QuantumScape has no revenue and funds its battery work from about $820 million in cash and securities. Its future rests on a PowerCo licence arriving before that money runs short.
Every electric car runs on a pack of battery cells. QuantumScape is developing a new kind of cell for cars, and it runs a pilot production line in San Jose. One side of the cell (the anode) is lithium metal. What makes that possible is a thin, solid ceramic film that separates the cell's two sides and does not burn. Rather than make cells in large volumes, the company wants carmakers to pay for the right to make them, starting with PowerCo, Volkswagen's battery company.
The plan is licensing. QuantumScape keeps refining the cell and the way to make it, then hands both to partners, who build the factories and pay royalties (fees on the batteries they make and sell). Once certain milestones are met, QuantumScape and PowerCo intend to sign a licence. On signing, PowerCo would prepay an initial royalty of $130 million. That money counts against future royalties, and part of it can be clawed back, on a declining scale over time, if PowerCo ends the licence early under certain conditions. Lasting income depends on partners producing at volume, and how much reaches QuantumScape depends on how cheaply they can manufacture. Until then, the main costs are scientists, engineers and the San Jose line, which must make enough good film and cells to hand the know-how to PowerCo.
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