QS QuantumScape 10-Q 2026-09-30 section summaries

Business and operating performance

QuantumScape remains pre-commercial: it reported no revenue from its solid-state lithium-metal battery business through September 30, 2026, and operates as one reportable segment. Its CEO evaluates performance and allocates resources using consolidated net loss.

With no revenue, operating expenses equaled operating loss: $92.424M in Q3 2026, down from $114.993M in Q3 2025, and $307.730M for the first nine months of 2026, down from $362.154M in the comparable 2025 period. Q3 R&D expense was $73.881M versus $92.074M, and G&A was $18.543M versus $22.919M.

Net loss improved to $84.477M in Q3 2026 from $105.824M in Q3 2025, and to $283.516M for nine-month 2026 from $334.945M. Loss per share was $0.14 for Q3 and $0.46 for the nine months, compared with $0.18 and $0.59, respectively, in 2025. Interest income partly offset operating losses: $8.066M in Q3 2026 versus $9.997M, and $25.311M for nine-month 2026 versus $28.706M.

Liquidity, cash use and balance sheet

At September 30, 2026, total assets were $1.119081B, down from $1.308156B at December 31, 2025; total stockholders’ equity was $995.344M, down from $1.168973B. Total liabilities were $123.737M, versus $139.183M. The balance sheet does not separately report goodwill or intangible assets, so reported equity also represents tangible common equity on the figures provided. No conventional debt balance is presented; lease liabilities are reported separately.

Cash and cash equivalents were $75.599M, versus $230.524M, while marketable securities were $744.184M, versus $740.283M. Together they totaled $819.783M, down from $970.807M. Restricted cash of $13.674M was held in other assets and pledged for facility leases.

Nine-month operating cash outflow was $171.319M, improved from $186.323M in 2025. Capital expenditures were $19.047M versus $24.001M, leaving operating cash flow less capex at negative $190.366M versus negative $210.324M. Cash, cash equivalents and restricted cash declined $154.906M during the period to $89.273M. Financing cash inflow was $29.922M, including $28.856M under the related-party collaboration agreement and $3.715M from option and employee stock-plan exercises, partly offset by finance lease principal payments. Nine-month 2025 financing inflow was $285.524M, including common-stock issuance proceeds. Lower cash burn is favorable, but the company continues to use substantial liquidity without operating revenue.

Recurring-fair-value financial assets were $809.400M at September 30, 2026, down from $949.297M at year-end 2025. The balance comprised $40.323M of Level 1 money market funds and $769.077M of Level 2 securities, including $556.025M of U.S. government and agency securities, $172.806M of corporate notes and bonds, and $40.246M of commercial paper. Available-for-sale securities had $811.489M amortized cost and $809.400M fair value, with $2.090M of gross unrealized losses, attributable to interest-rate movements rather than increased credit risk. Management reported no intent or likely requirement to sell before recovery and recorded no credit-loss allowance.

Costs, assets and dilution

Nine-month stock-based compensation was $74.147M, down from $96.117M; Q3 expense was $16.313M versus $29.223M. Nine-month compensation included $50.029M in R&D and $24.118M in G&A. Milestone PSU expense was reduced by reversals after certain development milestones were no longer considered probable, including an $8.1M Q3 reversal and $9.6M nine-month reversal. As of September 30, 46.035M potential shares were excluded from diluted EPS as antidilutive, including 29.183M RSUs, 13.719M PSUs, and 3.133M options. Unrecognized compensation cost was $150.3M for unvested RSUs and $33.1M for PSUs considered probable of vesting.

Common shares outstanding rose from 607.630M at December 31, 2025 to 622.059M at September 30, 2026. Weighted-average shares were 620.557M in Q3 2026 versus 588.728M, and 616.251M for nine-month 2026 versus 566.293M.

Net property and equipment declined to $218.977M from $251.449M. Nine-month depreciation and amortization was $40.1M, down from $51.3M; property-and-equipment write-offs were $4.607M versus $24.410M. Lease liabilities were $35.832M operating and $29.216M finance; lease terms extend through 2032.

Collaboration, legal matters and other commitments

Volkswagen held approximately 27.3% of voting interests at September 30, 2026, up from 26.2% at year-end. A July 2026 amendment to the PowerCo collaboration replaced cost reimbursement with transition and milestone payments, including cell delivery and validation. Maximum aggregate payments were $75.4M, inclusive of prior payments; QuantumScape received $18.5M in Q3 and $28.9M for nine-month 2026, recorded as additional paid-in capital, with no repayment obligation or shares issued. In October, the parties removed $7.0M of transition payments and began negotiating revised scope and payments. PowerCo will make no milestone payments during negotiations, creating uncertainty around collaboration timing and funding.

Legal accruals were approximately $5.7M, up from $4.0M at year-end. Shareholder derivative actions include allegations concerning prior company disclosures; a settlement in principle reached in February 2026 has no determined amount and remains subject to negotiation and court approval. The company cannot estimate potential losses for many matters. Minimum purchase commitments totaled $6.134M, including $2.475M for the remainder of fiscal 2026.

Business and commercialization

QuantumScape is a pre-revenue, development-stage company developing solid-state lithium-metal batteries. It has generated no revenue from operations to date and expects significant expenses and losses to continue as it develops products, processes and manufacturing capabilities.

Its first targeted commercial product, QSE-5, is designed for approximately 5 Ah capacity, energy density above 800 Wh/L and 10%–80% fast charging in under 15 minutes. The company began producing low volumes of B-sample cells in 2024 for automotive customer testing. A 2025 Ducati V21L electric motorcycle demonstration with Volkswagen and PowerCo used B1 samples made with the company’s more efficient Cobra separator process. The highly automated San Jose pilot line, installed in 2025 and inaugurated in February 2026, began its initial capacity ramp-up. It is intended to support development, customer sampling, process and equipment development, initial QSE-5 production, and PowerCo collaboration and technology transfer.

The proprietary ceramic separator enables QuantumScape’s anode-free architecture, in which lithium metal forms on the anode during first charge. Eliminating anode materials and manufacturing steps, and potentially reducing formation and aging time and capital intensity, could provide cost advantages if the company achieves scale and process maturity. The Cobra process was integrated into baseline cell production in 2025, but further improvements and a successful pilot-line ramp-up are still needed. Throughput, quality, consistency, reliability and safety challenges could delay development or commercialization.

Automotive qualification typically proceeds through A, B and C samples, with customer-specific requirements and uncertain timelines; later designs may require changes in capacity, layer count, dimensions or packaging. Other potential markets include data centers, aerospace and defense, robotics, medical devices and consumer electronics, though automotive EVs remain the focus. The company has sampling, technology-evaluation and joint R&D agreements with multiple OEMs, but broader adoption and serial production depend on testing, validation, qualification and successful technology transfer. Potential business models include licensing, component sales, wholly owned manufacturing and joint ventures; licensing is positioned as a less capital-intensive route.

PowerCo relationship

The July 2024 collaboration agreement aims for PowerCo to industrialize QuantumScape technology based on QSE-5. Subject to milestones and a contemplated IP license, QuantumScape would grant PowerCo a non-exclusive, limited, royalty-bearing license primarily for automotive battery manufacturing and sales. PowerCo would prepay an initial $130 million royalty, creditable against future royalties; the amount is subject to a time-based diminishing clawback in certain early-termination circumstances.

After the reporting date, in October 2026, the parties amended the agreement to remove transition payments and begin negotiating revised scope and payments, including current- and next-generation roadmaps and applications beyond automotive, such as data centers and robotics. PowerCo will make no project milestone payments during negotiations. Thus, milestone performance, a license agreement and related royalty or project contributions are material to both commercialization and funding prospects.

Operating results

Revenue was zero, with no prior-period revenue reported. Q3 2026 operating expenses and operating loss were both $92.424 million, down from $114.993 million in Q3 2025. Q3 R&D expense was $73.881 million, versus $92.074 million; G&A was $18.543 million, versus $22.919 million.

For 9M 2026, operating expenses and operating loss were both $307.730 million, versus $362.154 million in 9M 2025. R&D was $240.984 million, versus $288.840 million; G&A was $66.746 million, versus $73.314 million. Lower R&D reflected reduced impairment losses ($6.8 million in Q3 and $19.8 million in 9M), stock compensation ($6.8 million and $12.1 million), and, for 9M, depreciation and amortization ($9.0 million), facility costs ($4.1 million) and personnel costs ($2.1 million). Lower G&A stock compensation ($6.1 million in Q3 and $9.9 million in 9M) was partly offset by higher professional-service and office-administration costs ($1.1 million and $2.3 million).

Q3 2026 net loss was $84.477 million, compared with $105.824 million; 9M net loss was $283.516 million, compared with $334.945 million. Interest income declined to $8.066 million from $9.997 million in Q3 and to $25.311 million from $28.706 million in 9M, mainly due to lower rates. Interest expense was $0.451 million versus $0.503 million in Q3 and $1.395 million versus $1.547 million in 9M. Income tax provisions were not material. The accumulated deficit was approximately $4.1 billion at September 30, 2026.

Stock-based compensation is a significant non-cash expense. Performance-based PSU expense can fluctuate with management’s probability assessments: Q3 reversals were $2.9 million in R&D and $5.2 million in G&A; 9M reversals were $3.6 million and $6.0 million, respectively. The company expects continued significant non-cash compensation, while G&A is expected to rise as commercialization approaches, including customer and sales support and advertising.

Liquidity, cash flows and commitments

Cash, cash equivalents and marketable securities totaled approximately $819.8 million at September 30, 2026, down from $970.8 million at December 31, 2025. Management believes available cash will cover working capital and capital expenditures for at least 12 months from the report date. Future needs depend on development and scale-up costs, customer milestones and potential receipt of PowerCo’s initial royalty. Delays, supply-chain issues, competition, inflation, tariffs or regulatory changes could increase funding needs; if financing is unavailable or unfavorable, QuantumScape may need to reduce development investment or scale back operations.

9M 2026 operating cash outflow was $171.319 million, compared with $186.323 million in 9M 2025. The 2026 outflow included $74.1 million of stock-based compensation and $40.8 million of depreciation and amortization, among other non-cash items. Capital expenditures for property and equipment were $19.0 million, versus $24.0 million, primarily supporting R&D; significant near-term pilot-line and product-roadmap investment is expected to continue. Investing cash outflow was $13.509 million versus $17.089 million, with marketable-security purchases and maturities largely offsetting. Financing cash inflow was $29.922 million, compared with $285.524 million.

9M 2026 financing included a $28.9 million PowerCo collaboration capital contribution, with no shares issued, and $3.7 million from stock-option exercises and the employee stock purchase plan. 9M 2025 financing was largely supported by $264.3 million of net ATM proceeds and $23.6 million from equity-plan activity. Prior ATM issuances included 24.9 million shares for approximately $128.5 million net proceeds in 2024 and 29.5 million shares for approximately $264.2 million net proceeds in 2025.

At September 30, 2026, operating lease commitments were approximately $7.3 million over the next 12 months and $36.2 million thereafter; non-cancellable service and purchase commitments were $2.9 million over the next 12 months and $3.2 million thereafter. The facility finance lease entails net cash payments of $5.5 million in the next 12 months and $29.5 million thereafter.

Market Risk

For the three months ended September 30, 2026, QuantumScape reported no material changes in its exposure to market risk. The company refers readers to Part II, Item 7A of its FY2025 Annual Report for details of those exposures. This section provides no market-risk metrics or specific changes.

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at the reasonable-assurance level as of September 30, 2026. During the quarter ended September 30, 2026, no change in internal control over financial reporting materially affected, or was reasonably likely to materially affect, the company’s internal control over financial reporting. The company cautions that its controls provide reasonable, not absolute, assurance. This section reported no financial metrics or business developments.

QuantumScape (QS) — Risk Factors

Commercialization and manufacturing remain unproven

QuantumScape remains pre-commercial: it has produced no cells at commercial capacity or volume and has generated no revenue from business operations. It has tested small single- and multilayer cells, shipped its first A0 prototype cells in 2022, QSE-5 B0 samples in 2024, and B1 prototypes in 2025. Its initial commercial product is targeted at approximately 5 Ah, but capacity, dimensions and layer count may vary. Some laboratory cells have passed automotive-level performance and safety tests, but testing has involved limited B-sample quantities, modified conditions and tests to failure; the designs are not yet validated against all automotive requirements.

The lithium-metal cell and ceramic separator have not been demonstrated at automotive-scale production. QS must still scale separator dimensions and output, improve thickness, defects and yield, increase cell size and layer count, and establish reliable throughput, cycle life, packaging, pressure management and safety. Pilot-line results may not transfer to commercial production on schedule or at acceptable cost. The San Jose pilot line supports development, customer samples and process work for PowerCo, but equipment integration and reliability, automation, supplier performance, permitting, utilities, construction and qualification remain risks. QS has experienced power outages, material shortages, port backups and contractor delays.

Expected cost advantages over conventional lithium-ion batteries depend on unproven improvements in throughput, yield, automation and materials costs, including savings from eliminating an anode host. Manufacturing equipment and processes are not qualified for large-scale QS production, and future lithium-ion cost reductions or competing technologies could erase the anticipated advantage. Changes in cell design or production processes could also make installed assets obsolete; QS wrote off approximately $26.6 million of property and equipment in FY2025.

Financial losses, funding and strategic dependence

QS reported Q3 2026 operating losses of $92.4 million and net losses of $84.5 million; for 9M 2026, operating losses were $307.7 million and net losses were $283.5 million. Its accumulated deficit was approximately $4.1 billion from inception through September 30, 2026. Losses are expected to continue, and may increase, as the company funds R&D, pilot-line scale-up, inventories, commercialization and corporate infrastructure. Additional capital will likely be needed, but financing may be unavailable or costly; equity issuance could dilute holders, and registered shares and awards may add selling pressure. QS’s Class A share price ranged from an intraday low of $3.40 to a high of $132.73 from November 27, 2020 through September 30, 2026, with daily changes exceeding 10% at times.

The PowerCo relationship offers a potential route to industrialization but also creates substantial concentration and execution risk. The collaboration and contemplated non-exclusive, royalty-bearing license are milestone-dependent; the license could initially cover up to 40 GWh annually, with another 40 GWh expandable and amendments adding up to 5 GWh, for potential capacity of up to 85 GWh per year. In October 2026, the parties amended the collaboration to remove transition payments and negotiate revised scope and payments for current and next-generation technology and applications beyond automotive. PowerCo will make no Project milestone payments during these negotiations, and certain milestones were not achieved within contemplated time frames. Failure to agree on terms or meet milestones could delay or end the license, reduce expected funding and royalties, or allow termination. QS would also depend on PowerCo to scale manufacturing, with less control over production. Volkswagen’s EV investment plans and market conditions may affect commercialization; Volkswagen is QS’s largest shareholder and can designate two directors.

More broadly, QS relies on a limited number of large OEMs and partners. Customer sampling and development agreements do not guarantee volume or license contracts: validation can be lengthy, customers have strong negotiating leverage, and customer-specific engineering may consume resources. Licensing or joint ventures can reduce capital requirements but mean less production control and potentially lower revenue; independent manufacturing would require substantial capital. Partner agreements may limit customer options, IP use, product choices and royalty opportunities.

Market, supply-chain and competitive risks

Commercial prospects depend on EV adoption, which could be weakened by affordability, charging infrastructure, safety and recycling concerns, economic uncertainty, high interest or energy costs, and OEM delays or cancellations. EV incentive reductions add risk: the Section 30D consumer credit ended September 30, 2025, and the Section 30C charging-infrastructure credit ended June 30, 2026. QS is also exploring consumer electronics, data centers, aerospace and defense, but these markets entail distinct qualification, regulatory and investment requirements.

Competition includes established lithium-ion producers and emerging solid-state, lithium-metal and silicon-anode technologies. Competitors may have greater resources, customer access and manufacturing experience. In 2025, average Chinese battery-pack prices were approximately 56% below Europe’s and 44% below the United States’, reflecting scale and government support. Price declines, overcapacity, subsidies or stronger competing technologies could constrain adoption, pricing and margins.

QS depends on third parties for critical materials and equipment, sometimes from only one or a few suppliers, and lacks production-quantity agreements for many materials. Lithium, nickel, cobalt and other inputs are exposed to price volatility, shortages and geopolitical disruption. China-linked materials and equipment create particular exposure to U.S.–China trade restrictions. Tariffs, export controls, sanctions and sourcing rules may raise costs or delay access; QS reported no material tariff impact to date, but described new 2026 U.S. tariffs and the risk of further measures and retaliation. QS has limited ability to pass higher costs to customers.

Other material risks

QS’s IP may be challenged, misused or difficult to enforce, especially where jointly developed IP can be exploited by partners. Patent disputes, infringement claims and litigation could require costly licenses, redesigns or cessation of activities. Product-liability exposure is heightened because the batteries have not been mass-produced or commercially tested, and insurance may not cover all losses. Hazardous materials and automated manufacturing also create safety, environmental and remediation risks.

Cybersecurity, privacy, AI, system failures and evolving regulation could cause operational interruptions, data or IP loss, litigation or reporting problems; incidents to date were not material. Sustainability commitments, anti-corruption and export compliance, talent retention, natural disasters and public-company costs create additional exposure. OBBBA had no material financial-statement impact to date, but tax-law changes and ownership-change rules could restrict use of tax attributes.

Management currently believes internal control over financial reporting is effective, following remediation of a prior material weakness. More complex transactions—including PowerCo accounting, stock compensation, leases and taxes—require significant judgment; errors could cause restatements or regulatory scrutiny. QS also notes dual-class voting: as of September 30, 2026, specified insiders and major holders owned approximately 14.4% of Class A and 100% of Class B, representing approximately 44.3% of total voting power. Governance provisions may limit stockholder influence or impede a takeover. QS does not expect to pay cash dividends in the foreseeable future.

On October 21, 2026, QuantumScape amended its collaboration agreement with PowerCo SE, a Volkswagen Group subsidiary and major QS investor. The amendment removes $7.0 million in transition payments previously due from PowerCo. While the parties negotiate revised work scope and payment terms for QS’s current- and next-generation technology roadmap—and consider applications beyond automotive, including data centers and robotics—PowerCo will make no milestone payments. The pause creates near-term uncertainty around collaboration-related cash inflows, while the potential expansion suggests the partnership could cover a broader range of applications.

During the last fiscal quarter, no directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement.