QuantumScape Corporation (NYSE:QS) Q4 2022 Earnings Call Transcript

Jagdeep Singh: Yes, that’s a good question. So first of all, let me more backwards from the C sample. Obviously, the C sample is going to be very customer specific because the definition of a C sample is that it’s — it’s a product that is — it’s a sample made of an actual production line that’s going to go into serious production. And you can’t do that until you’ve got a customer that’s told you they’re planning on using that sample — that type of sample in a natural product, right? So that will be tested. The B sample is likely also to be customer-specific, maybe less so than the C sample, but because the B sample is used to make test vehicles that’s also going to have a customer-specific element to it. The A sample is typically the most technology oriented the samples, because it’s a demonstration of the core capabilities of the product.

But even there, different customers have different things they’re most interested in. So yes, even with A sample, see one customer have a certain set of functionalities they care more about than other functionality or other customers. And so there will be some customer-by-customer variance of all those samples. Relative to where we share progress with you on all those samples, to the extent those are meaningful milestones, we absolutely will. And to the extent that they’re not meaningful then we wouldn’t need to. But we try to be more transparent rather than less that managed. So I would expect that we would be sharing updates on any meaningful customer milestones.

Chris Snyder: I appreciate that. If I could just squeeze a final quick one in on the A and B sample. In the past, when you guys have kind of said roughly 18 months, what kind of time line between A sample and B sample. Does that clock start with A0 delivery, or does that clock start when you deliver the last generation of the A sample? Thank you.

Jagdeep Singh : I think that the 18-month windows that we provided earlier were kind of approximations. And so I think if you look at it as an approximation, then I think whether you start with A0 or some subsequent version of it, you’re still roughly in the same time frame. So I don’t think we want to be overly precise. I think it’s hard to be overly precise about milestones that are years away. The main point we wanted to provide was that mega that one is that there is a series of progressively more mature samples that we need to provide to the automotive sector. The first of those milestones, which is the A-sample phase is really focused on some core functionality and demonstration of capability. The next version, which is the B-sample phase is focused on production processes, although, it could be on smaller, lower volume versions of the tools.

And the final phase is the C-sample, which is focused on the functionality and the right process, but on the actual production tooling, and we wanted to provide that rough range. So people have a sense of roughly what we’re talking about, it’s not a two-month delta. It’s not a 10-year delta, but it was something in the range that we had mentioned. And I think that pretty much remains the case.

Chris Snyder: Appreciate all that. Thank you, Jagdeep.

Jagdeep Singh : Absolutely.

Operator: Our next question is from Mark Delaney with Goldman Sachs. Your line is now open.

Mark Delaney: Yes. Good afternoon, and thank you very much fore the questions and thank you for all the details in the shareholder letter. My first question was a follow-up on that same topic. And just trying to better understand in more depth, if I could, please. What’s the difference between A0 sample and an A-sample and any sort of idea of how many A-samples we should be expecting?

Jagdeep Singh : Well, I mean, I think that — the — we present — we laid out in the letter some of the key things we’re working on this year, right. So we said that — so what the A0 has is multi-amp-hour capabilities, so 24 layers and demonstrates the core capability of the product. So it’s a lithium-metal anode solid-state separator, zero lithium to start with cell. All that can be tested by the customer. Customers even tested as we mentioned earlier, fast charging and capacity retention and so on. The things we’re working on this year, which include thicker cathodes, more energy dense packaging, mid of the year, the fast film production process. Those are all features that will make their way into subsequent releases. And that you might imagine those going to a second generation of A-sample, and they will also make their way into the B-sample and C-sample.

But I think, the key for the A-sample really is, is there new functionality that’s going into the cell. And the goals we laid out this year indicate a number of areas where there’s key functionality we are trying to roll in. So you can imagine probably at least one further generation of A-sample. And then subsequent to that, we think we will have a lot of the core functionality in, and we will focus more on getting some of the manufacturing maturity for the B and C samples.