QS: 2024 Q4 Summary
Year In Review & Look Ahead
10-K (Link update coming soon)
This won’t be a super comprehensive article. Most of the relevant information can be found in the shareholder letter (linked above). There’s no reason to really rehash it all here. I will provide commentary on some interesting highlights that stuck out to me.
2025 Goals
Bring Cobra Into Baseline Production
Install higher-volume cell production equipment jointly with PowerCo
Ship QSE-5 B1 samples for customer testing
Expand commercial engagements
Overall, the plan is the same as it always has been - get Cobra up and running and ready to ship to customers for testing.
B1 Samples
I found this quote particularly interesting:
Initial volumes of QSE-5 B1 cell shipments will support the demonstration phase of the launch program with our prospective customer, targeted for 2026.
~Shareholder Letter
It sounds like B0 samples are mature enough for validation (specifically performance and safety) so B1 may immediately be able to go into test vehicles (if that’s what they Siva means by “demonstration phase”).
This also means that guidance for B1 cell delivery is probably be closer to the end of the year. I would suspect at least near the end of Q3. I’ll make a post later to catalog potential upcoming catalysts (updating my previous Catalyst Note). I do wonder if we’ll hear any chatter on the launch vehicle this year or if we’ll have to wait.
Partnerships
Goal 4 - Expand Commercial Engagements - mentions that QS is in talks with 2 new customers. If these deals end up being similar to PowerCo’s, the total backlog of production capacity could be in the 120 to 240 GWh range. QS is delivering samples to 6 OEMs (I believe) so we could see more deals heading into 2026 as well. I think we may now have enough information to perform a valuation on Quantumscape (the commercialization picture is now starting to become clearer). Stay tuned for that.
We can also have fun speculating on who these partners may be. Reddit user u/Euphoric_Upstairs_57 has thrown together a list of potential suitors based on a similar cellphone tracking methodology that social media companies use to suggest new friends. His work can be found HERE. Current front runners look to be Honda, Ford, and Tesla. Although, there’s no guarantee that any of these are actually OEM prospects for Quantumscape (it is a small industry, and I’m sure these guys and gals cross paths frequently).
Dilution
This was the elephant in the room for me. Quantumscape raised $128 million through dilution last quarter. Here’s the relevant quote from the shareholder letter.
We ended 2024 with $910.8M in liquidity, which includes $128.5M of net proceeds raised under our at-the-market equity program. This extends our cash runway into the second half of 2028, six months longer than our previous guidance. Any additional funds from customer inflows or capital markets activity would further extend this cash runway.
I found it odd that they glossed over it in the letter and in the earnings call. I reached out to Investor Relations for more color and received the following response:
…We believe the market opportunity for our technology platform is massive and the strength of our balance sheet is important in that it both differentiates the company from our peers and improves our position in commercial discussions.
~Investor Relations
I think we should expect that Quantumscape will try to remain close to the $1B liquidity mark…at least until royalties start flowing.
One thing is clear, QS now has enough cash to weather the potential spin cycle that the renewables industry may feel over the next 4 years (I’ll avoid political commentary, but it’s no doubt that this industry does seem to have a target on it’s back at the moment).
Giga Scale
Here’s quote from the earnings call that suggests that the design of giga watt-hour scale equipment may already be underway:
In parallel with that effort, we are working to build a technology package for PowerCo to take our QSE-5 platform to gigawatt hour scale production and we are working on all aspects of this package today.
~Siva Sivaram
Launch Customer
I’ll provide more color later, but when asked about the demo program starting in 2026:
To point you to a couple of comments in the letter, in our spoken word, this is a high visibility, low volume project, bringing our technology into a real world application…
~Kevin Hettrich
This reinforces that initial launch will be for a very low volume, premium type vehicle. I still believe a Mission X style car makes the most sense. But we should keep our eyes out for any announcements that involve the following:
High Performance: Long Range, very high horsepower, leading industry fast charge
Small Batch: Probably fewer than 100 vehicle production run rate per year.
Very Expensive: Cobra will still fall short of economies of scale. This combined with the low production volumes means supply/demand will drive pricing. Anything under $100k makes little sense, at this point. And we can automatically count out any vehicle with a price point under $50k.
An official launch date (available for purchase) scheduled for 2027 (or later): If 2026 kicks off the demo program, then customer purchase probably follows in 2027. This may be dependent on whether in-vehicle testing begins at the start of 2026 or towards the end. From my readings, vehicle testing can take 12 to 18 months to complete.
Summary
Shareholders may finally start to see “fireworks” in 2025 and 2026. There’s a lot to look forward to: new licensing agreements, B1 sample delivery, launch vehicle announcements, actual cars with QS cells on the road (demonstration phase), royalty prepayment, and likely an announcement from PowerCo about breaking ground on a Giga scale Pilot line at one of their facilities.