QuantumScape burns cash as it ramps up VW solid state battery
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Solid state battery maker QuantumScape is set to receive the first payments in a new deal with Volkswagen as it burns cash in the development of its lithium metal battery cells.
QS has also signed another deal with an unnamed global automotive AOEM for the technology.
The second quarter saw $123m in outgoings at QuantumScape with income of $8m. It expects to see a $10m payment from VW’s battery subsidiary PowerCo in the third quarter as part of a $131m deal over two years to scale up production, on top of an earlier deal with VW for $130m.
“This quarter is a major inflection point in our journey, and we are now firmly in the commercialization phase of our company,” said Dr. Siva Sivaram President, CEO of QS. “We believe this expanded deal with PowerCo is an unambiguous demonstration of both the economic value of our solid-state platform and the power of our capital-light business model. Under this model, we have the ability to monetize development activities early on and then collect licensing royalties as our customers ramp production volumes.”
The updated collaboration agreement is designed to accelerate the QSE-5 battery development pilot line in San Jose, marking a major step forward in the industrialization of solid-state battery technology.
The company expects a loss of up to $270m this year, but the new deal with PowerCo has extended the runway, or the time until it runs out of cash, to 2029.
VW to make solid state lithium metal battery cells with QuantumScape technology
The agreement enables PowerCo to engage earlier in QSE-5 production and automation efforts to ramp-up the QS pilot line. This is an essential step in scaling manufacturing and executing the technology transfer required for higher-volume prototype cell deliveries to PowerCo.
The expansion allow allows PowerCo the right under the licensing agreement to produce up to an additional 5 gigawatt-hours (GWh) of QSE-5-based cells annually, including for customers outside the Volkswagen Group, and the right to license certain future QS technology.
“This expanded agreement is a clear signal of the growing strategic, technical and financial alignment between the two companies,” said Dr. Siva Sivaram, CEO and president of QS. “It reflects our shared confidence in QSE-5 as a game-changing platform for the battery industry.”
The development deal with the new OEM follows initial sampling to work toward a commercialization and licensing deal. “We continue to collaborate closely with existing and new customers, and we see market traction accelerating as these announcements provide commercial validation and increase urgency in the automotive space,” said
The next-generation Cobra process has replaced Raptor as the baseline separator production process, which will enable B1-samples shipping later this year. This is requiring higher-volume cell production equipment which will be installed later this year. Over the past two years, QS has improved the baseline heat treatment speed for the separator by over 200x.
“We are working closely with our launch customer, and in Q2 we shipped QSE-5 cells for pack integration and testing, including safety testing. We continue to target 2026 for the beginning of field testing,” he said.
Capital expenditures in the second quarter were $8.3M. Q2 capex primarily supported facilities and equipment purchases for the B1 sample production using the Cobra separator process, with $45m to $65m for the full year.
“We continue to streamline operations consistent with the company’s capital-light licensing focus and capture gains from cost reduction initiatives and process improvement, including the Cobra process. We narrow the range of our full-year guidance for adjusted EBITDA loss to $250m to $270m. We ended Q2 with $797.5M in liquidity and extend our guidance for cash runway into 2029, a six month improvement over our previous guidance. Any additional funds from other customer inflows or capital markets activity would further extend this cash runway.”
We are just getting started; we have long and deep relationships with additional auto OEMs, and we continue to see these engagements intensify. The challenges of scaling production remain significant, and there is still much work left to do.
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