QuantumScape CEO on outlook, ramping up EV battery development

QuantumScape Co-founder and CEO Jagdeep Singh joins Yahoo Finance Live to break down the future of EV battery production and what’s next for the battery manufacturer.

Video transcript

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- QuantumScape says it's making progress with getting its battery technology to market in a bid to supply the surging electric vehicle space. The company continues to target commercial production sometime in 2024. Joining us now for an exclusive interview is QuantumScape founder and CEO Jagdeep Singh.

Jagdeep, always good to speak with you here. So we've been following you from the very beginning. Where are you in terms of a timeline in getting your technology to market?

JAGDEEP SINGH: Yeah. Morning, [INAUDIBLE] So the timeline hasn't changed. You know, we've said, as you pointed out, we want to commercialize in the '24-'25 time frame, and that's still the time frame that we're targeting. What's-- I think what's encouraging is the results we announced last week is that we seem to be tracking well to that timeline. So if you recall in December, we showed what we called single-layer cells.

Those are the first demonstrations of solid-state batteries with one cathode, one anode, one solid-state separator. And then in February, on the earnings call, we reported four-layer cells, which is kind of stacking these up into bigger cells. And then, of course, last week we announced that we now have 10-layer cells.

And of course, that's a big deal because, you know, while the single-layer cells demonstrate that the chemistry works and we can make these solid-state cells and the performance is, you know, better than has ever been reported before, and starts to close the gap with combustion engines, we needed to stack those single layers up into multiple layers to make bigger cells. And that's the results that make us feel like we're-- you know, we're going to be able to hit our targets in the '24-'25 time frame to commercialize.

- Jagdeep, what you and your team do? Now 400 employees, it's not as simple as making a sandwich and putting it on the grill here. What challenges are you up against in the near term here to reach your commercialization goal?

JAGDEEP SINGH: Yeah, so, you know, as we stack more of these layers up together, one of the key things you need is just you need to have more material, more separators to work with. So we need to increase our capacity. That's a big part of what we're doing this year, is we're ordering bigger versions of the tools that we work with so we can get more capacity. Obviously, we need to engineer the stacking itself. And it's not quite as simple as a sandwich, but it's not quite as hard as fundamental new chemistry, which we already addressed in the December results that we showed.

So really, I would say the biggest task going forward is around scale-up. And scale-up is-- there's two ways to scale it up. There's scaling up the number of layers in a cell. That we've shown very encouraging progress on. And there's also a scaling up in terms of the capacity and throughput of the manufacturing facilities. And there, you might recall we announced that we're doing this pre-pilot line facility that should be able to produce hundreds of thousands of cells in the 2023 frame, which gives us enough cells to put into real test cars. And that's when I think you'll see actual cars with these batteries in them.

- Now, Jagdeep, your timeline here gives you guys a little bit more leeway to work through some of the supply issues that, of course, we've all heard about across the economy, but I'm curious if you have had any challenges getting materials you need, whether it is on the raw material side, whether it's on some of the more technical input side, and if that has at all hampered your development or if you're wary of, you know, you look out 12 to 18 months, wary that you could run into some of those bottlenecks.

JAGDEEP SINGH: Yeah, I mean, some of the tools suppliers that we use-- these are large industrial tools used in many different industries, from ceramics to the battery industry-- they have experienced some-- you know, some delays based on their own supply chain. So obviously, things like the worldwide semiconductor shortage is hitting some of these players. Luckily, the overall impact has not been too dramatic for us. We've been placing our orders 9, 12 months in advance of when the tools are scheduled to come in, so there's enough working margin there. But it's something that we obviously track very closely. We have a great team of people that works with those suppliers.

Recall that Volkswagen is our biggest partner, and they obviously have a lot of buying power. And so they've been actually very helpful in helping us work with some of these suppliers. So overall, there has been, you know, small impacts on various tools, but in the larger picture, we feel like we're going to be able to get to the targets that we're shooting for.

- Jagdeep, I believe you're poised to deliver prototype samples to auto OEMs in 2022. Who will be getting those samples, and what exactly are they getting? So you deliver a battery to some of these OEMs, they test it out. What's the range on those batteries?

JAGDEEP SINGH: Yeah, so by product samples, what we mean is samples that are in the commercial form factor of. So we already are making cells that are in the commercial area, so commercially relevant area, I should say. So it's close to what we think we'll actually be shipping to customers. But what we need to do is have the number of layers also be consistent with what we will ship commercially.

So we've said that customers are going to be getting on the order of a few dozen layers of these single-layer cells stacked up sometime next year. That's our target. The first customer to get these cells, of course, will be Volkswagen. We've made clear that they're our biggest partner, and they will-- they'll be the first cars on the road with these cells. And then in 2023, that's when you will see these cells going to actual test cars on test tracks. So that's kind of the rough time frame.

So these prototype samples with multiple dozens of layers are targeted for next year. In '23, we see actual cars with this technology. And then '24-'25 time frame, if all goes well, we hope to be in mass production, also with Volkswagen. As you might recall, we're doing a joint venture with them to manufacture these cells in volume. So when that happens, that's when the full vision of what we're talking about gets realized, which is, of course, you know, cars or batteries that have longer range, faster charge times, safer operations. You know, all those things come together with solid-state batteries, and that's really what we're shooting for.

- Is your guidance still to hit 6.4 billion in sales by 2028? And if so, what is in that assumption? Is that just business related to Volkswagen?

JAGDEEP SINGH: Yeah, so our numbers haven't changed at all. Those are the numbers we shared when we did our offering last year, and we really haven't updated or changed those numbers at all. Basically, the first volume customer is going to be Volkswagen. Volkswagen has a lot of different brands, as you know, from Porsche to Audi to the VW brand itself. So a number of iconic brands.

Once they ship cars, we are free to ship with other players, as well. The numbers you referred to are a mix of both the VW facility, as well as additional factories that we turn up beyond that first factory. So the VW factory is what we expect will be in production in the '24-'25 time frame, but post that time frame-- you know, '26, '27 or later-- we expect to have additional factories that will serve additional customers, as well. And that's what creates the really big opportunity here.

- And lastly, do you need to raise capital to ultimately push to develop that manufacturing footprint?

JAGDEEP SINGH: Well, we've said that the cash we have in the bank, which is currently around $1.5 billion, is sufficient to get us into production. And in fact, it will also contribute some capital to our subsequent QS1 expansion plans. And you know, so we feel pretty good about our cash balance right now. It's really-- you know, we don't need additional capital to get to-- to get into production. And so we're focused really on execution, you know, getting these layers done, getting the factories built, and demonstrating this technology actually, you know, can be commercialized and make an impact on the EV market.

- All right, we'll leave it there. QuantumScape founder and CEO Jagdeep Singh, always good to see you. Stay safe. We'll talk to you soon.

JAGDEEP SINGH: Pleasure, [INAUDIBLE]. Thank you.