Quantumscape Corp (QS) 2022 Q2 法說會逐字稿

Good day, and welcome to QuantumScape's Second Quarter 2022 Earnings Conference Call.

John Saager, QuantumScape's Head of Investor Relations, you may begin your conference.

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's Second Quarter 2022 Earnings Call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter.

Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our shareholder letter, Form 10-K and other SEC filings, including uncertainties followed by the difficulty in predicting future outcomes.

Joining us today will be QuantumScape's Co-Founder, CEO and Chairman, Jagdeep Singh; and our CFO, Kevin Hettrich. Jagdeep will provide a strategic update on the business, and then Kevin will cover the financial results and our outlook in more detail.

With that, I'd like to turn the call over to Jagdeep.

Thank you, John, and thanks, everyone, for joining us. Building on the momentum of our previously reported single, 4-, 10- and 16-layer cells, we're pleased to report we've now made our first prototype 24-layer cells and put them on test. These cells are generally showing early cycling and capacity retention behavior similar to our previously published data. This is an important result because as we have previously indicated, the 24-layer cells represent A-sample candidates for some automotive OEMs, and delivering such sales to an automotive customer remains one of our key goals for the year.

Making 24-layer cells that are good enough to deliver to customers is a high bar and one we still need to meet. Doing so requires that we make cells with sufficient performance and quality to meet our standards and in sufficient quantities to complete the validation process and ship them to a customer.

During the quarter, we encountered a number of challenges related to the quality and throughput of our production prices. These challenges range from discovery of a contaminant in our material to identifying defects introduced during the production process. While we have successfully addressed a number of these, we continue to work through others.

We're encouraged by the fact that despite these challenges, our team has been able to make progress on 24-layer prototype cells, and we remain focused on the key goal of deriving such A-sample cells to 1 or more customers by year-end. Note that our prospective customers have distinct requirements, so the precise definition of an A-sample will vary from customer to customer.

Delivery of the A-sample represents the beginning of the automotive qualification process. In our shareholder letter, we provide more detail on that process and how we currently see it unfolding over the coming years.

In addition to multi-layering progress, this quarter, we made strides on improving cell quality. For any given quality metric, performance falls on our spectrum and improving the quality distribution means moving the entire spectrum towards higher quality. To achieve this goal, we're working to implement a variety of quality improvements to our processes and materials, including advances in separated manufacturing and the implementation of our second-generation catholyte as detailed in the shareholder letter.

Next, an update on the manufacturing front. For context, our cell manufacturing process has many similarities to conventional lithium-ion cell manufacturing, and the proprietary parts can largely be grouped into 2 main tasks: separator production and cell assembly. A key ongoing goal of our Phase 1 engineering line is to improve the quality, consistency and throughput of our separator production; and the first goal of our Phase 2 engineering line is to do the same for cell assembly.

We're pleased to report that our Phase 2 engineering line is now operational and cell assembly has been transitioned to this line. Located at QS Campus, the Phase 2 line benefits from 6x more floor space for cell assembly, increasing flexibility to iterate on our process, expand automation and in-line metrology and add more cell assembly lines as we continue to scale our production.

This quarter, we achieved a peak of greater than 5,000 weekly separator film starts. To improve the quality of distribution of our cells, we've been using much of our separator production capacity, the baseline the quality improvements I mentioned earlier. While we don't expect linear increases in starts each quarter, we retain our goal of achieving peak weekly starts of 8,000 before the end of the year.

On the customer front, we continue to collaborate closely with Volkswagen as we work to bring our technology to market. Our collaboration with Volkswagen engineering teams has intensified in recent months, with regular technical and product development meetings. Their expertise has proved especially valuable as we build competence in mass manufacturing.

In addition to Volkswagen Group, and our previously announced deals, we're pleased to report 2 additional customer sampling agreements with automotive OEMs. We've now announced agreements with 6 prospective automotive customers from global top 10 manufacturers by revenue to premium performance in luxury automakers, encompassing both pure EV and conventional OEMs. We've engaged with companies we believe provide us with a strategic mix across geographic footprint and vehicle segment.

This breadth of customer engagement gives us confidence that demand for next-generation solid-state lithium metal batteries remains robust across the automotive industry. And if we can accomplish our goals, the scope of the opportunity ahead of us remains compelling.

Before I pass things over to Kevin, a few concluding remarks. This quarter has been both rewarding and challenging. Despite facing the hurdles I mentioned earlier, the team has made significant strides in cell development, manufacturing and customer engagement. We're grateful for the exceptional focus and discipline the team has shown through the challenges of delivering on a never-before-realized technology and the commitment of our automotive partners to help us bring this technology to market.

We remain focused on our key goal of delivering a 24-layer A-sample to the automotive customer this year and look forward to reporting our continued progress in the coming months. Kevin?

Thank you, Jagdeep. In the second quarter, our operating expenses were $96 million. Our GAAP net loss for the quarter was $95 million. This level of spend was in line with our expectations entering the quarter.

Cash operating expenses, defined as operating expenses less stock-based compensation and depreciation, were $60 million for the quarter. For full year 2022, we continue to expect cash operating expenses to be in the range of $225 million to $275 million as we support additional hiring and increased production volumes on our engineering lines. In line with previous guidance, we forecast OpEx to grow steadily during 2022, and 2023 OpEx to grow modestly from 2022 levels as we slow our headcount growth rate, reallocate resources from development to manufacturing, and realize gains through investments into automation.

CapEx in the second quarter was approximately $28 million. Approximately 40% of our Q2 CapEx went towards our Phase 2 engineering line, 40% towards QS-0 and the QS Campus build-out and 20% towards our Phase 1 engineering line. This level of CapEx spend was below our guidance range of $35 million to $65 million as we are actively working to prioritize investment into critical milestones, while conserving cash to maintain flexibility through the current difficult macroeconomic environment. Drivers of lower CapEx spend varied by project and included deliberate postponements to refine equipment specifications, delays imposed by supply chain factors or technical challenges as discussed in the shareholder letter, realized cost savings and improved visibility into order times.

An example of realized savings was the facility CapEx to support our Phase 2 engineering line. In this case, value engineering and in-sourcing construction activities helped these specific projects come in below budget. These drivers also impact full year CapEx projections, and we now estimate our capital expenditures to be between $175 million and $225 million for full year 2022. We believe most of the reduction in our forecasted 2022 CapEx spend will now be pushed out into 2023.

Despite the lower CapEx spend in 2022, we remain focused on achieving our goals for the year, including delivery of A-sample prototype cells to a customer, demonstration of a cell format designed to accommodate lithium plating and stripping, scale-up of peak film starts to 8,000 per week and taking delivery of the majority of QS-0 equipment towards a 2023 line start.

We note that on the last call, there is a distinction between equipment sufficient to allow us to make the first cells on the pre-pilot line and equipment required to make significantly higher volumes. We believe we remain on track with respect to the former, but expect some of the tools required for the latter to be received in 2023.

With respect to cash, we spent $79 million on operations and CapEx in the second quarter. We now expect to enter 2023 with over $950 million in liquidity, above previous guidance of over $800 million.

With that, I'll pass it over to you, John.

Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors and analysts over the Say app and then our IR inbox. We received many questions around our time line. And this quarter, we spent some time discussing that in more depth in the shareholder letter.

So Jagdeep, can you give any more color on when our technology will be fully developed or time line more broadly?

Yes. So John, our goal is to get this technology to market as quickly as possible. On today's call, we wanted to update our view of the time line going forward. Our time line is gated by a number of factors, some of which we control and some of which we don't. For example, like other companies, we're always vulnerable with unexpected supply chain disruptions. There are also product and process development risks as well as the need to specify, order and qualify production tooling. And subject to these uncertainties, as we said in the letter, we're currently targeting approximately 18 months in the A and B sample, sample A and prototype B sample cells, which may use some low-volume processes. And we anticipate a similar time frame to go from B samples to C samples. However, given the unequivocal demand we see from customers, the differentiated performance of our prototype cells, and the strength of our balance sheet, we believe the opportunity ahead of us remains uniquely compelling.

Okay. Great. Another topic we've spoken a lot about is the competitive landscape. Someone on the Say app this quarter asked, were lithium-ion batteries be able to bridge the gap to solid-state over the next 5 years.

Yes. So relative to conventional lithium-ion cells, we don't believe it's possible to achieve a dramatic increase in performance without a change in chemistry. We believe our approach based on a solid-state ceramic separator and an (inaudible) form anode appear metallic lithium can deliver between 900 and 1,000 watt hours per liter while simultaneously enabling 15-minute charge. And those are targets we don't believe are achievable with conventional chemistries.

Now relative to next-generation automotive chemistries such as lithium metal or solid state, we haven't seen any one show data comparable to what we published, which includes the ability to run 800 charges start cycles at a 1-hour rate of charge, at room temperature and modest pressure, what we refer to as the gold standard test conditions. And we've shown data in single, 4- and 10-layer cells. But of course, we do need to do more work to scale up the higher layer count and production throughput. We're targeting 24 layers for our first A samples, which, of course, we plan to ship later this year. And while we're pleased that we showed early progress on these cells today, I want to note that we're not done with this development.

Okay. Great. We had another investor asked a question. Does QuantumScape need to make perfectly uniform, totally defect-free separators for your cell work?

So the short answer is no, we don't. In fact, the baseline process we show in the quality improvement section of our letter, which shows a number of nonuniformities, has already produced separators that have delivered the industry-leading results we've shown so far, including cycling on those gold standard test conditions as well as repeated 15-minute charge performance.

So the key is knowing which defects matter and which ones don't, and to focus on the former, not the latter. And based on the many years of experience we've gained with this system and with solid state in general, we believe we've gained a lot of learnings on this topic. And this is actually a key part of our IP, our intellectual property.

That said, if you think of the quality of distribution as a bell curve, for example, what we're trying to do is shift the entire curve to the higher quality end of the spectrum because we believe improving the quality distribution of our materials raises the performance, scalability and the reliability of ourselves.

Okay. Great. We'll switch gears a little bit now, and this next one is for Kevin. We've said that we plan to be strategic around fundraising and careful with capital spending in general. How should investors think about our funding and forecast the cash run right now?

Thank you for the question, John. We ended Q2 '22 with approximately $1.28 billion in liquidity and forecast exiting 2022 with over $950 million in liquidity and forecast our cash runway extending through the end of 2024. And this, we believe, provides sufficient CapEx to complete our second phase engineering and pre-pilot QS-0 lines, which we believe will be capable of producing our B samples and initial C samples. This also includes OpEx to run the lines, generate samples to engage in customer qualification and continue process development working towards broader commercialization. To support subsequent expansion of the business, we'd anticipate raising funding between now and the end of '24 and plan to be strategic on the form, timing and amount.

Okay. Great. Jagdeep, some investors have asked how Volkswagen's creation of PowerCo affects QuantumScape and our relationship with Volkswagen.

Yes. So our relationship with Volkswagen dates back to 2012, spans multiple CEOs, and we've worked with Frank Blome who's the CEO of PowerCo for many years, including as a member of our Board of Directors. We have a tremendous amount of respect for Frank's battery knowledge and operational experience and more importantly, a high degree of trust with Frank.

Given that the core of PowerCo is the former battery center of excellence within VW, which is a group we've been working with since its inception, we expect this transition to be quite natural.

Okay. Great. And then we had two questions coming in from Jose Asumendi of JPMorgan. His first question, which technical milestones are you looking to achieve in the next 6 months? And what has been the largest technical challenge you had to overcome to develop the 24-layer cell?

Yes. So the most important milestone we're looking to achieve in the next 6 months is, of course, delivery of the A sample. This kicks off the automotive qualification process and, in our view, represents a substantial risk reduction to our path forward. Relative to the largest technical challenge we faced last quarter, I would say it was a discovery of the contaminant in our material that we referenced in the letter. And of course, through some great work on the part of our QS and metrology team, we were able to identify the composition of this contaminant, and this allows us to work to resolve it.

Okay. Great. Jose's second question was, with regards to Volkswagen and the recently launched new battery company structure, has this changed in any form your collaboration with the firm? Is there any additional color you can provide on the collaboration?

So relative to the collaboration, we've been collaborating more closely with VW in recent months with more frequent technical and program management meetings. But relative to the nature of the collaboration itself, we haven't announced any changes.

Okay. Thanks so much, guys. We're now ready to begin the Q&A portion of today's call. Operator, please open the line for questions.

(Operator Instructions) Our first question is from the line of Winnie Dong with Deutsche Bank.

A bit more detail on possibly the items are passed that you're pushing out, which is led to the lower CapEx spending for the year. Specifically, what kind of supply chain factors? I know you mentioned the technical challenges that you're facing, but what kind of supply chain factors are you considering that's pushing that up?

Winnie, thank you for the question. If you compare the annual guidance from last quarter of $325 million to $375 million, take the midpoint of $350 million and compare it to the current $175 million to $225 million, midpoint of $200 million, we are seeing -- pushing approximately the bulk of that $150 million into '23, which is I think what you're asking about.

The primary drivers were the deliberate postponement to refined specification. We had execution buffers in our goals in '22. And while we still target achieving those '22 goals in '22, we have used that much of that buffer, and that has delayed the ordering of equipment gated by technical development. And an example of that would be some aspects of the cell assembly, which would be gated by high confidence in the proprietary cell design.

Another example would be we made changes in some of our separator processes in the quarter to improve quality and reliability and we wanted to incorporate those process changes into some of our tooling that automates one of our separator processes. And when you combine those postponements and ordering with supply chain headwinds facing the industry, that's what's resulted in our updated capital forecast.

Okay. Got it. Separately, I was wondering if you can remind us again what's required to go from A sample to B sample. You mentioned the 18-month time frame that you're sort of targeting and similar time frame from B to C as well. Could you remind us sort of like the steps that are a path to sort of accomplish to go from A to B?

Yes. So this is Jagdeep, I'll take that one. So generally speaking, the A sample is whatever the automotive OEM thinks they need to see in order to convince them that the product basically is capable of delivering the functionality they want. So that obviously will vary by OEM, every OEM will have a different definition of that.

The B sample typically represents the functionality in A sample, maybe a little bit more, some small tweaks are typically okay. But it's typically made using processes that are closer to production processes. They can be on smaller versions of production tooling, but they're more production like than A sample, which can be completely handmade. The C sample then is -- has all the functionality, has those production processes and is actually implemented on the production tooling on which you're going to produce the production cells.

So if you think about the definition of the C sample, then clearly, the C sample line depends on the volume of the vehicle that you're trying to serve. So if you're trying to serve a car that makes 1 million units a year, that will be a very different type of C sample line than a car that makes just like 1,000 units a year, right, because, in one case, the tools required are much bigger than the other case.

So the C sample line, the real definition is that it's the line of which your production cells are coming. And how big that line is, is a function of how much -- how big a volume you're trying to serve with that line.

The only other point I'd make is that, typically, all these different sample stages have multiple generations. So there might be multiple As and Bs and Cs. And what we said on the call here was the very first B samples that we make, which are the prototype B sample cells, so they're like B samples but they're prototypes, those could come off a line where some of the process steps are lower volume than others. So that's really a summary of our time line.

Our next question is from the line of Gabe Daoud with Cowen.

Jagdeep, maybe if we could just try to honing in a little bit more on the time line. So if it's 18 months between A, B and C and if we think about, a, this year being, call it, December delivery. So does that put your C sample delivery to late '25? And then maybe QS-1 has then stood up in late '26, early '27? Could you maybe just help us frame that time line and then progression to QS1, I guess?

Yes. So we didn't say -- by the way, Gabe, thanks for the question. We didn't see anything about QS-1 in the letter. What we did say though on the time line for A, B and C is exactly what you laid out.

So assuming that A sample happens as we are targeting at the end of this year and assuming that the gap between A and B, and B and C are what we're anticipating, which is, as we said, roughly 18 months, then you're absolutely right, that would put us into the end of '25 for the C sample. Remember, the C sample, of course, is defined as cells coming off of a production line using production tooling. So that should be able to be a revenue-generating capability at that point.

And all we said about Q1, of course, is going to be some time after that because you need to have the blueprints for the line, which is really the function -- one of the key functions of the QS-0 is to be able to get all the details around the processes, the tools, the specifications and so on, so we can order larger versions of those tools and more of them to be able to turn up bigger lines. The thing you don't want to do is start trying to turn up a higher volume production line before you have all the details worked out on the tooling because that just put capital at risk and obviously we don't want to do that.

Okay. Got it. That's helpful. And then maybe just as a follow-up, I know we're kind of focused here on the 24-layer, but I guess I was just curious if the 16-layer, did that hit 800 cycles? And I guess as we are maybe -- so that's the first part of question. And then I guess, sorry, back to the 24-layer, since that is closer to representing an A sample, is there like anything you can say on what that looks like on an energy density standpoint?

Yes. Sure. So the 16 there wasn't an explicit milestone that we had, and we felt that we made enough progress on the 16-layer to where we could move to making 24-layer cells. As you pointed out, we only reported over 500 cycles in about 16-layer cells, so we didn't really see a need to continue to work more on that and switched over to 24-layer cells. And we're actually -- as you point out, quite pleased to have those first 24-layer cells on test already today in July. And that gives us a number of months to refine the design, incorporate any improvements and still be able to make the A sample target for the end of the year.

The energy density, we haven't commented on, Gabe. The A sample really isn't going to be the cell with energy densities that are close to the production levels because it doesn't have the right number of layers and the packaging isn't really optimized. All those things are things that we think will happen in conjunction with the B sample.

The next question is from the line of Chris Snyder with UBS.

I wanted to follow up on Gabe's question on the time line but with a specific focus on progressing towards QS-1. Is it fair to assume that the delivery of a C sample is required for QS-1 to be commissioned and move forward? Or could that checkpoint be met with the B sample? Any color there would be really helpful.

Yes, this is a great question. I think one of the things that we are thinking at this point is that one of the goals that we think we can meet from the QS-0 line itself is to make C samples. And by doing that, we think we can gain a lot of learnings that might otherwise need that 1 gigawatt hour QS-1 line.

So basically, we think that essentially, the C sample coming out of QS-0 can deliver to us some of the same learnings that we might otherwise need to do the 1 gigawatt hour Phase 1 QS-1 line, which we think opens a possibility to scaling up subsequent production lines more quickly. So that's only our current thinking. And if things go as planned, and that will be the way we'd like to see them unfold.

And the company has obviously just continues to announce a number of commercial agreements. I mean I think it's been the general kind of consensus view from the analyst community that QS-1 or just the first kind of substantial production facility would be with Volkswagen as the JV in the counterpart. Is there opportunity that the counterparty on the first commercially sized facility could be an OEM other than Volkswagen?

So we haven't said anything about specifically who else we're going to do JVs with outside of Volkswagen. There obviously is the joint venture with Volkswagen, which is designed to serve the needs of Volkswagen.

For the other non-Volkswagen customers, I think there's a couple of different ways to serve them. One, of course, is through this expanded QS-0 line where we produce C samples off of QS-0. That will allow us to serve a certain volume of vehicles. So we wouldn't be able to do like super, super high-volume type vehicle programs out of that line but for smaller, perhaps premium, high-performance type of vehicles, that would be one option.

The other option, of course, is to do joint ventures like the ones we have with VW with other OEMs. In fact, one of the agreements that we announced specifically had a section in there discussing the possibility of a joint venture with that other top 10 automotive OEMs. So that's another possibility.

And there are also other opportunities that we're looking at beyond those that might involve other more creative ways to get there. But I think that -- our main goal is to get the technology into the market as quickly as we can.

And we've said in the past, there are basically 3 sort of general ways to do that. One is to build on factories. I guess QS-0 an example of that, it's a small factory, but it's a factory. The second is to partner with OEMs to do JVs. The VW is an example of that. The third one we referenced in the past, occasionally, although we haven't provided any more details on that at some point, it might make sense to license the core IP. We'd only do that if there is someone that we trust as a partner and where the economics make sense. But those are the 3 general options, and we don't have any religion around any one of them. We want to basically pursue what makes the most business sense for us, for our investors, for our customers.

I appreciate that. If I could just squeeze one last one in. Over the past couple of years, the company has produced a high number of data and test metrics that they provided to the market.

I would just be interested, Jagdeep, amongst all these test metrics data that you guys produce, which -- what to you is the most significant kind of indicator of what you're tracking, whether it just be the company's progression, the technology? I'd just be interested to hear your view amongst all the data and test metrics, what do you think is most important?

It's a great question. I think probably I would say the most significant asset of data we published is this notion of what we call the gold standard test conditions, right? So the idea is that this is data showing that these lithium metal cells, which obviously are designed for high energy density, because the lithium metal anode is more energy dense than carbon or carbon silicon hybrid anode, so that opens up the possibility of getting to these 900 to 1,000 watt hour per liter type numbers. But the important point is with that kind of a design, we've demonstrated that you can operate that chemistry with high rates of charge.

So we do all of our testing that we published in recent times that 1C meaning 1 hour charge rate at room temperature, a recent test have been a 25 degree Celsius for (inaudible) cycles, as Gabe alluded to in his question earlier, and done a modest pressure, we use no more than approximately 2.4 average sort of pressure. And in recent times, we're even dropping pressure below that. So that's the first key point I'd focus on is test results that show -- that they've done under these gold-standard conditions without compromising pressure or temperature or rate or cycle life.

The second key thing I'd say on the data front is that we've shown data showing both the ability to run at even higher rates. So we earlier this year, published some data on 15-minute charge, 40x in a row. So that's also a really remarkable result. Really, we haven't seen any data from any other lithium metal player that I could do that or, for that matter, even lithium-ion type layers for energy cells. We mean cells that are designed for the highest possible energy, not power cells, which are designed for power.

And then I think the third thing that I would point to in terms of data is we keep showing it on increasing layer count. I think we've steadily -- we've kind of try to keep our noses to the grindstone, want to just stay focused on the mission, which is to keep increasing their accounts while trying to maintain that level of functionality.

So we went from 1 layer to 4 layers to 10 to 16 and now 24-layers or at least a very early data on 24. We're not done with that yet. I want to be careful about that. But those 3 things combined are I think what gives us a lot of comfort that we're onto something here, right? The fundamental data, the gold standard data is very compelling at a 1-hour charge rate for cycles.

The high rate charge data for single layer cells would now be very compelling. And then we try to take that capability and increase the layer count with that. And I think that all of those things are things that we really haven't seen with other approaches to high-intensity automotive lithium metal cells.

The next question is from the line of Ben Kallo with Baird.

Congrats on adding 2 new customer relationships. Maybe could you just talk us through kind of how those relationships span from like maybe have just provided them with a sample cell, like 2-layer cell? Or how are all the different relationships differ, I guess, is the question.

Yes. So these relationships are generally quite similar. What they basically are is that they represent effectively a reservation agreement on the part of the OEM to get a certain amount of capacity out of our -- production out of the QS-0 line. And then in addition to that, this involves our providing those OEMs with a set of intermediate samples.

So we'll provide them samples, A sample, B sample, and subsequent sample, being up to that pre-pilot line. And I think the thing that we're excited about is not only that there is now 6 such OEMs but they really represent a broad cross-section of the automotive sector, right?

So I mentioned in the letter, they represent top 10 players on one hand as well as non-top 10 but well-established premium luxury-type brands. They represent pure EV type players and conventional OEMs. So we have both end of the spectrum on multiple axes are representative.

I think we've tried to be, as we said before, strategic about who we work with. We are in the position, for better or worse, of being supply constrained right now. There's more demand than we have the ability to provide cells today. Frankly, we think we'll be in a position for some time into the future. But the benefit of that is it allows us to be a little more thoughtful about who we choose to work with, and we try to choose players that we think encompass the full spectrum of the automotive sector in order to make sure that we have exposure to the whole sector.

So I think we feel pretty good about the OEM momentum. And our focus now is really just trying to deliver these cells so we can realize the potential of the opportunity ahead of us.

I guess what I was asking is, has everyone received something physically to test? Or is everyone at different stages in their testing work? So maybe they've just received data, you start a relationship there versus others, tested the actual cell.

Yes. So I think -- and don't quote me in this, but I think -- because I haven't made the full list and look at it. Just to this question, but I think every 1 of these guys, to my knowledge, I would say most of these players have, in fact, received cells at some stage and have already tested them. And well, I should say, yes, most of them have, I think not everyone has. But most of them received cells and have tested them.

And there are different stages of their process. Obviously, someone like VW is further along. We've had that partnership in place for a lot longer. Some of the newer players -- we've been announcing players every -- at regular intervals in time. So some of them are going to be at different points in their process. But most of these guys have already received the tested cells and some of them that haven't, we'll get sell shortly and we'll test them. So the process is moving forward with all these players, but there's just at different points in those journeys.

Cool. And then the last question, you called out and you highlight the cell manufacturing step being completed. Could you just maybe delve into that a bit more on what that means and what -- how it's changed from how you previously did it?

Yes. I think that particular reference was to the Phase 2 line. So as you know, we have this Phase 1 engineering line, which was in our older building, and we were turning up a Phase 2 version of the line for additional capacity and capability in our new QS Campus facility. And we've now turned off that Phase 2 engineering line and transferred production cell assembly to that line.

So that's an important point because it means that we're actually now making cells in this new facility, which means when we put in place the building, the appropriate dry rooms and the appropriate clean rooms and the power supply and people and all those things have to go into place to be able to make cells. Also in this building is where we're planning on deploying the rest of QS-0, which is a pre-pilot line. Kevin, anything to add to that?

Nothing, that's a good summary, Jagdeep.

So I think at this point -- yes, let me just go ahead and sums up the call. I want to thank everyone for joining the call. I'd also like to thank our investors for their ongoing support of our mission. I'd like to thank our forward-thinking customers for their commitment to helping us get this technology to market. And of course, our amazing team for their incredibly dedicated efforts to overcome all the hard problems associated with bringing a groundbreaking new technology to market. We look forward to reporting our further progress in the coming quarters.

That concludes the QuantumScape Q2 2022 Earnings Call. Thank you all for your participation. You may now disconnect your lines.