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Kevin Hettrich

Thank you, Siva. Capital expenditures in the first quarter of 2025 were $5.8 million. Q1 CapEx primarily supported facilities, and equipment purchases as we prepare for higher volume QSE-5B1 sample production using the cobra separator process. We expect CapEx spend to be well above Q125 levels through the remainder of 2025 as we order, install, and qualify higher throughput equipment to support our targeted launch program and engage prospective customers. We reiterate our full year guidance for CapEx to be between $45 million and $75 million.
GAAP operating expenses and GAAP net loss in Q1 were $123.6 million and $114.4 million respectively. We forecast EPS to remain roughly flat throughout the year as increased spending to support higher output levels and the impact of the current tariff policy, we expect to be broadly offset by improvements in operational efficiency such as the planned transition from our raptor to our cobra separator process and cost saving initiatives.
Adjusted EBITDA loss was $64.6 million in Q1, in line with expectations. A table reconciling GAAP net loss and adjusted EBITA is available in our shareholder letter. We reiterate our full year guidance for adjusted EBITA loss to be between $250 million and $280 million. We ended Q1 with $860.3 million in liquidity and maintain our guidance that our cash runway extends into the second half of 2028. Any additional funds from customer inflows or capital markets activity would further extend this cash runway.

Question and Answer Session

John Seger

Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors or that I believe investors would be interested in.
Siva, first question for you. Can you update our investors on our automotive customer engagements during the quarter and explain how that affects our existing customer?

Siva Sivaram

John, let me start with our existing customer. The product launch that we are planning is going very well. The teams are working hand in glove. And we are shipping the volumes that the customer needs for module and systems level testing.
That means our customers will be packing these cells into larger modules, connecting them electrically into the battery management system, the BMS, and calibrate that BMS according to a specific performance profile of our cells and the requirements of the application. Of course, to ship in these volumes, we have to pass the UN 38.3 safety tests. We have now passed these tests, which is another important milestone in our commercialization roadmap. This is a well-planned launch. And we'll have exciting details to share as we progress.
Now coming to our additional automotive volumes. The response from our customers to the licensing business model has been overwhelmingly positive. We continue to be in active discussions with our prospective customers. We've developed an engagement model with Powercore as the first customer that allows us to collaborate with our customers to design bespoke solutions that fit their road maps.
Each relationship is unique. And these are long-term engagements. And these customers are in our facilities working with us. In stark contrast to public sentiment, our conversations with our customers have a sense of urgency and enthusiasm. The world needs a better battery, and our customers see the step change improvement of our technology. We can offer a no compromise solution that beats internal combustion engines on pure driver experience.

John Seger

Thanks, Siva. Today, QS and Murata Manufacturing announced the framework agreement for ceramics production using our Cobra technology. Could you please elaborate on their role in a licensing model and how this fits into our overall strategic blueprint?

Siva Sivaram

Absolutely. Our engagement with partners like Murata is fully aligned with our strategy as a technology licensing company. The vision is to develop our proprietary solid state battery technology platform and then partner with world class manufacturers to bring it to scale efficiently. The first major step in that journey was our agreement with Powerco, which is targeting 40 to 80 gigawatt hours of production capacity.
To give you a sense of scale, even 40 gigawatt hour translates into hundreds of millions of square meters of separator components. Manufacturing at such high volume and with the necessary quality requires collaboration with highly capable partners. That's where Murata comes in. They are a global leader with decades of experience in high precision ceramics, and we are excited about the opportunity to leverage their expertise.
By combining our groundbreaking cobra separated production process, with Murata's proven capabilities and global manufacturing strength, we can accelerate the industrialization of our solid state battery technology while maintaining our strong focus on innovation and technological advancement. As we continue to grow, we expect to bring in additional partners across different parts of the supply chain.
Our approach is intentional and modular. We are nurturing a broader ecosystem of collaborators who can help us scale while protecting our IP. This model draws from my experience in semiconductors where desegregation of the supply chain enabled innovation. Instead of vertical integration, each player focuses on what they do best. Fabulous design companies innovate, foundries manufacture, and everybody wins by operating at scale.
This approach doesn't just support IP creation, it also strengthens IP protection by separating know-how across specialized partners with well aligned incentives. We are applying that same logic here.

John Seger

Thanks again, Siva. Kevin, turning to you now. You've reaffirmed our guidance in the shareholder letter today. I have two questions for you on that front. First, can you discuss the tariff implications on our financial outlook in the near term? And then, can you discuss how our supply chain exposure compares to that of conventional lithium ion.

Kevin Hettrich

On the topic of tariffs, I have 3 points to make. First, we forecast tariffs in their current form would only have a marginal impact on our cost of materials and equipment. We're actively working to mitigate this by evaluating lower tariff sources and through continuous efforts to reduce costs. We are not changing guidance and we reiterate our adjusted EBITDA laws and CapEx guidance for the year.
Second, China has restricted export of certain critical materials to the US. We have not been impacted by these restrictions. I would also highlight that our Amphenol design eliminates graphite from the cell, a material dominated by China from a supply chain point of view.
Our Amphenol design both removes the cost of the anode as manufactured along with the associated supply chain risk. Third, we are a global technology licensing company. Our success derives from innovation, ecosystem development, and enablement of our licensing partners. We remain focused on meeting the massive worldwide demand for significantly higher performing batteries.

John Seger

Okay, thanks so much. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions.

Operator

(Operator Instructions)
Jordan Levy, Truist Securities.

Jordan Levy

Afternoon all, I appreciate the commentary on the Murata deal here. Maybe just to dive a little bit more in on that, is the thought that they kind of step in after you've worked out some of the commercialization IP and pathway for separator production, or are they going to be kind of an integral part of that kind of trajectory?

Siva Sivaram

Jordan. Murata, as is a world leader in precision ceramic production. They already supply a lot into both the electric vehicle and consumer electronics markets. And they have a global presence in high volume ceramic manufacturing, so they are a well-planned partner for us to ramp high volume production.
The excitement that they showed when they came here to look at the Cobra technology was one of those things to behold. I mean, we were working together, and they see the possibilities of high volume thin ceramic production together. So we expect them to be a very integral part of our supply chain as we develop the ecosystem. The QS ecosystem as it grows up, with there, they get part of it.

Kevin Hettrich

The only other thing I could add is that in addition to the speed and the capital efficiency with which we partner with Murata, working with partners as part of the broader QS ecosystem adds value to our core technology platform as more global players invest resources and know-how into our ecosystem, the platform becomes more robust and ultimately more valuable.

Jordan Levy

Super helpful, I appreciate that. And then maybe just a quick follow on any incremental IP licensing deals. I recognize there's nothing to announce today. But just to kind of gauge, the conversations you're having, have you seen any, uptick in excitement on your potential customer base or anything with all the geopolitical environment and tariffs show?

Siva Sivaram

And Jordan, this is a fairly important issue that we are addressing. In general, ever since we announced that we are a technology licensing company and when we started talking to our customers, there is a real uptick in the urgency with which they want to proceed and the excitement at the technology.
Overall, there may be choppy waters in the industry, but our interactions are exactly to the contrary. We see them really want to partner with us and develop these long-term relationships where we can develop bespoke solutions for their roadmap needs, and that has, been very encouraging to follow.

Jordan Levy

Thanks so much.

Operator

Winnie Dong, Deutsche Bank.

Winnie Dong

Thanks for taking my question. First question is, I was wondering if you can provide an update on the work that you guys are doing with Powerco itself. And last time I believe you mentioned, there's some personnel devoted to the joint expert both on QS and and Powerco.
So I just wondering if you can provide an update on that. And then my second question is on the initial phase of the agreement with Murata. What is included in the first phase and then for future partnership purposes in subsequent phases, I'm just curious how that partnership will look like. Is it going to be more of a three-way relationship between Murata, you, and, future customers, or are they going to be essentially like a supplier to you guys?
Thank you.

Siva Sivaram

Winnie, on the first question, on the political partnership, if you come by our offices, you'll see a whole bunch of Germans walking around in the labs working closely with us. We are Increasing the automation and efficiency of the line and integrating cobra into it, and that integrated line with cobra is what is going to be used for B1 samples that we'll be shipping later. And they are working with us day in and day out in increasing the capability of this line.
And that collaboration is going very well. As you saw, we had some of the highest levels of people from Volkswagen and Powerco spend time with us. And they are continuing to express their strong support in the joint work that's going on between the two companies.
Coming to your question on how partnerships such as Murata are going to evolve over time, each of this is going to be unique.
There's not going to be a one size fits all relationship as we look at ceramic manufacturers, equipment manufacturers, materials manufacturers, and cell manufacturers with our OEM partners. Each of them is going to have a relatively specific, agreement that we'll be developing to strengthen the entire supply chain so that you can take this truly differentiated battery platform and deliver it to the end customers. And we want to get there as fast as possible in the most efficient way possible. That's why we are developing this QS ecosystem, in a broad-based fashion and looking at partners wherever they are, to come and work with us.

Operator

Mark Delaney, Goldman Sachs.

Mark Delaney

Yes, good afternoon. Thanks for taking my questions. First one's on the competitive landscape and hoping to get your latest thoughts on where that stands. And given some of the technology progress announced in recent months from some of the LFP companies like BID and CATL around progress they're making with very fast charging capabilities, so-called 5 minute batteries, has that affected your views of the competitive landscape and what you're seeing from, additional perspective automotive customers?

Siva Sivaram

Hey Mark, yes, we've been very closely following along with this series of announcements from BYD and cattle on these LFP batteries from China. Now first and foremost, these are giants of companies that have really worked hard to push the envelope on lithium-ion, conventional lithium ion batteries capabilities. They have pushed it farther and farther. However, on these specific announcements, there's a lot of data that is still lacking, so we don't get full information on it.
What we do see, however, is we have a no compromise solution in the QS platform. The QSC-5 with respect to safety, cycle life, energy density, power, cost, fast charge, range, put them all together. This is the only no compromise solution out there. And you can see that by the excitement from the large OEM customers who are coming into our shop and working with us. So we are following these developments from China carefully.
We are taking them very seriously, but we are still very confident on our lithium metal anode free. As you can see, there, there's no anode. We don't have to think about having to find graphite or or anything else to put on that side. The best is to not to have an anode and we have that as a solution. So we feel confident even in light of all these competitive announcements on the strength of our offering.

Mark Delaney

I appreciate all the thoughts on that. My other question was on the potential collaboration with Murata. And do you think customers that are licensing your technology can cost effectively scale the higher volume production of the separator for series production vehicles if you don't come to an agreement with Murata, or is this just about making it faster and more efficient than you'd previously been planning? Thanks.

Siva Sivaram

Precisely the latter. So you can see that we are a technology company first and foremost, we produce a lot of intellectual property. So our first job is to make sure that intellectual property is well protected and we're able to scale that into a product very quickly. We continue to develop the core technology. We developed the cobra process. We developed this highly scalable process.
That makes us even more incentive to go find partners who are very good high-volume manufacturers in that specific area that allows us both to combine our skills and get it to market fast. This is the, as you would see that the network effect of us having multiple similarly minded, similarly motivated, well aligned partners trying to take this core intellectual property and get into high volume. That is the.

Mark Delaney

Understood. And I guess just one last one, before I turn it over, as you're exploring this potential collaboration with Murata. Is that something you expect Power Code to be involved with as well, or is this just between you and Murata and, anything with Power Code would be separate from that. Thanks.

Siva Sivaram

So -- this contract, this doesn't mean development arrangement is between Quantumscape and Vrata manufacturing. That does not mean we don't keep our OEM partners fully informed of what we are doing, and is fully supportive of what we are trying to achieve over here.
And As you probably have seen in our strategic blueprint. In our global ambition, it is important that we do have these kinds of partners around the world who are working closely with us. And our OEM partners actually are very encouraged that we are putting this global QS ecosystem together.

Operator

Jed Dorsheimer, William Blair.

Mark Shooter

Hi, you have Mark Shooter on Dorsheimer. Congrats on the progress and collaboration with Murata. As you think through other collaborations, especially for some manufacturing, would Powerco be open to manufacturing for non-VW customers? Assuming no, how are you thinking through finding other cell manufacturing supply and our customer is China sensitive?

Siva Sivaram

Mark, we look at this, in a fairly systematic fashion. We look at all opportunities and by the way, I will not speak for for what they would or they would not do. We do look at other large OEMs, auto OEMs who do want to make cells. And we are not ruling out discussions with other cell manufacturers, equipment manufacturers, materials manufacturers, and ceramic manufacturers all across the spectrum. So this is part of what we'll be looking at for various specific applications.

Mark Shooter

That's very helpful, thank you. Cut to last night and Elon Musk, he mentioned that the best anode is no anode at all, to me that sounds like he's referring to an anode designed just like Quantum Scape but it was in reference to, supply chain stress and how China dominates the graphite market. How has customer conversations developed around that and and the supply chain and tariffs since April second?

Siva Sivaram

Our architecture has been anode free from the time we have disclosed it outside. Anode free architecture, we have always felt is the right way to build a high performing battery. We have been very careful in making sure that the intellectual property around it is well protected in the way we build it. Not having graphite has always been a strength of ours and and the best way to have a part is not to have that at all, not to have the anode at all.
Having said that, overall, you saw Kevin's answer earlier with respect to tariffs. We have marginal impact from tariffs in our current annual operating plan. And our method of developing a platform and working globally where we are not the ones moving material around is the right way for us to develop create shareholder value.
We are very careful in making sure that our partners, our manufacturing and OEM partners know that the technology we are developing is not dependent on any one particular how to obtain material. For example, the separator is made of earth abundant materials. So in general we are watching the various policy changes carefully. But I think our age will continue to be in us developing new innovation and moving the frontier forward and making sure our partners are coming along with us.
Kevin, you want to add anything to that?

Kevin Hettrich

No, just it is a view we resoundingly agree with. The addition of the anode in a conventional cell, it adds weight and volume. It limits the power performance, specifically the ability to charge. It has expensive materials to buy. You have to transform it. And in today's Environment adds risk to the supply chain, it's one of the major sources of life loss. And it's chock full of flammable materials, eliminating it is what leads to the no compromise solution that that we're offering that is superior on all of these dimensions at the same time. So we very much agree with, the viewpoint, and that's core to our technology platform and it's a platform we are the clear world leaders in.

Mark Shooter

Thank you guys, if I can sneak one more in here. See, I noticed that the language is a bit broader in your strategic blueprints about applications outside of the EVs. Are you guys opening up to potential other high value applications or outside of the EVs and is anything on the horizon?

Siva Sivaram

As you know, our first focus is on the automotive sector. That is the highest volume sector out there. But we are producing a very high performance battery that is a no-compromise battery that is useful across all fronts. So applications such as the rapid growth in data centers, evolving aviation applications, these are all -- and consumer electronics, these are all very important. But as a company, we are focused today on automotive but keeping our eyes open on these new applications.

Mark Shooter

Thank you.

Operator

Joe Spak, UBS.

Joe Spak

Thanks. Good afternoon. I wanted to circle back to Mark's question a little bit on the sort of competitive environment and really sort of better understand what's going on in your, sea level sort of discussions. Because to his point and as you sort of alluded to, there's a lot of fast moving progression going on with those two players in terms of density, fast charging, sodium ion, you name it, a lot of which have the same or similar benefits to what you can offer.
So I guess what I'm trying to understand is this giving them any more pause in terms of sort of trying to sign up for a certain technology until they see how some of these other developments play out or they -- has there been any change in the tone of those conversations?

Siva Sivaram

Yeah, so, number one, the fact that the two Chinese players are intensely competitive with each other is a good thing for the industry, and that's always good. However, if you listen to the whole thing carefully, no one is promising any new fundamental technology, nor is there a mention of a true solid state battery.
Both of them have explicitly stated for the long term that solid state batteries are the future. In this current case, they are taking LFP batteries and working everything around it, so that they can enhance the life, enhance the performance of an existing generation of technology, which is a very good thing to do.
However, 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.

Joe Spak

But maybe you could help me understand then why I guess the like the ends justify the means, like if you get the performance you need or want out of their evolving 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 similar?

Siva Sivaram

Yeah, if you notice when these data are announced, they don't give you all of the information about those solutions. They don't talk about the safety. They don't talk about the safety of putting a megawatt of power into a cell at any given time which contains a combustible medium. They do not talk to you when they do cycle high -- fast charging what the cycle life is. They don't tell you how large those packs have to be to get that kind of range. This is the trouble with making conclusions out of incomplete datasets.
We can always make one of something that looks very good. What we are promising you and what we are building our company on is what I keep going back to, and no compromise on all of those and first and foremost on safety.
We need to be able to make sure we give you a battery that is very safe and performs at the end of its life and cycle life as well as it did on the first cycle, even while I'm charging it very fast, even while I give you the range, and even while I'm giving you cost at scale. And I think the reason all of our customers keep coming back to us is because none of these answers that they hear is satisfactory to them.

Joe Spak

Fair enough. I guess another one just going back to the [eno] comment from the other night. I think the first time you sort of mentioned (inaudible) or Tesla has sort of mentioned maybe since, I think they filed a patent back in maybe 2020 or something like, do you have any understanding of what it is they are trying to accomplish, how similar or different it might be from your solution?

Siva Sivaram

Look, we don't talk about our potential customers or existing customers. It is for them to talk. We have been talking about ourselves and what an anode-free architecture is going to be for a long time. We have not been shy about talking about it in public. So it is good to see more people coming around to our way of thinking, and I want to leave it at that.

Joe Spak

Okay. Last one, do you have any updated thoughts on the timing for when you might be able to provide the street with a little bit more context on some of the financial implications from the licensing model?

Siva Sivaram

Kevin, you want to take that and the --

Kevin Hettrich

We've given the general framework that's long term under the licensing model. You have royalty from the from the sale of product that involves our technology, and then in advance, the other part of the model would be cash flows before that would take one of the following forms or multiple of the following forms, things like pre-pays, things like reimbursement for development tailored to that product or NRE type revenue, but we haven't gone into specifics beyond that framework.

Siva Sivaram

So to round that off, so we do expect that a licensing business model to have multiple different streams of revenue. And the ecosystem is an important part of making sure these revenue streams are well rounded. And at the appropriate time, we'll come and give you a full financial picture on this.

Joe Spak

Thank you very much.

Operator

(Operator Instructions)
There are no further questions at this time, I'll turn the call to QuantumScape management for closing remarks.

Siva Sivaram

Thank you, operator. With that, I would like to thank our employees for their dedication, our partners for their trust, and our shareholders for their continued support. We look forward to updating you on further progress in the months to come. Thank you.

Operator

This concludes today's conference call. Thank you for joining. You may now disconnect.