QuantumScape targets its equipment cost under $100M for an unfunded 2028 line

QuantumScape designs battery cells with no anode material: lithium metal forms inside the cell as it charges, instead of sitting in graphite or silicon.¹ It calls itself a leader in solid-state lithium-metal batteries, but as of June 30, 2026 it had not earned revenue from its main business. It lost $435.1M in 2025.²

Its plan has been to license the design to partners rather than build big plants itself. When it opened its Eagle Line pilot line in San Jose in February 2026, it said the line would show licensing partners how to make cells at gigawatt-hour scale in their own plants.¹ The main partner is PowerCo, a battery company wholly owned by Volkswagen, which itself holds about 27.3% of QuantumScape's vote. Under a planned license, PowerCo could make up to 85 gigawatt-hours a year and would prepay a $130M royalty, but it has no duty to sign if milestones are missed.² In July 2026 the two sides cut the most PowerCo will pay for the joint program to $75.4M, including money already paid, from up to $130.7M, and tied future payments to milestones.³

Other companies working on such batteries include Solid Power and SES AI.¹ QuantumScape's own filings flag silicon-anode batteries as serious competition, and say several automakers have delayed, scaled back or dropped electric-vehicle programs. Volkswagen has cut its planned spending on electrification, and Chinese battery packs cost about 56% less than European ones in 2025.²

To widen its market, it recorded first billings in the third quarter from an agreement with Honda announced in June, and on October 8 it launched the QS PowerBlock, a battery design for artificial-intelligence data centers.¹ The PowerBlock's claimed 4x power density against an industry reference comes from prototype tests and modeled setups, not live use.²

The stock was sliding before this news. It closed at $5.05 on September 15 and $3.98 on October 20, down 21%, while Solid Power fell 17% from $2.43 to $2.025.¹ The 10-Q gives the stock's intraday range since it began trading as $3.40 to $132.73. Our price file starts in mid-September, so we cannot confirm the stock's range over the past year.² Chief technology officer Timothy Holme adopted a plan on June 10 to sell up to 3,381,234 shares. In early October he converted Class B shares to Class A and sold 75,000 shares plus two 22,500-share blocks at $4.5401. He is also on a modified work arrangement from August 2026 through May 2027, with his base salary paused.³

QuantumScape reported third-quarter results on October 21 in a shareholder letter furnished with an 8-K. Its main news was Muehlbauer, which will provide cell assembly equipment for the planned 100-megawatt-hour line, with production targeted for 2028.¹ The company says that with Murata, Corning and Muehlbauer it now has partners along its whole production flow. It also says the Eagle Line is fully running and making more QSE-5 cells for customers.² The letter gives no price, site or owner for the new line and no terms for Muehlbauer. On the call, management said the line will serve high-value markets such as aerospace, defense and data centers directly while automotive stays on the capital-light licensing model, and that it wants several customers signed up before the 2028 start; none is named yet.³ On the results call, management said site selection is underway and a capital plan will come with the 2027 guidance on the fourth-quarter call. Management said the company is targeting equipment cost to it of less than $100M and is seeking funding from customers, government and partners that would not dilute holders.⁴

The quarter's numbers were steady. Operating expenses under standard accounting rules were $92.4M and the net loss was $84.5M, down from $115.0M and $105.8M a year earlier.¹ The company's preferred measure is adjusted EBITDA, short for earnings before interest, taxes, depreciation and amortization. It showed a $60.7M loss, which the company called in line with expectations, and it adds back items such as write-downs and stock-based pay.² The $23.8M gap to the net loss is mostly $16.3M of stock pay and $15.4M of depreciation, partly offset by $8.1M of interest income that lowers the net loss but not the adjusted one.³ Customer billings were $9.8M, a figure the company says is not a substitute for revenue. They included first billings from Honda and from a newer business it calls QSAS, for which management sees a market of up to $75B by 2030.⁴

Liquidity of $819.8M was $75.6M of cash and $744.2M of marketable securities. That is $39.2M less than the $859.0M held on June 30.¹ The quarter used $55.1M in operations and $4.4M on equipment, while PowerCo paid in $18.5M under the collaboration. Over nine months, operations and equipment used $190.4M, or about $63.5M a quarter.² At that pace the cash covers about 13 quarters, before any spending on the new line, though the July 10-Q says the company expects the rate at which it incurs losses to be significantly higher in future periods. In its June 10-Q, management said its cash would last at least twelve months from that report.³ Little comes due soon: as of June 30, operating leases needed about $7.2M and finance leases $5.5M over the next twelve months.⁴

The company kept its 2026 guidance of a $250M to $275M adjusted EBITDA loss and $27M to $37M of equipment spending. After $188.2M of adjusted loss and $19.0M of equipment spending in nine months, that implies a fourth-quarter adjusted loss of $61.8M to $86.8M and $8.0M to $18.0M of equipment spending.¹ Debt ratios do not really apply. Total liabilities were $123.7M at September 30, and with adjusted EBITDA negative there is no earnings figure to measure debt or interest cover against.²

There were about 619.1 million shares as of July 17: 587,219,164 Class A and 31,894,343 Class B, with each Class B share carrying ten votes. Insiders and large holders own about 14.4% of Class A but 44.6% of the vote.¹ The average share count in the quarter was 620.6 million, up 5.4% from a year earlier, after the company sold 29.5 million shares for about $264.2M in 2025. The cash-flow statement shows $267.6M of share-sale money in the third quarter of 2025 and none so far in 2026.² At June 30, another 47.7 million potential shares, about 7.7% more, were left out of the loss-per-share count. They are mostly 31.6 million restricted stock units, 10.5 million performance units and 3.2 million options.³ The 10-K said there were no plans to issue preferred stock, so in a wind-down common holders would stand behind the $123.7M of liabilities. The 10-Q says the company may run another at-the-market offering, which sells new shares gradually into the market, or other raises that could dilute holders.⁴

At $4.22, the 619.1 million shares were worth about $2.61 billion. Liquidity covers about 31% of that, so the market values the technology and partnerships at about $1.79 billion beyond the cash.¹ The stock rose 6.0% from its October 20 close of $3.98 to $4.22 after hours on October 21, against 0.5% for the S&P 500 fund.² It traded at $4 a minute before the close, so most of the gain came after the bell, when the third-quarter results and the line announcement went out together, so the move cannot be pinned on the line alone.³

The bull case is that QuantumScape is moving from lab to factory with little cash strain. The pilot line is running, partners now cover the whole production flow, and a new customer, described as a leading global player in mobility manufacturing, has signed.¹ Cash spending is falling: operations used $55.1M in the quarter against $63.7M a year earlier, though most of the 20% drop in operating expenses was lower stock pay and depreciation and the adjusted EBITDA loss was nearly flat at $60.7M against $61.4M.² If PowerCo signs its license, it would prepay a $130M royalty.³

The bear case starts with PowerCo, which the July 10-Q called the only agreement the company had aimed at commercializing its technology; the letter now adds an unnamed customer agreement with no disclosed terms.¹ Its maximum program payments were cut in July to $75.4M, including the $19.5M paid in 2025 and $28.9M in the first nine months of 2026, which would leave at most about $27.0M; on the call management said it has amended the agreement to eliminate transition payments and is working to add milestones tied to technology advances, without saying whether that is the July change or a later one, and the letter flags that the two sides may not agree on updated milestones, so even that $27.0M is not assured.² Second is money: the line's cost is still only a target of under $100M of equipment to QuantumScape, the company is still looking for funding, and it warns it may need public-market raises that dilute holders.³ Third is execution. The 10-Q says the company has not validated a high-volume separator process and its equipment is not yet qualified for large-scale manufacturing, and the letter says the new partnerships may not get past early phases. Last, the chief technology officer has kept selling, though his September notice says the sales run under a Rule 10b5-1 plan set on June 10 while his salary is paused, and the stock sits not far above the $3.40 low in its 10-Q.⁴

The company's own goals, which are targets and not promises, are to start the new line in 2028, hold the 2026 adjusted loss to $250M to $275M, and bring PowerCo onto its longer-term technology platform. It lists missing the line's timeline as a risk.

November 11 is the next date: the technology update at the Solid-State Battery Symposium in Kyoto. The next quarterly letter will then test whether the fourth-quarter adjusted loss lands in the implied $61.8M to $86.8M range.¹ The bull view would be wrong if the company starts a new share sale before it gives its capital plan, if PowerCo talks fail, or if the 2028 date slips. The bear view would be wrong if the line is paid for by customers, government or partners rather than new stock.²

Our call is that QS will not close above $5 on the first trading day after the Kyoto update. That needs about an 18% gain from $4.22, and the stock has not closed at $5 or more since September 22.¹ A technology update adds detail but no cash, and the filing's own open risks, a reset with PowerCo and possible dilution, will still be there.²

The company has not named the line's site or owner, said who will pay for it, or signed customers for it; management said it wants several customers signed before the 2028 start. On the call management gave a target of under $100M of equipment cost to QuantumScape and said a capital plan comes with the 2027 guidance; no price or terms for Muehlbauer's equipment are public.

The letter says the company signed with a leading global player in mobility manufacturing, and neither the letter nor the call names that customer or gives terms.

The July 2026 amendment ties PowerCo's payments to milestones, and the letter says the two sides may not agree on an updated set.¹ The July cap includes amounts paid to date, so at most about $27.0M of the $75.4M would remain after $19.5M received in 2025 and $28.9M in the first nine months of 2026; management said on the call it has amended the agreement to eliminate transition payments but did not say whether that is the July amendment or a newer one, and which milestones unlock any remaining money is not public.²

Holme's insider filing codes his early-October sales at $4.5401 as open-market or private sales and does not say whether they ran under the trading plan he adopted on June 10.