bfiest
2 months ago
From Reddit
Joe Spak of UBS, “if you get the performance you need or want out of their(CATL/BYD) evolving (batteries), you know, technology, then why would like, even if there is a solid state solution, what becomes the advantage to move to that versus if the performance and costs are are similar?”
Siva talked about these companies not providing the data, and asking the question of what they are compromising to realize these results. But most importantly was Siva’s first response, “we are a different paradigm. We start at a different part in the s curve. Our job is to make sure we continue to push the frontier on the solid state battery, which is what makes us feel all the more convicted in our beliefs that we need to be there as soon as possible in high volume because we have a solution that the industry needs to replace internal combustion engines.”
QS batteries represent the beginning of a new S-curve – one that starts at a higher performance baseline (e.g. ~300 Wh/kg) where Li-ion is plateauing, and promises further improvements from there. The next question is: how might this solid-state technology evolve over the next 20 years, and how will its improvement curve compare to the Li-ion curve that preceded it?
“I think the reason all of our customers keep coming back to us (QS) is because none of these answers that they hear (from competitor battery developers) is satisfactory to them.” This suggests QS’s OEM partners are testing CATL & BYD batteries, but they’re not seeing the results, and they’re not buying into the competitor hype and are still hot for QS technology.
solong
3 months ago
This is a good article from a UK based magazine - "Thomas Schmall, VW board member for technology, said: “EVs are the future of mobility, and this agreement with QS will ensure VW’s global fleet has access to this groundbreaking battery technology for years to come. We are committed to driving the industry forward to ensure our EVs set the benchmark for excellence and sustainability.” The agreement replaces the previous joint venture between the two companies to manufacture solid-state batteries. It combines QS’s technology with PCo’s production and financial prowess."
https://www.bestmag.co.uk/quantumscape-and-vw-commercialising-solid-state-battery-technology/
The last video interview I had seen with the company shared the timeline of beginning production in 2025 with the goal of being able to reach full production at the new manufacturing facility VW had built for QS battery technology in 2025.
The 2026 model year is usually decided in the 1st half of the previous year. I.e. the 2026 Models are currently being finalized and tested. The Order Banks on almost all VW 2026 models open in either May or June of this year. Production on almost all VW 2026 models begin in either July-August-September - so I am assuming (could be wrong on this) that they won't be ready for the 2026 Model Year.
All large-scale manufacturers treat a NEW product the same: 1) establish a target for the specs, testing prototypes and revising them until they meet spec, 2) test it on a trial production line to insure best practices (achieving production goals, and then move it to the production line.
That's why I'm guessing they'll take part of this year to work though that process and be available for use by members of the VW Group: VW, Audi, Porsche, Bentley, Bugatti (Joint Venture of Rimac & Porsche), Seat, Skoda, VW Commercial, Scania commercial trucks, MAN commercial trucks. - they are the 2nd largest vehicle manufacturer in the World (Toyota is #1) for the 2027 Model Year.
Global Electrification Targets of the VW Group:
80% EV Sales in Europe by 2030:
55% EV Sales in North America by 2030:
All-Electric Entry-Level Vehicle by 2027
I'm not sure QS could have asked for a better partner.
bfiest
3 months ago
Another interesting valuation post from Reddit.
Quantumscape valuation exercise (BEAR CASE)
Inspired by beerion's work - here goes my version (which supports his). Beerion's bear case breakdown is exceptionally well-reasoned. I completely agree that the downside scenario is starting to look implausible given QuantumScape’s progress, and the point about the stock’s asymmetry resonates strongly with my own analysis. I was working on my own back-of-the-envelope valuation the past few days and here are my separate thoughts, which I think just corroborate beerion's case:
The bear case of $5.76B-$7.26B ($10.95-$13.81/share)—derived from $3.35B in IP costs plus time-value adjustments—sets a compelling floor. I’d argue it’s conservative, and my analysis, rooted in the non-China TAM and QS’s licensing model, suggests a higher baseline. The current $2.6B market cap (sub-$5/share, \~$1.6B operating value after $1B cash) implies a near-collapse probability that doesn’t hold up. Using a 25% discount rate—standard for pre-revenue VC risk—here’s my take, factoring in a 2027-2035 ramp-up:
* **Non-China TAM by 2035**: Per BloombergNEF, McKinsey, and IEA, the total battery TAM is 7 TWh ($550B), split evenly between China and non-China at $275B each. QS’s non-China focus targets $275B, and a 5% capture equates to $2.5B-$3.0B annual revenue (350 GWh at \~$10/kWh)—achievable with PowerCo’s 80 GWh deal and two OEMs adding \~100 GWh each (280 GWh "committed" so far).
* **Revenue and Earnings Ramp-Up**: Revenue scales from $0.5B in 2027 (post-commercialization) to $3.5B by 2035, with $400M annual spend (all OpEx, $0 CapEx conservatively). Earnings ramp from $0.1B to $3B:
* 2027: $0.5B revenue - $0.4B = $0.1B earnings
* 2035: $3.5B - $0.4B = $3B earnings
* Linear growth: \~$0.375B revenue/year. The $1B cash (per 10-K, $910.8M) is deployed by 2027, extending the runway to 2028 and supporting this ramp.
* **Present Value at 25% Discount Rate**:
* *Discounting Terminal Valuation*: At 2035, $3B earnings × 10x = $40B terminal value. Discounted back 10 years at 25%: $40B / (1.25)\^10 ˜ $4.3B. Adding $1B cash (deployed), \~$5.2B today.
* *Discounting Cash Flows*: Discount 2027-2035 earnings at 25%, plus perpetuity:
* 2027: $0.1B / (1.25)\^2 ˜ $0.06B
* 2031: $1.5625B / (1.25)\^6 ˜ $0.41B
* 2035: $3B / (1.25)\^10 ˜ $0.32B
* Total (2027-2035): \~$2.92B.
* Perpetuity (2035 onward): $3B / 0.25 = $12B, discounted to today: $12B / (1.25)\^10 ˜ $1.29B.
* Total PV: $2.92B + $1.29B ˜ $4.21B + $1B cash = $5.21B.
* *VC Valuation*: Discount $40B at 25% to $4.3B, add $1B cash, and apply a 25%-50% premium ($1.1B-$2.1B) for IP ($3.35B R&D) and licensing traction (280 GWh = $2.8B revenue). Total: $6.4B-$7.4B.
* *Range*: $5.2B-$7.4B today at 25%.* Note: An "IP premium valuation DCF" refers to using the Discounted Cash Flow method to value intellectual property (IP) by incorporating a premium into the projected cash flows, reflecting the added value that the IP provides beyond a standard asset due to its unique characteristics like market dominance, technological advantage, or brand recognition.
* **Market-Implied Discount**: The $2.6B cap is a 50%-65% discount to $5.2B-$7.4B, implying a \~50% failure rate. Yet PowerCo’s $130M royalty, two OEM deals, and a 2028 cash runway (per 10-K) make this laughable. Post-revenue confirmation (2026), a 25% rate could justify $20B-$35B, closer to the $25B-$30B TAM potential.
* **Lowering Discount Rates**: If licensing cash flows are confirmed for 2026-2027 and pre-revenue risks (e.g., commercialization, scale-up) start to extinguish, the 25% rate could drop to 15%-20%, lifting fair value to $20B-$35B or higher—reflecting QS’s de-risked, capital-light model.
The $3/share floor (with $2/share cash) discussed by beerion limits downside to \~30%, while my $5.2B-$7.4B at 25% offers 2-3x upside—conservative next to a $20B-$35B re-rating once licensing revenue kicks in (or is confirmed). QS’s shift to a capital-light model and 280 GWh committed capacity shred any bear case. The market’s \~50% implied rate is nuts—revenue confirmation could trigger a massive re-rating. Beerion's asymmetry nails it—looking forward to the base and bull cases.
Just need to stay strong, be cold blooded and hold your position.
bfiest
3 months ago
Very good, detailed timeline from poster on Reddit
The Hidden Story of QuantumScape and Volkswagen: A Speculative Analysis from 2022 to 2025 and Beyond
Understanding QuantumScape’s (QS) true progress requires a different way of thinking than just taking their public statements at face value. The company, like any highly scrutinized tech firm, carefully controls its communication. They follow a pattern of delayed confirmation, meaning that major breakthroughs are often hinted at in earnings calls but only officially announced 1-2 quarters later.
This means that by studying past communication patterns, we can predict what has already happened behind closed doors but has not yet been disclosed. When we overlay this method with Volkswagen’s own shifting EV strategy, we begin to see a clearer picture of what’s really going on.
**Introduction: How to Read Between the Lines**
QuantumScape’s (QS) journey is not just a story of technological breakthroughs—it is a story of corporate strategy, controlled communication, and hidden clues within public disclosures.
Unlike many companies that openly promote progress, QS follows a pattern of delayed confirmation, where key milestones—while hinted at in earnings calls—are only officially announced one or two quarters later.
This means that to truly understand QS’s trajectory, we must track how discussions in earnings calls translate into later confirmations in shareholder letters. When we overlay this with Volkswagen’s shifting EV strategy, a clearer picture emerges of where QS stands today and where it is likely headed.
**2022: The Over-Promise, the Lawsuits, and the Start of Controlled Messaging**
QuantumScape entered 2022 with immense investor expectations, driven by the promise that its solid-state battery technology could revolutionize the EV industry. However, the gap between ambition and execution led to investor lawsuits, leadership changes, and a shift in communication strategy.
**1. The Lawsuits and How They Changed QS’s Messaging**
QuantumScape was sued by investors in early 2022 for allegedly misrepresenting how close it was to commercialization. This led to a clear shift in how the company communicated progress:
* **Before 2022**, QS proactively forecasted its future goals.
* **After 2022**, QS only confirmed milestones after they were fully validated, meaning that if something was mentioned in an earnings call, it had likely already been achieved months before.
**2. Leadership Change: Why Did Jagdeep Singh Step Down?**
Throughout 2022, Jagdeep Singh was the face of QuantumScape, but his departure in early 2023 was a pivotal moment.
* Earnings Call Mentions (2022-2023): Jagdeep was prominently featured, but discussions became more focused on execution rather than vision.
* Shareholder Letter Confirmation (2023-2024): By mid-2023, Jagdeep had stepped down, and Dr. Siva Sivaram had taken over as CEO—a clear move toward an execution-oriented leadership team.
* Why It Matters: Jagdeep was the visionary who got QS to this point, but Siva was brought in to industrialize the technology—a sign that QS was shifting toward practical commercialization.
**3. Volkswagen’s Strategic Pivot: PowerCo’s Creation**
At the same time, Volkswagen launched PowerCo, its in-house battery subsidiary, marking a shift from investing in battery startups to directly managing battery production.
* **Earnings Call Mentions (2022):** PowerCo was briefly mentioned as an R&D partner.
* **Shareholder Letter Confirmation (2023-2024):** PowerCo evolved into a full-fledged industrialization partner, with QS integrating PowerCo engineers into its production process.
This meant that QuantumScape was no longer just a research project for Volkswagen—it was now a key part of their future EV roadmap.
**2023: The Silent Acceleration — Progress That Was Hidden in Plain Sight**
By mid-2023, QuantumScape had entered what we now recognize as the silent acceleration phase. While the company publicly downplayed progress, it was quietly reaching major milestones behind the scenes.
**1. QS-0: The First Sign of Real Production**
* **Earnings Call Mentions (2022-2023):** QS-0 was first hinted at as a pilot production line.
* **Shareholder Letter Confirmation (2023-2024):** QS-0 was later confirmed as QuantumScape’s first real step into industrial-scale production.
Implication: If QS-0 was mentioned in transcripts before being confirmed in letters, then other major manufacturing developments (like Cobra) are likely already further along than QS admits.
**2. PowerCo’s Growing Involvement**
* **Earnings Call Mentions (2023):** PowerCo was described as a collaborator, but no clear role was defined.
* **Shareholder Letter Confirmation (2024):** By early 2024, PowerCo had evolved into a strategic industrialization partner, with engineers embedded inside QS’s facility.
**Implication:** Volkswagen wasn’t just testing QS’s technology anymore—it was preparing for real production.
**2024: PowerCo’s Deal and Volkswagen’s EV Retreat—But Not from Solid-State**
By mid-2024, Volkswagen’s PowerCo officially signed a $130 million licensing deal with QuantumScape to industrialize QS’s battery technology.
**1. The PowerCo Deal Was Signed Earlier Than Announced**
* **Earnings Call Mentions (Q1-Q2 2024):** PowerCo was described as "expanding its collaboration" with QS.
* **Shareholder Letter Confirmation (Q3 2024):** By mid-2024, the PowerCo deal was officially announced—meaning it was likely finalized months earlier.
**2. Cobra Production Equipment: Another Case of Delayed Confirmation**
* **Earnings Call Mentions (Q2-Q3 2024):** Cobra was hinted at as a manufacturing enabler, but QS avoided specifics.
* **Shareholder Letter Confirmation (Q4 2024):** Cobra was confirmed to be operational, proving that its impact was already being felt before QS disclosed it.
**Implication:** If Cobra was downplayed before being confirmed, then the B1 sample program is likely already further along than QS admits.
**2025: What Has Already Happened But Hasn’t Been Announced Yet**
Based on QS’s historical pattern of delayed confirmations, we can logically infer what has likely already happened behind the scenes but has yet to be publicly disclosed.
**1. Cobra Will Be Fully Ready for Scaled Production by Late 2025**
* **Earnings Call Mentions (Q4 2024):** QS confirmed Cobra was operational but avoided discussing its throughput capacity.
* **Expected Shareholder Letter Confirmation (Q3-Q4 2025):** Cobra will likely be confirmed as fully scaled by late 2025.
* **Why This Matters:** Cobra is the final missing piece for high-throughput separator production, a prerequisite for mass production in 2026.
**2. B1 Samples Are Already Functional**
* **Earnings Call Mentions (Q4 2024):** QS stated that B1 samples were a goal for 2025 but did not confirm performance.
* **Expected Shareholder Letter Confirmation (Q2-Q3 2025):** Given past patterns, B1 samples are likely already functional, and QS is waiting for external validation before announcing success.
**3. Mass Production Will Start in 2026, Not 2028**
* **Earnings Call Mentions (Q4 2024):** QS maintains a **2027-2028 mass production timeline**.
* **Expected Shareholder Letter Confirmation (Q4 2025):** If PowerCo is already preparing production infrastructure, mass production is likely to start in 2026, not 2028.
**Final Takeaways: 2025 Will Be the Year of Confirmations**
QuantumScape is further along than it appears, and 2025 will be the year that confirms it.
* B1 samples are already functional—confirmation expected mid-2025.
* Cobra will be fully scaled by late 2025, enabling mass production.
* At least one major OEM deal is finalized—announcement likely by mid-2025.
* Mass production will start in 2026, not 2028—expect an acceleration announcement in late 2025.
**The key to understanding QS is seeing what was discussed in transcripts first and later confirmed in letters. Now let's move to Cobra and PowerCo:**
**Speculating on PowerCo’s Cobra Orders and Installations: The Missing Piece**
Up to this point, we have established that QuantumScape follows a pattern of delayed confirmation, meaning that key developments are first hinted at in earnings calls, then officially confirmed in shareholder letters a quarter or two later. This pattern applies to everything from leadership changes (Jagdeep to Siva), the QS-0 pilot line, AI-driven Raptor defect detection, and the PowerCo licensing deal.
However, one major missing piece is whether PowerCo has already ordered and begun installing Cobra equipment for separator production—a critical step in bringing QuantumScape’s solid-state battery technology to mass production.
**The Case for PowerCo Already Ordering and Installing Cobra**
**1. QuantumScape Has Already Delivered and Installed Cobra at Its Own Facility**
* **Q2-Q3 2024 Earnings Calls:** Cobra was mentioned vaguely as a next-generation separator processing tool but without clear installation details.
* **Q4 2024 Shareholder Letter:** Cobra was officially confirmed to be operational at QuantumScape’s facility.
**Pattern Match:** Given that Cobra was declared operational by Q4 2024, it was likely functional earlier in 2024, even before the PowerCo licensing deal was announced.
If Cobra was already working at QuantumScape, PowerCo would have been aware of its capabilities before signing the licensing deal in July 2024.
**2. PowerCo’s Licensing Deal Implies a Pre-Existing Plan for Cobra Integration**
In July 2024, PowerCo finalized a licensing deal with QuantumScape to manufacture up to 40 GWh annually, with an option to expand to 80 GWh.
* **Earnings Call Mentions (Q1-Q2 2024):** PowerCo’s involvement was described as “expanding collaboration” with QS.
* **Shareholder Letter Confirmation (Q3 2024):** The licensing deal was officially announced, confirming PowerCo’s commitment to industrialization.
**Pattern Match:** Since PowerCo would need to scale separator production to meet its manufacturing targets, it would not have signed the deal without knowing that Cobra was ready for deployment.
**3. Volkswagen’s “Walk Back” on Broader Battery Investments, Except QS**
In 2024, Volkswagen scaled back some of its EV battery investments, postponing PowerCo’s IPO and reducing commitments to conventional lithium-ion gigafactories.
However, Volkswagen continued to move forward with QuantumScape, integrating PowerCo engineers directly into QS’s facility.
**Pattern Match:** If PowerCo was slowing down other battery investments but staying aggressive with QuantumScape, this suggests that they already had a clear timeline for bringing Cobra online.
PowerCo likely did not commit to licensing QS’s technology unless it had already planned its own Cobra installations.
**4. Cobra’s Scaling Timeline and PowerCo’s Likely Orders**
If we apply the historical delay between QS’s internal deployments and public confirmations, we can reverse-engineer when PowerCo likely placed its orders:
* **Q1-Q2 2024:** QuantumScape was already testing and refining Cobra internally (but had not confirmed it publicly).
* **Q2-Q3 2024:** PowerCo negotiated and signed the licensing deal, knowing that Cobra would be crucial for scaling separator production.
* **Q4 2024:** QuantumScape confirmed Cobra’s operational status, meaning it had likely been functional for months.
* **Q1-Q2 2025 (Speculative):** PowerCo has already placed orders for Cobra equipment and is in the process of installing it at its facilities.
**5. Why Cobra’s Deployment at PowerCo Hasn’t Been Publicly Confirmed Yet**
* QuantumScape does not confirm developments until they are fully locked in.
* PowerCo operates within Volkswagen, which does not typically reveal procurement details in real-time.
* If PowerCo is already installing Cobra, they would wait until the system is fully functional before announcing it.
**Speculative Conclusion: PowerCo’s Cobra Installations Are Likely Underway**
Given QS’s pattern of delayed confirmations, the PowerCo licensing agreement, and Volkswagen’s continued commitment to solid-state despite broader EV slowdowns, the most logical conclusion is that PowerCo has already ordered Cobra equipment and is in the process of installing it.
**What This Means for the 2025 Timeline**
* Q2-Q3 2025: PowerCo’s Cobra installations should be completed, allowing for scaled separator production.
* Q4 2025: PowerCo publicly confirms Cobra deployment, coinciding with a likely update on B1 sample progress and mass production timelines.
* 2026: First large-scale solid-state production begins at PowerCo’s facilities.
**Final Thought: We Are Closer to Mass Production Than People Think**
If PowerCo has already ordered and installed Cobra, then QuantumScape’s technology is much closer to real-world deployment than publicly disclosed.
The key question now is: **Will QuantumScape accelerate its 2027-2028 production timeline to 2026?** If the speculation holds true, the answer is likely **yes**.
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