QS QuantumScape 10-Q 2026-06-30 section summaries

QuantumScape (QS) — Part I, Item 1

Business and results

QuantumScape remains a pre-revenue solid-state lithium-metal battery developer; planned principal operations have not commenced, and it reported no revenue from its principal business through June 30, 2026. It operates as one reportable segment. Its central investor challenge remains financing development and commercialization while managing substantial operating losses and cash use.

• Q2 2026: Net loss was $98.240M, compared with $114.698M in Q2 2025; operating loss was $106.127M, versus $123.586M. Operating expenses were $106.127M, including R&D of $82.533M (from $101.177M) and G&A of $23.594M (from $22.409M). Interest income was $8.355M (from $8.940M), and interest expense was $0.466M (from $0.516M). Basic and diluted loss per share improved to $0.16 from $0.20.
• H1 2026: Net loss was $199.039M, versus $229.121M in H1 2025; operating loss was $215.306M, versus $247.161M. Operating expenses included R&D of $167.103M (from $196.766M) and G&A of $48.203M (from $50.395M). Interest income was $17.245M (from $18.709M), and interest expense was $0.944M (from $1.044M). Loss per share was $0.32, versus $0.41. Lower expenses and losses partly reflect lower depreciation and asset impairments, not revenue generation.

Weighted-average shares increased to 617.077M from 561.698M in Q2, and to 614.062M from 554.890M in H1. Period-end common shares outstanding rose from 607.630M at December 31, 2025, to 619.109M at June 30, 2026 (587.077M Class A and 32.032M Class B). Potentially dilutive securities were excluded as antidilutive; 47.653M were outstanding at June 30, 2026, including 3.202M options, 31.649M RSUs, and 12.802M PSUs.

Liquidity, balance sheet and cash use

At June 30, 2026, total assets were $1.169B, total stockholders’ equity $1.048B, and liabilities $120.773M, compared with $1.308B, $1.169B, and $139.183M, respectively, at year-end 2025. Goodwill and other intangible assets were not separately presented. Accumulated deficit was $3.993B.

Cash and cash equivalents were $132.872M (from $230.524M), and marketable securities were $726.130M (from $740.283M); together they totaled $859.002M, down from $970.807M. Separately, recurring-fair-value financial assets totaled $848.526M, down from $949.297M: $75.654M of Level 1 money-market funds and $772.872M of Level 2 securities. Marketable securities had $849.520M amortized cost and $848.526M fair value. Their $1.003M unrealized loss was attributed to interest rates, not credit deterioration; the company reported no credit-loss allowance and no intent or expected need to sell before recovery. Restricted cash of $13.655M was pledged for facility leases.

H1 net cash used in operating activities was $116.259M, versus $122.589M in H1 2025. Cash purchases of property and equipment (capital expenditures) were $14.598M, versus $14.421M; operating cash flow less capex was negative $130.857M, versus negative $137.010M. Cash, cash equivalents and restricted cash declined $97.652M to $146.527M during H1, compared with a $31.585M increase to $190.499M in H1 2025. Investing cash inflow was $6.399M (from $139.289M), largely reflecting marketable-security activity; financing provided $12.208M (from $14.885M).

Development spending, compensation and related-party funding

H1 stock-based compensation was $57.834M, versus $66.894M; Q2 expense was $27.325M, versus $26.255M. H1 expense comprised R&D of $37.661M and G&A of $20.173M. At June 30, unrecognized compensation was $164.1M for RSUs and $38.6M for PSUs. RSUs outstanding rose from 28.957M at year-end to 31.649M; PSUs rose from 7.376M to 10.531M. H1 grants included 10.306M RSUs and 7.481M PSUs. Milestone PSUs are tied to development and commercial goals through May 2029; H1 milestone-PSU expense was $8.0M, with $4.5M unrecognized for milestones not yet considered probable. The 2021 Extraordinary Performance Award program was fully cancelled by February 2026.

Volkswagen subsidiary PowerCo’s 2025 agreement contemplated up to $130.7M over two years, subject to milestones. QS received $10.353M in H1 2026 as a contribution to additional paid-in capital, with no shares issued. A July 2026 amendment changed the structure to milestone-based payments and reduced the program maximum to $75.4M, inclusive of amounts already paid. The funding is non-repayable under the stated terms but depends on technical and project milestones and involves a major related party. Volkswagen held approximately 27.3% of voting interests at June 30, up from 26.2% at year-end.

Assets, leases and legal matters

Net property and equipment fell to $229.435M from $251.449M. H1 depreciation and amortization was $27.7M, versus $37.4M; H1 property-and-equipment impairment was approximately $1.9M, versus $14.9M. Lease liabilities were $37.006M for operating leases and $30.112M for a finance lease; lease obligations extend through September 2032. Asset retirement obligations were $14.041M.

Aggregate legal accruals increased to $4.655M from $3.900M. Shareholder derivative matters remain outstanding, including a settlement in principle with no determined amount and subject to negotiation and court approval. The company states that reasonably possible estimable unaccrued losses are not expected to materially affect results, though outcomes remain uncertain. Future minimum purchase commitments totaled $6.873M at June 30, including $1.477M for the remainder of 2026.

Overall, reduced losses and cash burn are partly attributable to lower depreciation and impairment, while the company remains dependent on its liquid investment portfolio, milestone-linked partner funding, and continued execution toward commercialization.

QuantumScape (QS) — Q2 and H1 2026

Business status and commercialization

QuantumScape remains pre-commercial, with no revenue to date. Its primary focus is developing solid-state lithium-metal batteries for automotive EVs, while identifying longer-term opportunities in consumer electronics, data centers, aerospace and defense. Commercialization depends on technical progress, customer validation, and the ability to manufacture cells consistently and at scale. Automotive qualification proceeds through A-, B- and C-sample stages, and timing remains uncertain.

The target QSE-5 cell is approximately 5 Ah, with stated energy density of over 800 Wh/L and a target fast charge from 10% to 80% in under 15 minutes. Low-volume B-sample production began in 2024, and automotive customers have received cells for testing. A 2025 demonstration with Volkswagen and PowerCo used B1 QSE-5 samples manufactured with a more efficient separator process. QuantumScape installed its highly automated San Jose pilot line in 2025, inaugurated it in February 2026, and began ramping initial capacity. The line is intended to support development, customer sampling, process development, initial QSE-5 production and collaboration with PowerCo.

The cell’s anode-free design is intended to reduce materials and manufacturing steps: a lithium-metal anode forms during first charge from lithium in the cathode. QuantumScape is developing its proprietary Cobra separator process and automating production to improve throughput, efficiency and scalability. These remain development objectives; the company still needs to improve cell quality, consistency, reliability, safety and production throughput, and achieve customer-specific designs and sufficient prototype volumes. It also expects further cost reductions across separators, cathodes, equipment, materials and manufacturing processes.

Results and expenses

Operating expenses and losses declined year over year, although this does not necessarily indicate lower development activity: much of the R&D reduction reflected lower impairment and depreciation/amortization charges.

In Q2, lower R&D impairment expense ($13.6M) and depreciation and amortization ($5.6M), along with lower facility costs, were partly offset by higher materials and stock-based compensation. H1 reductions included impairment ($13.0M), depreciation and amortization ($8.3M), stock-based compensation ($5.2M) and facility costs ($3.4M). H1 stock-based compensation was $57.8M, down from $66.9M; depreciation and amortization was $28.1M, down from $37.8M. Performance-based Milestone PSU expense may fluctuate as achievement probabilities are reassessed. Management expects R&D and G&A costs to rise as commercialization, customer support and related activities expand.

Q2 loss before taxes was $98.047M, from $114.874M; H1 was $198.839M, from $229.128M. Interest income partially offset losses: $8.355M in Q2, from $8.940M, and $17.245M in H1, from $18.709M, with the decrease reflecting lower interest rates. Interest expense, primarily on a facility finance lease, was $0.466M in Q2, from $0.516M, and $0.944M in H1, from $1.044M. Income tax provisions were immaterial.

Liquidity, cash use and funding

Cash, cash equivalents and marketable securities totaled approximately $859.0M at June 30, 2026, down from $970.8M at December 31, 2025. H1 operating cash used was $116.259M, compared with $122.589M in H1 2025. Capital expenditures were $14.6M, versus $14.1M, mainly for R&D. Investing cash provided was $6.399M, versus $139.289M, and financing cash provided was $12.208M, versus $14.885M. Marketable-security maturities and purchases drove investing flows: H1 2026 maturities of $514.2M were largely offset by purchases of $493.5M; H1 2025 maturities of $537.6M were offset by purchases of $384.1M. H1 2026 financing included a $10.4M PowerCo capital contribution, with no shares issued, and $3.6M from option exercises and the employee stock purchase plan. The company previously raised net ATM proceeds of $128.5M in 2024 and $264.2M in 2025.

Management believes available cash is sufficient for at least 12 months from the report date, but development and scale-up costs, delays in customer negotiations or milestones, supply-chain constraints, tariffs, inflation, competition and regulatory changes could increase funding needs. If resources are insufficient, QuantumScape may seek equity or debt financing; unavailable or unfavorable terms could require it to reduce development investment or scale back operations.

At June 30, 2026, operating-lease commitments were $7.2M over the next 12 months and $38.0M thereafter; non-cancellable service and purchase commitments were $3.0M and $3.9M, respectively. The facility finance lease requires net cash payments of $5.5M over the next 12 months and $30.9M thereafter.

PowerCo arrangement

The 2024 PowerCo collaboration contemplated industrialization of QS technology based on QSE-5, a planned non-exclusive, limited, royalty-bearing IP license and a conditional $130M initial royalty prepayment, creditable against future royalties and subject to a diminishing clawback in certain early-termination circumstances. In July 2026, after quarter-end, the parties amended the arrangement: milestone-based payments for cell delivery and validation over the next two years replace the prior statement of work and cost-reimbursement approach. Maximum aggregate program payments to QuantumScape are $75.4M, inclusive of amounts paid to date. Payment milestones and progress toward the separate IP license remain relevant to funding and commercialization.

For the three months ended June 30, 2026, QS reported no material changes in its market risk. The company referred readers to Part II, Item 7A of its Annual Report for details of its market-risk exposures; this section provides no specific exposure changes or market-risk metrics.

Disclosure Controls and Internal Control

As of June 30, 2026, management, including the CEO and CFO, concluded that the company’s disclosure controls and procedures were effective at the reasonable-assurance level. During Q2 2026, no change in internal control over financial reporting materially affected, or was reasonably likely to materially affect, those controls. This section reports no financial results or operating developments.

QuantumScape (QS) — Item 1A: Risk Factors

Commercialization and manufacturing remain unproven

QuantumScape has not produced solid-state cells at commercial capacity or volume and has not generated revenue from business operations. Its first A0 prototype cells shipped in 2022, QSE-5 B0 samples in 2024, and B1 prototypes in 2025. QSE-5 is targeted at approximately 5 amp-hours, but final specifications may change. Some laboratory cells have passed automotive performance and safety test levels, yet testing has involved limited samples, and larger-scale validation of evolving cell designs, materials, and packaging remains necessary. Prototype and pilot-line progress does not establish commercial-scale production, customer qualification, or adoption.

The San Jose pilot line is intended to support development, customer testing, higher-volume QSE-5 production, and PowerCo collaboration and licensing. Scaling it requires improving separator quality and yield, throughput, equipment reliability, automation, cycle time, cell size and layer count, packaging, pressure management, safety, and cost. Equipment installation and qualification, infrastructure, supplier and contractor delays, outages, unstable yields, or difficulty transferring processes to partners could delay production or increase costs. QuantumScape wrote off approximately $26.6 million of property and equipment in FY2025 for assets with no remaining future benefit; design or process changes and equipment replacement could cause further write-offs.

Commercial prospects, customers, and PowerCo

Customer sampling, evaluations, and joint development may not lead to production or licensing agreements. Automotive OEMs are few, have lengthy qualification cycles and substantial negotiating leverage, and impose demanding cost, quality, reliability, safety, and scalability requirements. Supporting several customers could consume resources, while customer-specific terms may constrain pricing, licensing, or work with other partners. Until commercialization agreements are secured, results may fluctuate substantially.

The PowerCo relationship is central to planned scale-up and licensing. The July 2024 agreement contemplated a non-exclusive, royalty-bearing license for facilities with up to 40 GWh of annual capacity, expandable by another 40 GWh. A July 2025 amendment added up to 5 GWh, bringing potential capacity to 85 GWh annually. In July 2026, the agreement was amended to replace the prior statement of work and cost-reimbursement structure with milestone-based payments tied to cell delivery and validation over the next two years; maximum aggregate program payments to QS are $75.4 million, inclusive of amounts paid to date. A license, initial fee, and royalties depend on technical milestones and future cell demand. Volkswagen’s investment decisions, PowerCo’s ability to scale, disagreements, delays, or withdrawal could impair commercialization and expected cash inflows. Volkswagen is QS’s largest shareholder and may designate two directors, contributing to partner concentration and potential governance concerns.

Costs, funding, and financial outlook

QS reported a Q2 2026 operating loss of approximately $106.1 million and net loss of approximately $98.2 million; for H1 2026, operating loss was approximately $215.3 million and net loss approximately $199.0 million. Its accumulated deficit was approximately $4.0 billion from inception through June 30, 2026. It expects quarterly operating losses to continue until significant production begins, which is not expected in the near term, and losses may rise as it funds R&D, commercialization, production capabilities, inventory, and infrastructure.

Profitability depends on commercializing or licensing the technology, controlling costs, and achieving manufacturing yield, throughput, and automation targets that remain unproven. Projected cost advantages over lithium-ion batteries depend on assumptions such as eliminating the anode host and improving separator yield and throughput; competitors’ advances or lithium-ion manufacturing improvements could erase the anticipated advantage. Volatile lithium, nickel, cobalt, freight, labor, and equipment costs, tariffs, shortages, and limited-source suppliers could raise costs; QS has limited ability to pass increases to customers. Substantial future capital may be required, but financing may not be available on acceptable terms. Equity offerings, including a possible ATM, could dilute shareholders, and substantial shares are eligible for resale.

Market, competition, and business-model risks

Growth depends heavily on EV adoption, which could be weakened by affordability, charging infrastructure, performance or safety concerns, economic conditions, interest rates, energy prices, supply constraints, or reduced OEM programs. Changes to incentives may also soften demand: the Section 30D EV credit terminated on September 30, 2025, and the Section 30C charging-infrastructure credit is scheduled to terminate July 30, 2026. QS is also exploring electronics, data centers, aerospace, and defense, but these markets require additional technical adaptation, qualification, relationships, and investment.

QS faces established lithium-ion producers, better-resourced solid-state competitors, and alternative battery technologies. As of 2025, China’s average battery-pack price was approximately 56% below Europe’s and 44% below the United States’, illustrating cost and scale pressure. Owned manufacturing would require substantial capital; joint ventures and licensing reduce some capital needs but bring partner dependence, less control, potentially lower returns, and risks around quality, royalties, milestones, and IP.

Technology, intellectual property, and operational exposure

Patents and trade secrets may not adequately protect QS technology; patents may be challenged, narrowed, circumvented, or expire before commercialization. Infringement disputes could require costly litigation, redesign, damages, or unavailable licenses. Jointly developed IP may be jointly owned, allowing partners certain exploitation rights, while a contemplated PowerCo license could be perpetual for some IP. Cyberattacks, data breaches, AI errors, IT failures, or privacy-law changes could expose confidential information, disrupt operations, or delay financial reporting. Product defects or battery safety incidents could trigger recalls, liability, reputational harm, and costs potentially exceeding insurance coverage.

Trade restrictions, tariffs, sanctions, export controls, and geopolitical tensions could disrupt access to materials and equipment, including Chinese inputs; tariffs had not materially affected the business as of the report date. Hazardous lithium- and sulfide-containing materials, automated equipment, environmental rules, recycling requirements, and sustainability commitments add safety, compliance, and operating costs. Litigation, anti-corruption or sanctions violations, pandemics, disasters, power interruptions, and difficulty retaining specialized personnel could also disrupt operations.

Governance, reporting, and shareholder risks

As of June 30, 2026, insiders, affiliates, and holders of at least 10% beneficially owned approximately 14.4% of Class A and 100% of Class B, representing approximately 44.6% of total voting power; Class B shares carry ten votes each versus one for Class A. The dual-class structure, Volkswagen’s board rights, and charter, bylaw, and Delaware-law provisions can limit shareholder influence or impede a change of control. QS does not expect to pay dividends in the foreseeable future.

Class A shares traded intraday between $3.40 and $132.73 from the start of public trading through June 30, 2026, with volatility tied to technical milestones, financing, partner developments, EV-market expectations, and broader markets. The company says internal control over financial reporting is currently effective but previously identified and remediated a material weakness. Complex accounting judgments—including stock compensation, leases, taxes, and PowerCo-related arrangements—could lead to errors or restatements. The July 2025 PowerCo R&D funding amendment involved judgment-sensitive accounting: amounts without stated repayment terms were recorded as a liability and later derecognized to equity upon extinguishment. Nasdaq delisting, reduced analyst coverage, public-company costs, or reporting failures could further impair liquidity, visibility, and investor confidence.

Insider Trading Plans and CTO Work Arrangement

No operating or financial results are reported in this section.

During the fiscal quarter, CTO Dr. Timothy Holme adopted a Rule 10b5-1 trading plan on June 10, 2026, for potential sales of up to 3,381,234 Class A shares. The plan expires June 16, 2027, or earlier if completed. CFO Kevin Hettrich adopted a plan on June 5, 2026, for potential sales of up to 426,000 Class A shares, expiring August 23, 2027, or earlier if completed. These are plans for possible future sales, not reports of completed transactions. No other officers or directors adopted or terminated trading arrangements during the quarter.

From August 2026 through May 2027, Holme will remain CTO and an employee under a temporary modified work arrangement, focusing on long-term R&D priorities while certain day-to-day responsibilities shift to other senior technical leaders. He is expected to resume his full duties after the arrangement. During this period, the Compensation Committee paused his base salary and the vesting of restricted stock units subject solely to service-based vesting. His other outstanding equity awards continue to vest under their existing terms.