Q2FISCAL
2024
LETTER TO
SHAREHOLDERSJULY 24, 2024

1

Dear shareholders,
We are excited to provide an update on our activities since our last shareholder letter.

PowerCo Agreement
On July 11, we announced a landmark agreement with PowerCo, the battery company of theVolkswagen Group. This deal reflects the value created by consistent execution on our development
roadmap and customer validation of our technology. We forecast that this capital-light licensing
arrangement lengthens our cash runway into 2028, an extension of 18 months relative to ourprevious guidance.

PowerCo and Volkswagen Group leaders tour QuantumScape labs in San Jose, Calif.

The deal consists of two major elements. First, it creates a dedicated and co-located team of experts
from PowerCo and QuantumScape that will collaborate to industrialize our solid-state lithium-metal
battery technology. The second component is a non-exclusive technology licensing agreement.
Contingent upon satisfactory technical progress, QuantumScape will receive a $130 million
prepayment of royalties and grant PowerCo a non-exclusive license, covering an initial production
volume of 40 GWh per year with an option to expand to 80 GWh, enough for approximately one
million vehicles annually.1 The license covers the technology platform used in our upcoming QSE-5
product. Additional agreements with PowerCo or other customers may include subsequent technology
innovations, and could contribute to a further extension of our cash runway.
This agreement is a major step in our global scale-up strategy to bring our solid-state lithiummetal battery technology to market for electric vehicles. By joining forces, we can combine ourcutting-edge technology with PowerCo’s capabilities in industrialization and manufacturing. Under
this licensing model, we can leverage our partners’ investment of billions of dollars to industrialize
our technology while maintaining our focus on innovation and development. We believe that thiscapital-light model will enable us to reach gigawatt-hour scale faster than we would be able to do
under the prior joint venture structure and, when combined with prudent cash management, willallow us to extend the cash runway by 18 months.
We see this collaboration and its intellectual property framework as a potential template for future
deals with other customers, and we believe the experience we gain in executing this technology
transfer to PowerCo will be helpful for ensuring the success of such projects. Please refer to ourCurrent Report on Form 8-K for more details on the agreement.

1This figure assumes an average gross pack energy of 80 kWh per vehicle.

2

Customer Engagement
Our overall customer engagements remain robust – we have shipped Alpha-2 prototype cells tomultiple customers in the automotive and consumer electronics sectors, and we continue to work
closely with our prospective launch customer for the QSE-5 cell.

Production Update: Raptor and Cobra
The core innovation that will allow our solid-state lithium-metal battery technology to be
manufactured at gigawatt-hour scale is our fast separator production process, which we are rollingout in two stages, Raptor and Cobra. This year, Raptor will enable initial low-volume B-sample
production of our first commercial product, QSE-5. Cobra is the key to higher-volume QSE-5
B-sample production next year, as well as a core element of the technology platform planned forlicensing to PowerCo.
We are on track to complete the Raptor process ramp, one of our four key goals for the year. Raptor
continues to show encouraging benefits for separator quality and has demonstrated the capability
to produce the best-performing separators we have ever made. The Raptor process has been an
important testbed for key elements of Cobra, and our progress on Raptor has allowed us to begin
shifting increased resources toward Cobra development. We are starting to take delivery of Cobra
equipment, in line with our annual goal.
We are encouraged by the progress we have made preparing for B-sample production before the endof this year. Our ongoing work includes integrating cell components, developing scalable processes
and continuously improving reliability.

Product Development: Safety Testing
Our prototype ~5 amp-hour cells based on our Alpha-2 design have demonstrated a promising safety
profile, and we continue to believe our technology offers the potential for improved safety relative toconventional high-energy lithium-ion batteries. One noteworthy result from prototype cell testing
was demonstrating thermal stability up to 300 °C; for reference, we tested conventional high-energylithium-ion cells, which burst into flames between 174 °C and 185 °C.
We believe an improved safety profile presents a compelling value proposition across the full spectrum
of applications. A design that can offer higher energy than conventional energy cells while remaining
stable at extremely high temperatures would help enable automakers to make their battery packs
smaller, lighter and more cost-effective while maintaining a safety profile as good or better thancurrent designs. Moreover, in cases such as heavy trucking, the safety risks posed by conventional
batteries impose onerous engineering overhead and design requirements to achieve acceptablesystem-level safety performance. A cell that can offer a fundamentally safer chemistry not only adds
value to existing applications like automotive and consumer electronics, but also potentially opens up
new markets that current technology is unable to serve effectively.

3For more information on how to interpret our safety testing results, please read our blog on thesubject. Note that these early results are from prototype cells based on our Alpha-2 design, not final
QSE-5 cells, and a full suite of tests must be conducted on many such cells before conclusions can be
drawn about the safety performance of the finished product.

Financial Outlook
Capital expenditures in the second quarter were $18.9M. Q2 capex primarily supported equipment
purchases for low-volume QSE-5 prototype production, as well as the Cobra process and otherequipment as we prepare for higher-volume QSE-5 prototype production in 2025. GAAP operating
expenses and GAAP net loss were $134.5M and $123.0M respectively; Adjusted EBITDA loss was$72.5M in Q2. A table reconciling GAAP net loss and Adjusted EBITDA loss can be found in the financial
statements at the end of this shareholder letter. We ended Q2 with $938M in liquidity. We maintain our
full-year 2024 guidance for Adjusted EBITDA loss to be between $250M and $300M and expect to beon the lower end of our capital expenditure guidance range of $70M to $120M.
As mentioned in previous shareholder letters, our long-term capital requirements are a function of
our commercialization pathway. We believe the licensing deal with PowerCo offers a capital-efficient
path to market, and we now project our cash runway to extend into 2028. Additionally, we expect thedeal to minimize the time to gigawatt-hour scale production of batteries based on our technology
platform and potentially quadruple capacity relative to the previous joint venture arrangement.

The extension of our cash runway forecast is mainly attributable to:• avoidance of planned spend on our joint venture, freeing up $134M previously earmarked
for our investment into the JV• prepayment of royalties contingent on satisfactory technical progress• inflows of development resources from our collaboration partner• improvements to capital and operational efficiency with respect to our existing operations
Any additional funds raised, including under our ATM prospectus supplement, would further
extend this cash runway.

As always, we encourage investors to read more on our financial information, business outlook and risk
factors in our quarterly and annual SEC filings on our investor relations website.

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Strategic Outlook
The secular trend toward EV adoption continues, but despite decades of development, existing
conventional battery technologies still cannot address the requirements of large segments of theautomotive market. There is a clear need for a next-generation battery to drive broad adoption ofEVs, and this need represents an extraordinary market opportunity, potentially hundreds of billions ofdollars annually.
We believe that our solid-state lithium-metal platform is the clear leader in the next-generation
battery race, and to seize this massive market opportunity, a global manufacturing ecosystem must
be developed. This is where our collaboration with PowerCo fits in: they can bring their industrial
expertise and operational excellence to bear on the formidable practical challenges of producing ournext-generation battery platform at the gigawatt-hour scale. This non-exclusive deal also allows us
to pursue additional opportunities while maintaining our tenacious focus on innovation and return on
invested capital.
Above all, we see this collaboration with PowerCo as an opportunity to quickly and efficiently
get our battery technology into series-production electric vehicles. The inherent leverage of thisindustrialization model takes advantage of the investments being made by automotive OEMs such as
the Volkswagen Group, and our highly differentiated technology allows both partners to benefit fromthis collaboration. Moreover, under this model, our market share is not directly constrained by the sizeof our balance sheet or the bandwidth of our operations team.
Though significant work remains to achieve our ambitions, we are excited to begin our collaboration
with PowerCo. It’s the first step in the next phase of our journey to revolutionize energy storage andcreate exceptional value for shareholders. We look forward to reporting on our progress in the months
to come.

Dr. Siva Sivaram
President, CEO and Director

Kevin Hettrich
CFO

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QuantumScape Corporation
Condensed Consolidated Balance Sheets (Unaudited)(In Thousands, Except per Share Amounts)

AssetsCurrent assets
Cash and cash equivalents ($3,609 and $3,522 as of June 30, 2024 andDecember 31, 2023, respectively, for joint venture)
Marketable securities
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Right-of-use assets - finance lease
Right-of-use assets - operating lease
Other assets
Total assets
Liabilities, redeemable non-controlling interest and stockholders’ equity
Current liabilities
Accounts payable
Accrued liabilities
Accrued compensation and benefits
Operating lease liability, short-term
Finance lease liability, short-term
Total current liabilities
Operating lease liability, long-term
Finance lease liability, long-term
Other liabilities
Total liabilities
Redeemable non-controlling interest
Stockholders’ equity
Preferred stock
Common stock
Additional paid-in-capital
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities, redeemable non-controlling interest and stockholders ’ equity

$

$

$

$

June 30,

December 31,

2024

2023

196,388741,467
35,614
973,469
321,534
23,70353,97924,0981,396,783$

15,22866,53022,3685,208
3,067
112,401
55,64633,51813,137214,702
1,812

$

—
50
4,305,018(519)(3,124,280)
1,180,269
1,396,783$$

142,524928,284
12,7091,083,517
313,164
25,14055,86324,294
1,501,97812,95910,18026,043
5,006
2,907
57,09557,62235,098
11,986
161,801
1,770—
49
4,221,892(2,877)(2,880,657)
1,338,407
1,501,9786

QuantumScape Corporation
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)(In Thousands, Except per Share Amounts)
Three Months Ended June 30,
2024
2023

Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income (loss):
Interest expense
Interest income
Other income (loss)
Total other income
Net loss
Less: Net income attributable to non-controlling interest, net of tax of $0
Net loss attributable to common stockholders
Net loss
Other comprehensive income (loss):
Unrealized gain on marketable securities
Total comprehensive loss
Less: Comprehensive income attributable to non-controlling interest
Comprehensive loss attributable to common stockholders
Basic and Diluted net loss per share
Basic and Diluted weighted-average common shares outstanding$

97,74636,711
134,457(134,457)

$
$

(562)
12,01650
11,504(122,953)
22(122,975)(122,953)$

868(122,085)
22(122,107)$(0.25)
501,232$

Six Months Ended June 30,
2024
2023

86,45337,089123,542(123,542)

$
$

(602)
7,319
318
7,035
(116,507)
14(116,521)(116,507)$

2,640(113,867)
14(113,881)$(0.26)
445,324$

181,593
84,765
266,358(266,358)$$(1,134)24,081(170)
22,777(243,581)
42(243,623)(243,581)$

2,358(241,223)
42(241,265)$(0.49)
498,688$

163,394
70,126
233,520(233,520)$$(1,202)
13,596(12)
12,382(221,138)30(221,168)(221,138)$

8,158(212,980)
30(213,010)$(0.50)
442,724

7

QuantumScape Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)(In Thousands)

Operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Amortization of right-of-use assets and non-cash lease expense
Amortization of premiums and accretion of discounts on marketable securities
Stock-based compensation expense
Other
Changes in operating assets and liabilities:
Prepaid expenses and other current assets and other assets
Accounts payable, accrued liabilities and accrued compensation and benefits
Operating lease liability
Other liabilities
Net cash used in operating activities
Investing activities
Purchases of property and equipment
Proceeds from maturities of marketable securities
Proceeds from sales of marketable securities
Purchases of marketable securities
Net cash provided by investing activities
Financing activities
Proceeds from exercise of stock options and employee stock purchase plan
Principal payment for finance lease
Net cash provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Purchases of property and equipment, not yet paid$

Three Months Ended June 30,

Six Months Ended June 30,

2024

2024

(122,953)

2023$(116,507)$(243,581)

2023$(221,138)

12,8691,982(7,520)47,825
1,245

10,028
1,942(3,336)49,992(98)

24,852
3,967(15,679)
67,112
1,352

19,533
3,875(5,512)
87,982
501

(31)
1,755
(1,272)
949(65,151)

995
91
(682)
(100)
(57,675)(22,710)63,319(2,533)805(123,096)

133(4,017)(1,251)(100)(119,994)(18,923)509,204—(424,970)
65,311(24,720)
261,440—(190,358)
46,362(33,043)
893,843
1,245(690,235)
171,810(52,732)
452,483
1,477(290,780)
110,448

$

4,622
(715)
3,907
4,067
210,369
214,436

$

3,583
(640)
2,943
(8,370)258,733
250,363$

6,570(1,420)5,150
53,864
160,572
214,436

$

7,633
(640)
6,993
(2,553)
252,916
250,363$$

562
11,624

$
$

602
9,416

$
$

1,134
11,624

$
$

602
9,416

8

Net Loss to Adjusted EBITDA
Adjusted EBITDA is a non-GAAP supplemental measure of operating performance that does
not represent and should not be considered an alternative to operating loss or cash flow fromoperations, as determined by GAAP. Adjusted EBITDA is defined as net income (loss) before
interest expense, non-controlling interest, revaluations, impairments, stock-based compensation,
depreciation and amortization expense, and other non-recurring charges. We use Adjusted EBITDA
to measure the operating performance of our business, excluding specifically identified items that
we do not believe directly reflect our core operations and may not be indicative of our recurring
operations. Adjusted EBITDA may not be comparable to similarly titled measures provided by othercompanies due to potential differences in methods of calculations. A reconciliation of Adjusted
EBITDA to net loss is as follows:($ in Thousands)
Three Months Ended
June 30,2024

GAAP net loss attributable to Common Stockholders
Interest expense (income), net
Other expense (income), net
Net gain (loss) attributable to non-controlling interests
Stock -based compensation
Litigation settlement accrual and legal fees, net (1)Non-GAAP operating loss
Depreciation and amortization expense (2)Adjusted EBITDA$$$(122,975)(11,454)(50)
2247,825—(86,632)
14,119(72,513)Six Months Ended
June 30,
2023

$

$
$

(116,521)(6,717)(318)
1449,992—(73,550)
10,028(63,522)

2024

$

$
$

(243,623)(22,947)170
42
67,112
24,455(174,791)
26,102(148,689)

2023

$

$
$

(221,168)(12,394)12
30
87,982—(145,538)
19,533(126,005)(1) This amount is with respect to the pending settlement of the securities class action litigation, which litigation was previously disclosed in our annual report
filed on February 27, 2024.
(2) Depreciation and amortization expense includes accelerated depreciation and write-off of property and equipment no longer in use.

Management’s Use of Non-GAAP Financial Measures
This letter includes certain non-GAAP financial measures as defined by SEC rules. These non-GAAP
financial measures are in addition to, and not a substitute for or superior to, measures of financial
performance prepared in accordance with U.S. GAAP. There are a number of limitations related tothe use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example,
other companies may calculate non-GAAP financial measures differently or may use other measures
to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial
measures as tools for comparison. We urge you to review the reconciliations of our non-GAAP financial
measures to the most directly comparable U.S. GAAP financial measures set forth in this letter, and not
to rely on any single financial measure to evaluate our business.

9Forward-Looking Statements
This letter contains forward-looking statements within the meaning of the federal securities laws andinformation based on management’s current expectations as of the date of this letter. All statements other thanstatements of historical fact contained in this letter, including statements regarding the future developmentof the Company’s battery technology, the anticipated benefits of the Company’s technologies and theperformance of its batteries, plans and objectives for future operations, forecasted cash usage, including
spending and investment, are forward-looking statements. When used in this letter, the words “may,” “will,””can,” “estimate,” “aim,” “pro forma,” “expect,” “plan,” “believe,” “focus,” “potential,” “predict,” “target,” “forecast,”“should,” “would,” “could,” “continue,” “ongoing,” “project,” “intend,” “anticipate,” “seek,” “enable,” “promising,”“working toward,” “progress toward,” “prospective” the negative of such terms and other similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements containsuch identifying words. These forward-looking statements are based on management’s current expectations,assumptions, hopes, beliefs, intentions, and strategies regarding future events and are based on currently
available information as to the outcome and timing of future events.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results
to differ materially from the expected results. Many of these factors are outside the Company’s control andare difficult to predict. Factors that may cause such differences include but are not limited to ones listed here.
The Company faces significant challenges in its attempts to develop a solid-state battery cell and produce it
at high volumes and may not be able to successfully develop its solid-state battery cell or build high volumesof multilayer cells for commercialization, including under its Collaboration Agreement. The Company could
encounter significant delays and/or technical challenges in replicating and scaling up the performance seen
in its single-layer and early multilayer cells, in achieving the high quality, consistency, reliability, safety, cost,
and throughput required for commercial production and sale, and in developing a cell architecture that meets
all the technical requirements. The Company has encountered and may encounter delays and other obstacles
in acquiring, installing and operating new manufacturing equipment for automated and/or continuous-flow
processes such as Raptor and Cobra, including vendor delays and other supply chain disruptions and challenges
in optimizing its complex manufacturing processes. The Company may encounter delays and cost overruns
in hiring and retaining the engineers it needs to expand its development and production efforts, including asa result of management changes or as part of the Collaboration Agreement, delays in building out or scaling
up QS-0, and delays in establishing supply relationships for necessary materials, components or equipment.
Delays in increasing production of engineering samples have slowed the Company’s development efforts in thepast. These or other sources of delay could impact our delivery of B-samples and delay or prevent successfulcommercialization of our products or the entry into the IP License Agreement. The Company may encounterdelays, difficulties and technical challenges in its collaboration with PowerCo to industrialize its solid-statelithium-metal battery technology. Delays or difficulties in meeting technical milestones, including under the
Collaboration Agreement required to trigger the IP License Agreement and related royalty prepayment, or scaling
up QS-0 could cause prospective customers and collaboration partners not to purchase cells from us or not toproceed with the IP License Agreement. If the Company does not enter into the IP License Agreement, it will notreceive the royalty prepayment and realize any of the other benefits expected from such agreement. The Company
may be unable to adequately control the costs associated with its operations and the components necessary tobuild its solid-state battery cells at competitive prices. The Company’s spending may be higher than currently
anticipated and the Company may need to raise additional funds, including in the public markets, and this may
cause dilution in the stock ownership of our investors. The Company may encounter difficulties, including due tochallenges related to the management transition, the building out of high-volume processes, the achievementof the quality, consistency, reliability, safety, cost and throughput required for commercial production and sale,changes in economic and financial conditions, and not be successful in competing in the battery market industry
or establishing and maintaining confidence in its long-term business prospects among current and future partners
and customers. The Company is at an early stage of testing its battery technology for use in consumer electronics
applications, and we may discover technical or other hurdles that impede our ability to serve that market. If theCompany is unable to protect or assert its intellectual property, its business and competitive position would be
harmed. The Company cautions that the foregoing list of factors is not exclusive. The Company cautions readers
not to place undue reliance upon any forward-looking statements, which speak only as of the date made.
Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking
statements. Should underlying assumptions prove incorrect, actual results and projections could differ materiallyfrom those expressed in any forward-looking statements. Additional information concerning these and otherfactors that could materially affect the Company’s actual results can be found in the Company’s periodic filings
with the SEC. The Company’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

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