QuantumScape Corporation (NYSE:QS) Q2 2024 Earnings Conference Call July 24, 2024 5:00 PM ET

Company Participants

John Saager - Vice President, Capital Markets and FP&A
Siva Sivaram - Chief Executive Officer
Kevin Hettrich - Chief Financial Officer

Conference Call Participants

Doug Dutton - Evercore
Jordan Levy - Truist Securities
Mark Shooter - William Blair
Ben Kallo - Baird

Operator

Good morning. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the QuantumScape Corp. Second Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

I will now turn the call over to John Saager, QuantumScape's Vice President of Capital Markets and FP&A. John, you may begin your conference.

John Saager

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's second quarter 2024 earnings call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter.

Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize.

Actual results and financial theories are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainty posed by the difficulty in predicting future outcomes.

Joining us today will be QuantumScape's CEO, Dr. Siva Sivaram, and our CFO, Kevin Hettrich.

With that, I'd like to turn the call over to Siva.

Siva Sivaram

Thanks, John. I'm excited to provide an update on our activities since our last earnings call.

First, we recently announced a landmark agreement with PowerCo, the battery company of the Volkswagen Group. This deal reflects the value created by consistent execution on our development roadmap and customer validation of our technology. We forecast that this capital-light licensing arrangement lengthens our cash runway into 2028, an extension of 18 months relative to our previous guidance. Upon satisfactory technical progress, the deal allows for a $130 million prepayment of royalties to QuantumScape in exchange for a non-exclusive license, covering an initial production volume of 40 gigawatt hours per year with an option to expand to 80 gigawatt hours, enough for approximately 1 million vehicles per year. The license covers the technology platform used in our upcoming QSE-5 product.