Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “ Risk Factors ” as set forth in this Report. Unless the context otherwise requires, references in this “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” to “the Company”, “we”, “us” and “our” refer to the business and operations of QuantumScape Corporation and its consolidated subsidiaries.
Overview
We are developing next-generation solid-state lithium-metal battery technology for EVs and other applications. We believe that our technology will enable a new category of battery that meets the requirements for broader market adoption. The lithium-metal solid-state battery technology that we are developing is being designed to offer greater energy density, faster charging, and greater safety when compared to today’s conventional lithium-ion batteries.
We are a development-stage company with no revenue to date, have incurred a net loss from operations of approximately $472.6 million for the year ended December 31, 2025, and an accumulated deficit of approximately $3.8 billion from our inception through December 31, 2025. We expect to incur significant expenses and continuing losses for the foreseeable future.
Key Trends, Opportunities and Uncertainties
We are a pre-revenue company. We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed below and in the section titled “ Risk Factors ” appearing elsewhere in this Report.
Product Development
We have demonstrated capabilities of our solid-state separator and battery technology in single-layer and multilayer cell cycling data, and in 2022, shipped our first A0 prototype battery cells to multiple OEMs for testing. Following that shipment, we continued focusing our research and development on subsequent generations of prototype samples incorporating advances in cell functionality, process and reliability, as well as bringing online our pilot line in San Jose, California. In 2023, we announced our first targeted commercial product, the QSE-5, a cell with a capacity of approximately 5 amp-hours as further described under the “Research and Development” section in Item 1 above. In 2024, we began producing low volumes of our first B-sample cells, and we began shipping these cells for automotive customer testing. These are B-samples of our first product, QSE-5, with an energy density of over 800 Wh/L and <15 minute 10% to 80% fast-charging capability. In 2025, together with Volkswagen and PowerCo, we had the first live demonstration of our solid-state lithium-metal battery technology powering a Ducati V21L electric motorcycle at the IAA Mobility event that included B1 samples of our QSE-5 cell from our more efficient separator production processes.
Process Development
Our architecture depends on our proprietary solid-state ceramic separator. Though our separator’s design is unique, our early-generation process relied on established or similar high-volume production processes already deployed in other industries. We, together with our partners, are developing subsequent, proprietary higher-volume separator production processes that seek to further reduce cost, increase throughput, and improve quality.
Our separator is being designed to enable our ‘anode-free’ architecture. As manufactured, our solid-state battery cell has no anode; the lithium-metal anode is formed during the first charge of the cell. The lithium that forms the anode comes from the cathode material we purchase. Eliminating the anode bill of materials and associated manufacturing costs found in conventional lithium-ion cells could result in a meaningful cost of goods sold (COGS) advantage once sufficient scale and process maturity are achieved. In addition, our solid-state battery cell is being designed to reduce the time and capital-intensity of the formation and aging process step as compared to conventional lithium-ion manufacturing.
We are focused on the throughput and capability of our pilot line in San Jose, California. As part of the continued expansion of our throughput we are automating our production process and purchasing higher throughput battery-cell production equipment.
Our pilot line is intended to serve four purposes. First, to provide a sufficient quantity of separators and cells for internal development and customer sampling and testing. Second, to provide the basis for continued production process development and to help inform equipment selection and specifications for future production activities by us or our partners. Third, we target the initial production of QSE-5 cells from the pilot line. Fourth, to support collaboration and future technology transfer activities as part of the collaboration and licensing arrangements with PowerCo as well as potential future commercial arrangements. Delays in the successful start-up and continued development of our pilot line may impact both our development and future scale-up timelines.
We will need to achieve significant cost savings in battery design and production, in addition to the cost savings associated with the elimination of an anode from our solid-state battery cells as manufactured, while controlling costs associated with the manufacture of our separator, including achieving substantial improvements in quality, consistency, reliability, throughput and safety required to hit commercial targets. Further, we will need to capture industry cost savings in the materials, components, equipment, facilities design, and processes for products we develop, notably in the cathode and cell design. As we advance our licensing business model, we anticipate our partners will need to achieve similar cost savings in battery design and production, and capture industry cost savings.
Commercialization and Market Focus
We are currently focused on automotive EV applications, which have among the most stringent sets of requirements for batteries. Meanwhile, we see opportunities for our solid-state battery technology in other large and growing markets including consumer electronics, data centers, defense, and others and we intend to explore such opportunities as appropriate. The automotive qualification process generally includes several major delivery milestones of A, B and C samples. Each major sampling stage may consist of several generations of increasingly mature prototypes. The timelines for each stage involve uncertainty and will be influenced by a number of factors, including product and process development risks; the specification, ordering, and qualification of production equipment; other supply chain dynamics; and OEM validation timeframes.
We have demonstrated capabilities of our solid-state separator and battery technology in single-layer and multilayer solid-state cells in commercially relevant areas (ranging from approximately 60x75mm to 70x85mm). We will work to continue improving quality, consistency, reliability, throughput, and safety and optimize all components of the cell. We will continue to work to further develop our production processes to enable increasing volumes of prototype shipments and, through successful technology transfer, high volume manufacturing by our licensing partners.
In July 2024, we entered into the Collaboration Agreement with the goal of PowerCo industrializing QS technology based on QSE-5. PowerCo was formed by Volkswagen in 2022 as a company intended to consolidate Volkswagen’s activities in the development and production of battery cells. In connection with the Collaboration Agreement and subject to the completion of certain milestones, we and PowerCo intend to enter into the PowerCo IP License Agreement under which we will grant PowerCo a non-exclusive, limited, royalty-bearing license to use the QS technology based on QSE-5 for the purpose of manufacturing and selling batteries primarily for automotive applications, and PowerCo will pre-pay an initial royalty fee of $130 million, against which any future royalties due will be credited. The initial royalty is subject to a time-based diminishing clawback if the PowerCo IP License Agreement is terminated early by PowerCo under certain conditions. In July 2025, we entered into an amendment and restatement of the Collaboration Agreement and entered into a statement of work outlining the scope and responsibilities of the joint scale-up team working at our battery development pilot line in San Jose, California for the development, validation, demonstration, and initial commercialization of QS battery cell technology based on QSE-5 and toward the transfer of such technology into cell size determined by PowerCo (the “Project”). PowerCo has agreed to contribute up to $130.7 million for the Project over the next two years, subject to the completion of certain milestones by the joint scale-up team.
In addition to the signed agreements with PowerCo with the goal of commercializing our battery technology, we intend to continue working closely with automotive OEMs to make our solid-state battery cells widely available over time. We have also signed agreements, including customer sampling, technology evaluation and joint development agreements, with a number of OEMs, ranging from leading manufacturers by global revenue to premium performance and luxury carmakers, to collaborate with us in the testing and validating of our solid-state battery cells with the goal to include such cells into pre-production prototype vehicles and ultimately into serial production vehicles.
We believe that our technology enables a variety of business models and presents opportunities with a variety of potential customers, such as automotive OEMs, end-users, and licensees, as applicable. In addition to the collaboration with PowerCo, which contemplates a licensing arrangement, we may operate solely-owned manufacturing facilities, license technology to other manufacturers, or enter into joint venture arrangements, among other approaches. We intend to continue to invest in research and development to improve battery cell performance, improve production processes, and reduce cost.
Access to Capital
As of December 31, 2025, our cash and cash equivalents and marketable securities were approximately $970.8 million. Changes to our technology development, operating costs and scale-up, including our ability to meet the milestones for entry into the PowerCo IP License Agreement, receipt of the related initial royalty fee from PowerCo, and achievement of the Project milestones for receipt of Project contributions from PowerCo, could materially impact us and the availability of our capital resources. We may also need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with automotive OEMs or other customers and tier-one automotive suppliers or other suppliers, supply chain challenges, competitive pressures, inflation, instability in global economic markets, increased trade tariffs, and regulatory developments, among others. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If such financing is not available, or if the financing terms are onerous or less desirable than we expect, we may be to decrease our level of investment in product development or scale back our operations, which could have an impact on our business and financial prospects.
Regulatory Landscape
We operate in an industry that is subject to many established environmental regulations, which have generally become more stringent over time, particularly in hazardous waste generation and disposal and pollution control. Regulations in our target markets include economic incentives to purchasers of EVs, tax credits for EV manufacturers, and economic penalties that may apply to a car manufacturer based on its fleet-wide emissions which may indirectly benefit us to the extent that the regulations expand the market size of EVs. While we also expect environmental regulations to provide a tailwind to our growth, it is possible for certain regulations to result in margin pressures. Trade restrictions and tariffs, while historically minimal between the European Union and the United States where most of our production and sales are initially expected, are subject to unknown and unpredictable changes that could impact our ability to meet projected sales or margins. In addition, there are government regulations pertaining to battery safety, transportation of batteries, use of batteries in cars, and factory safety. We will ultimately have to comply with these regulations to sell our batteries into the market. The license and sale of our battery technologies abroad is likely to be subject to more stringent export controls in the future.
Recent Developments
Completion of ATM Offering
In February 2023, we filed a prospectus supplement to a shelf registration statement on Form S-3 (the “Form S-3”) for the issuance and sale of our Class A Common Stock from time to time for an aggregate offering price of up to $400 million (the “ATM offering”). During the year ended December 31, 2024, 24.9 million shares of our Class A Common Stock were sold pursuant to the ATM offering for aggregate proceeds of approximately $128.5 million, net of issuance costs paid. During the year ended December 31, 2025, 29.5 million shares of Class A Common Stock were sold pursuant to the ATM offering for aggregate proceeds of approximately $264.2 million, net of issuance costs including the commission fees to the sales agents of approximately $4.0 million, completing our ATM offering.
Basis of Presentation
We currently conduct our business through one operating segment. As a pre-revenue company with no commercial operations, our activities to date have been limited and were conducted primarily in the United States. Our historical results are reported under United States of America generally accepted accounting principles (“U.S. GAAP”) and in U.S. dollars. Upon commencement of commercial operations, we expect to expand our global operations substantially, including in the United States and the European Union, and as a result we expect our future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in our historical financial statements. As a result, we expect that the financial results we report for periods after we begin commercial operations will not be comparable to the financial results included in this Report.
Components of Results of Operations
We are a research and development stage company and we have not generated any revenues to date. Our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or projected results of operations.
Operating Expenses
Research and Development Expense
To date, our research and development expenses have consisted primarily of personnel-related expenses for scientists, experienced engineers and technicians as well as costs associated with the construction and ramp up of our pilot line in San Jose, including the material and supplies to support the product development and process engineering efforts. As we ramp up our engineering operations to complete the development of our solid-state, lithium-metal batteries and required process engineering to meet automotive cost targets, we anticipate that research and development expenses will increase significantly for the foreseeable future as we continue to invest in additional plant and equipment for product development (e.g., multilayer cell stacking, packaging engineering), building prototypes, and testing of battery cells as our team works to meet the full set of automotive product requirements. We also recognize significant non-cash stock-based compensation to employees directly involved in research and development activities. For stock-based compensation awards with performance conditions, such as the restricted stock units with performance conditions (“PSUs”), the non-cash expense recognized is based on a probability assessment of the performance conditions, and as such, research and development expenses may fluctuate in the future as the performance conditions are re-assessed at each reporting period. For more information on the PSUs, see Note 8, Stockholders’ Equity, to our consolidated financial statements included elsewhere in this Report.
As we ramp toward commercialization of our technology, we will begin to incur expenses that are directly associated with such, including allocation of indirect costs from research and development.
General and Administrative Expense
General and administrative expenses consist mainly of personnel-related expenses for our executive, sales and marketing, insurance and other administrative functions as well as outside professional services, including legal, accounting and other advisory services. We are continuing to expand our supporting systems, in anticipation of planning for and supporting the commercialization of our technology and due to the ongoing requirements of being a public company. Accordingly, we expect our general and administrative expenses to increase in the near term and for the foreseeable future. Upon commencement of commercial operations, we also expect general and administrative expenses to include customer and sales support and advertising costs. We also recognize significant non-cash stock-based compensation to executives and certain employees. The non-cash expenses recognized for PSUs are based on a probability assessment of the performance conditions, and as such, general and administrative expenses may fluctuate in the future as the performance conditions are re-assessed at each reporting period.
As we ramp toward commercialization of our technology, we will begin to incur expenses that are directly associated with such, including allocation of indirect costs from general and administrative activities.
Other Income (Expense)
Interest Expense
Interest expense consists primarily of interest expense associated with our finance lease for one of our facilities.
Interest Income
Interest income consists primarily of interest income from marketable securities.
Other Income (Expense)
Our other income (expense) consists of miscellaneous income and expenses.
Income Tax (Provision) Benefit
Our income tax provision consists of an estimate for U.S. federal and state income taxes and foreign income tax based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in tax law. We maintain a valuation allowance against the full value of our U.S. federal and state net deferred tax assets because we believe the recoverability of the tax assets is not more likely than not.
Results of Operations
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 and the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 26, 2025 and is incorporated herein by reference.
The following table sets forth our historical operating results for the periods indicated (amounts in thousands):
Year Ended December 31,
$ Change
% Change
$ Change
% Change
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest expense
Interest income
Other income (expense)
Loss before income taxes
Income tax (provision) benefit
Net loss
Less: Net (loss) income attributable to non-controlling interest, net of tax of $0
Net loss attributable to common stockholders
Research and Development
The decrease in research and development expense in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily resulted from a decrease of $14.8 million in non-cash stock-based compensation expense primarily due to the full amortization of awards, forfeitures, lower headcount, and changes in the estimated milestones for performance based awards, a decrease of $14.4 million in personnel cost primarily due to lower headcount, and a decrease of $3.3 million in material supplies, offset primarily by an increase of $13.2 million in write-off of fixed assets no longer in use, including the leasehold improvements associated with the lease termination, an increase of $7.9 million related to depreciation and amortization, and an increase of $4.1 million in expensed equipment.
General and Administrative
The decrease in general and administrative expenses in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a net $24.5 million litigation settlement charged in the year December 31, 2024 associated with the class action lawsuits that were filed beginning January 2021, a decrease of $18.6 million in charges related to other legal matters, professional fees, outside services and office administration, and a decrease of $2.3 million in non-cash stock-based compensation expense primarily due to the full amortization, forfeitures, lower headcount, and changes in the estimated milestones for performance based awards.
Other Income (Expense)
Interest Income
The decrease in interest income during the year ended December 31, 2025 compared to the year ended December 31, 2024 was mainly due to the decrease in interest rates.
Other Income (Expense)
Other income (expense) for the years ended December 31, 2025 and 2024 consisted of miscellaneous income and expense that were not material individually or in aggregate.
Income Tax (Provision) Benefit
The income tax provision for the year ended December 31, 2025 and the income tax benefit for the year ended December 31, 2024 were not material.
Liquidity and Capital Resources
As of December 31, 2025 and 2024, our cash and cash equivalents and marketable securities were approximately $970.8 million and $910.8 million, respectively. Our cash equivalents are invested in U.S. money market funds, U.S. Treasury bonds and commercial paper. Our marketable securities are invested in U.S. Treasury notes and bonds, commercial paper, and corporate notes and bonds.
We have yet to generate any revenue from our business operations. To date, we have funded our capital expenditure and working capital requirements through equity as further discussed below. Our ability to successfully develop our products, commence commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations.
During the year ended December 31, 2023, we completed a public offering of 37.5 million shares of our Class A Common Stock and received net proceeds of $288.2 million (the “August 2023 Public Offering”).
During the year ended December 31, 2024, we sold 24.9 million shares of our Class A Common Stock pursuant to the ATM offering and received approximately $128.5 million in proceeds, net of issuance costs paid.
During the year ended December 31, 2025, we sold 29.5 million shares of our Class A Common Stock pursuant to the ATM offering and received approximately $264.2 million in proceeds, net of issuance costs paid.
We believe that our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Report. Our future capital requirements are influenced by any changes to our technology development, operating costs and scale-up, including our ability to meet the milestones to enable customer payments or the entry into the PowerCo IP License Agreement and related receipt of the initial royalty fee from PowerCo. We may need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with automotive OEMs or other customers and tier-one automotive suppliers or other suppliers, supply chain challenges, competitive pressures, inflation, and regulatory developments, among others. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional funding through the issuance of equity or debt financing. If such financing is not available, or if the financing terms are onerous or less desirable than we expect, we may be to decrease our level of investment in product development or scale back our operations, which could have an impact on our business and financial prospects.
Cash Flows and Material Cash Requirements
The following table provides a summary of our cash flow data for the periods indicated (amounts in thousands):
Year Ended December 31,
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash provided by financing activities
Operating Activities
Our cash flows used in operating activities to date have been primarily driven by the growth in our underlying business to support the research and development of next-generation battery technology. As of December 31, 2025, our operating lease commitments are approximately $7.1 million during the next twelve months and approximately $41.5 million thereafter. From time to time, we also enter into non-cancellable service and purchase commitments. We are expecting cash used in operating activities to include payments of approximately $2.6 million in the next twelve months and approximately $2.2 million thereafter through 2027 for our non-cancellable commitments as of December 31, 2025.
Cash used in operating activities for the year ended December 31, 2025 was primarily driven by a net loss of $435.1 million, offset by non-cash expense of $127.5 million related to stock-based compensation, non-cash expense of $65.6 million related to depreciation and amortization, non-cash expense of $26.6 million related to the write-off of property and equipment, non-cash lease expense and amortization of right-of-use assets of $7.7 million. Cash used in the operating activities was further driven by $19.0 million related to accretion of discounts on marketable securities, a decrease of $6.8 million in accounts payable, accrued liabilities and accrued compensation and benefits, and a decrease of $4.8 million in operating lease liabilities.
Cash used in operating activities for the year ended December 31, 2024 was primarily driven by a net loss of $477.9 million, offset by non-cash expense of $144.7 million related to stock-based compensation, non-cash expense of $57.8 million related to depreciation and amortization, non-cash expense of $13.3 million related to the write-off of property and equipment, non-cash lease expense and amortization of right-of-use assets of $8.0 million. Cash used in the operating activities was further driven by $29.3 million related to amortization of premiums and accretion of discounts on marketable securities and a decrease of $5.1 million in operating lease liabilities, and offset by an increase of $15.0 million in accounts payable, accrued liabilities and accrued compensation and benefits.
Cash used during the year ended December 31, 2023 was primarily driven by a net loss of $445.1 million, offset by non-cash expense of $166.3 million related to stock-based compensation, non-cash expense of $42.0 million related to depreciation and amortization, non-cash expense of $21.5 million related to the write-off of property and equipment, and non-cash lease expense and amortization of right-of-use assets of $7.8 million. These were partially adjusted by $18.9 million related to amortization of premiums and accretion of discounts on marketable securities, and an increase of $7.5 million in prepaid expenses and other assets.
Investing Activities
Our cash flows from investing activities to date have been comprised of purchases of property and equipment and purchases, maturities and sales of our marketable securities. We expect the level of capital investment to increase substantially in the near future as we acquire the property and equipment for and build out our pilot line.
Cash provided by investing activities for the year ended December 31, 2025 primarily consists of proceeds from the maturity of marketable securities of $1.13 billion. These were offset by $1.08 billion used for the purchase of marketable securities and $36.3 million used for the purchase of various property and equipment, primarily to support our research and development activities.
Cash used in investing activities for the year ended December 31, 2024 primarily consists of proceeds from the maturity and sale of marketable securities of $1.5 billion and $1.2 million, respectively. These were offset by $1.3 billion used for the purchase of marketable securities and $62.1 million used for the purchase of various property and equipment, primarily to support our research and development activities.
Cash provided by investing activities for the year ended December 31, 2023 primarily consists of $1.1 billion used for the purchase of marketable securities and $84.5 million used for the purchase of various property and equipment, primarily to support our research and development activities. These were offset by the proceeds from the maturity and sale of marketable securities of $1.0 billion and $1.5 million, respectively.
Financing Activities
Our cash flows from financing activities primarily consist of proceeds from the issuance of common stock and exercise of stock options. Finance lease commitment for one of our buildings will result in net cash payments of $5.4 million in the next twelve months and payments of $33.6 million thereafter.
Cash provided by financing activities during the year ended December 31, 2025 is primarily due to approximately $264.2 million in net proceeds from the ATM offering, $32.3 million received from the exercise of stock options and our employee stock purchase plan, and $19.5 million capital contribution received under the PowerCo Collaboration Agreement with no shares issued.
Cash provided by financing activities during the year ended December 31, 2024 is primarily due to approximately $128.5 million in net proceeds from the ATM offering and $20.1 million received from the exercise of stock options and our employee stock purchase plan.
The cash provided by financing activities during the year ended December 31, 2023 is primarily due to $288.2 million in net proceeds received from the August 2023 Public Offering and, $14.0 million received from the exercise of stock options and our employee stock purchase plan.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this Report. We believe that the following accounting estimates are the most critical to fully understand and evaluate our reported financial results, as they require our most subjective or complex management judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain and unpredictable.
Stock-Based Compensation
The share-based awards under our equity plans include stock options, restricted stock units with service conditions only (“RSU”), PSU and performance-based awards under the EPA Program. We recognize the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards, and compensation expense is recognized on a straight-line basis over the requisite service period. For share-based awards with only service conditions, the requisite service period is generally the vesting period. We reverse previously recognized costs for unvested awards in the period that forfeitures occur.
The fair values of RSUs and PSUs are measured on the grant date based on the closing fair market value of our common stock.
The fair values of options granted with performance (e.g., business milestone) and market conditions (e.g., stock price target) are estimated at the grant date using a Monte Carlo simulation model.
For performance-based awards with a vesting schedule based entirely on the attainment of both performance and market conditions, each quarter the Company assesses whether it is probable that it will achieve each performance condition that has not previously been achieved or deemed probable of achievement and if so, the future time when the Company expects to achieve that business milestone, or its “expected business milestone achievement time.” When the Company first determines that a business milestone has become probable of being achieved, the Company allocates on a straight-line basis the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting date,” which represents the requisite service period. The requisite service period at any given time is generally the period between the grant date and the later of (i) the expected time when the performance condition will be achieved (if the related performance condition has not yet been achieved) and (ii) the expected time when the market condition will be (if the related market condition has not yet been ). The Company immediately recognizes a cumulative catch-up expense for all accumulated expense for the quarters from the grant date through the quarter in which the performance condition was first deemed probable of being . Each quarter thereafter, the Company recognizes the then-remaining expense for the tranche through the end of the requisite service period except that upon vesting of a tranche, all remaining expense for that tranche is immediately recognized. The Company accounts for when they occur. The fair value of such awards is estimated on the grant date using Monte Carlo simulations, which is impacted by the following assumptions:
Expected Term —We estimated the expected term based on the midpoint between the time of vesting and the remaining time to expiration.
Expected Volatility —Given the limited market trading history of our common stock, volatility is based on a weighted blend of (i) the average volatility of peer companies within the automotive and energy storage industries multiplied by a ratio of our volatility based on available stock price data as compared to the average volatility of our peer companies over the same period and (ii) our implied volatility from exchange traded options.
Cost of Equity —Cost of equity is calculated using (i) risk-free rate, (ii) average peer group market beta and (iii) the market-risk premium.
As the stock-based compensation expense is based on the probability assessment of the performance conditions, we may experience significant fluctuation in the non-cash stock-based compensation recognized quarter over quarter. Although the potential stock-based compensation expense that may be recognized over the remaining term of the performance award may be estimated at each of the applicable grant date and the amount is expected to be material to the financial statements in the aggregate, the actual expense recognized may range from zero to the maximum; the actual expense may be recognized over a period less than the remaining term of the performance award; and the amount recognized quarter over quarter is expected to be material and may significantly fluctuate.
Recent Accounting Pronouncements
See Note 3, Recent Accounting Pronouncements, to the audited consolidated financial statements included elsewhere in this Report for more information about recent accounting pronouncements, the timing of their adoption, and, to the extent it has made one, of their potential impact on our financial condition and its results of operations and cash flows.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
We are exposed to a variety of markets and other risks including the effects of change in interest rates, inflation and foreign currency translation and transaction risks as well as risks to the availability of funding sources, hazard events and specific asset risks.
Interest Rate Risk
The market interest risk in our financial instruments and our financial positions represents the potential loss arising from adverse changes in interest rates. As of December 31, 2025, we had cash and cash equivalents and marketable securities of $970.8 million, consisting of interest-bearing money market accounts and marketable securities, for which the fair market value would be affected by change in the general level of U.S. interest rates. As of December 31, 2025, an immediate increase of 100 basis points in interest rates would have resulted in a decline in the fair value of our marketable securities of approximately $3 million. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Such losses would only be realized if we sold the investments prior to maturity.
Inflation Risk
Our operations could be adversely impacted by inflation, primarily from higher material, labor, and construction costs. To date, we do not believe that inflation has had a material impact to our results of operations, capital resources or liquidity, however, we have experienced increases in prices of raw materials, components and labor costs. Our future mitigation strategies may include considering alternative vendors, vertically integrating certain aspects of our supply chain and redesigning our product or production process. At this time, it is difficult to determine what impact these inflationary pressures will have on our long-term growth strategies, as there is uncertainty regarding how long higher levels of inflation may persist, and to what level we will be successful in passing these increased costs to our customers upon commercialization of our technology. If we are not able to fully offset higher costs through price increases or other corrective measures, this may adversely affect our business, financial condition and results of operations.
Foreign Currency Risk
Our functional currency is the U.S. dollar, while certain of our future subsidiaries may have other functional currencies, reflecting their principal operating markets. To date, we have not had material exposure to foreign currency fluctuations and have not hedged such exposure, although we may do so in the future.
Item 8. Financial Statemen ts and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm ( PCAOB ID No. 42 )
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity for the Years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the Years ended December 31, 2025, 2024 and 2023
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of QuantumScape Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of QuantumScape Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), redeemable non-controlling interest and stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the performance-based equity awards (Performance-based Stock Units) – stock-based compensation
Description of the Matter
As discussed in Note 2 and Note 8 to the consolidated financial statements, the Company granted performance-based restricted stock units (“PSUs”) to members of the Company’s management team and certain other employees in the years ended December 31, 2023, 2024 and 2025. The PSUs vest upon the achievement of performance (business milestones) conditions by tranche.
When the Company determines achievement of a tranche’s related performance condition is considered probable, the stock-based compensation expense is recognized over the expected vesting period which is the time to achieve the performance condition assuming the service condition has also been met. The Company recorded stock-based compensation expense of $14.4 million during the year-ended December 31, 2025, fair value of PSU’s vested of $44.2 million, and had $14.0 million of unrecognized compensation costs related to unvested PSUs as of December 31, 2025 for the tranches that were considered probable for PSU awards.
Auditing the Company’s accounting for PSUs is challenging and judgmental due to the subjectivity of management’s assessment of the probability and timing of performance conditions being met for each tranche of the award.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s assessment of the probability and timing of performance conditions being met.
Our substantive audit procedures included, among others, evaluation of the judgments made by management in determining the estimated probability and timing of each performance condition by discussing status with internal operational personnel and comparing the achievement of the business milestones to the Company’s annual plan.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2012.
San Jose, California
February 25, 2026
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of QuantumScape Corporation
Opinion on Internal Control Over Financial Reporting
We have audited QuantumScape Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, QuantumScape Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2025 consolidated financial statements of the Company and our report dated February 25, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Jose, California
February 25, 2026
QuantumScape Corporation
Consolidated Balance Sheets
(In Thousands, Except per Share Amounts)
As of December 31,
Assets
Current assets
Cash and cash equivalents
Marketable securities
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Right-of-use assets - operating lease
Right-of-use assets - finance lease
Other assets
Total assets
Liabilities 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
Commitment and contingencies (see Note 7)
Stockholders’ equity
Preferred stock- $ 0.0001 par value; 100,000 shares authorized, no ne issued and outstanding as of December 31, 2025 and 2024
Common stock - $ 0.0001 par value; 1,250,000 shares authorized ( 1,000,000 Class A and 250,000 Class B); 570,128 Class A and 37,502 Class B shares issued and outstanding as of December 31, 2025, 487,883 Class A and 54,666 Class B shares issued and outstanding as of December 31, 2024
Additional paid-in-capital
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
QuantumScape Corporation
Consolidated Statements of Oper ations and Comprehensive Income (Loss)
(In Thousands, Except per Share Amounts)
Year Ended December 31,
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest expense
Interest income
Other income (expense)
Loss before income taxes
Income tax (provision) benefit
Net loss
Less: Net (loss) 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 (loss) 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
The accompanying notes are an integral part of these consolidated financial statements.
QuantumScape Corporation
Consolidated Statements o f Redeemable Non-Controlling Interest and Stockholders’ Equity
(In Thousands)
Redeemable
Non-Controlling
Common Stock
Additional
Paid-In
Accumulated
Accumulated Other
Comprehensive
Total
Stockholders’
Interest
Shares
Amount
Capital
Deficit
Income (Loss)
Equity
Balance as of December 31, 2022
Exercise of stock option and employee stock purchase plan
Shares issued upon vesting of restricted stock units
Issuance of common stock, net of issuance costs of $ 11.8 million
Stock-based compensation
Net income (loss)
Unrealized gain on marketable securities
Balance as of December 31, 2023
Exercise of stock options and employee stock purchase plan
Shares issued upon vesting of restricted stock units
Shares issued under At-The-Market Offering, net of issuance costs
Stock-based compensation
Net loss
Unrealized gain on marketable securities
Dissolution of joint venture
Balance as of December 31, 2024
Exercise of stock options and employee stock purchase plan
Shares issued upon vesting of restricted stock units
Shares issued under At-the-Market Offering, net of issuance costs
Stock-based compensation
Capital contribution under collaboration agreement - related party
Net loss
Unrealized gain on marketable securities
Balance as of December 31, 2025
The accompanying notes are an integral part of these consolidated financial statements.
QuantumScape Corporation
Consolidated Statem ents of Cash Flows
(In Thousands)
Year Ended December 31,
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
Accretion of discounts on marketable securities
Stock-based compensation expense
Write-off of property and equipment
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
Other
Net cash (used in) provided by investing activities
Financing activities
Proceeds from exercise of stock options and employee stock purchase plan
Proceeds from issuance of common stock
Common stock issuance costs paid
Principal payment for finance lease
Cash received under collaboration agreement - related party
Dissolution of joint venture
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
The following table presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s Consolidated Balance Sheets (amounts in thousands):
December 31,
Cash and cash equivalents
Other assets
Total cash, cash equivalents and restricted cash
The accompanying notes are an integral part of these consolidated financial statements.
QuantumScape Corporation
Notes to Consolidated Financial Statements
December 31, 2025
Note 1. Nature of Business
Organization
The original QuantumScape Corporation, now named QuantumScape Battery, Inc. (“Legacy QuantumScape”), a wholly owned subsidiary of the Company (as defined below), was founded in 2010 with the mission to revolutionize energy storage to enable a sustainable future. In 2020, QuantumScape became a publicly traded company through a business combination with a special purpose acquisition company named Kensington Capital Acquisition Corp. (“Kensington”) which changed its name to QuantumScape Corporation upon closing in November 2020 (the “Business Combination”). As a result of the Business Combination, QuantumScape Battery Inc. survived and became a wholly owned subsidiary of QuantumScape Corporation (the “Company”).
The Company is focused on the development and commercialization of its solid-state lithium-metal batteries. Planned principal operations have not yet commenced. As of December 31, 2025 , the Company had not derived revenue from its principal business activities.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.
Since 2012, the Company has had a relationship with the Volkswagen Group, including its affiliates Volkswagen Group of America, Inc. (“VWGoA”) and Volkswagen Group of America Investments, LLC (“VGA”), collectively referred to as “Volkswagen.” Volkswagen, as a related party, is an approximately 26.2 % and 24.0 % voting interest holder of the Company as of December 31, 2025 and 2024, respectively.
All intercompany accounts and transactions are eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements as well as reported amounts of expenses during the reporting periods. Estimates made by the Company include, but are not limited to, those related to the determination of business milestone achievement dates related to stock awards with performance conditions, among others. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and marketable securities. As of December 31, 2025 and 2024 , approximately $ 117.8 million and $ 78.7 million of our total cash and cash equivalents and marketable securities, are held in U.S. money market funds, and $ 590.8 million and $ 695.5 million are invested in U.S. government and agency securities, respectively. The Company seeks to mitigate its credit risk with respect to cash and cash equivalents and marketable securities by making deposits with what we believe to be large, reputable financial institutions and investing in high credit rated shorter-term instruments.
Cash and Cash Equivalents and Restricted Cash
Management considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Restricted cash is maintained under an agreement that legally restricts the use of such funds and is reported within other assets as the date of availability or disbursement for all restricted cash is more than one year from December 31, 2025.
Restricted cash is comprised of $ 13.7 million and $ 18.0 million as of December 31, 2025 and 2024, respectively, all of which is pledged as a form of security for the Company’s lease agreements for its facilities. The restricted cash is maintained in certificates of deposits as of December 31, 2025 .
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Marketable Securities
The Company classifies its marketable securities as available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity, and return. From time to time, the Company may sell certain securities, but the objectives are generally not to generate profits on short-term differences in price.
These securities are carried at estimated fair value with unrealized gains and losses included in other comprehensive gain/loss in stockholders’ equity until realized. Gains and losses on marketable security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned.
Fair Value Measurement
The Company applies fair value accounting for all financial assets and liabilities measured on a recurring and nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance established a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, used to determine the fair value of its financial instruments. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
Property and Equipment
Property and equipment are recorded at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the related asset. Improvements that increase functionality of the fixed asset are capitalized and depreciated over the asset’s remaining useful life. Deposits for purchases of property and equipment are included in construction-in-progress. Construction-in-progress is not depreciated until the asset is placed in service. Fully depreciated assets are retained in property and equipment, net, until removed from service.
The Company reviews the estimated useful lives of its fixed assets on an ongoing basis. The estimated useful lives of assets are generally as follows:
Computer equipment, hardware, and software
3 - 5 years
Furniture and fixtures
7 - 10 years
Machinery and equipment
3 - 10 years
Leasehold improvements
Shorter of the lease term (including estimated renewals) or the estimated useful lives of the improvements
Impairment of Long-Lived Assets
The Company evaluates the carrying value of long-lived assets when indicators of impairment exist. The carrying value of a long-lived asset is considered impaired when the estimated separately identifiable, undiscounted cash flows from such an asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The long-lived assets outside of U.S. are not material as of December 31, 2025. During the years ended December 31, 2025, 2024, and 2023 , the Company wrote off approximately $ 26.6 million, $ 13.3 million and $ 21.5 million of property and equipment for assets with no remaining future benefit, respectively. These charges are recorded in Research and Development expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Leases
The Company classifies arrangements meeting the definition of a lease as operating or financing leases, and leases are recorded on the Consolidated Balance Sheets as both a right-of-use (“ROU”) asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate which is the rate incurred to borrow on a collateralized basis over a similar term. ROU assets also include any prepaid lease payments and lease incentives. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is reduced over the lease term. For operating leases, interest on the lease liability and the non-cash lease expense result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term. Variable lease expenses, including common maintenance fees, insurance and property tax, are recorded when incurred.
In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components for all classes of assets, and elects to exclude short-term leases having terms of twelve months or less.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer.
The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis. The operating segment has not derived revenue from its business activities as of December 31, 2025. The CODM uses net loss for purposes of making operating decisions, allocating resources, and evaluating financial performance. Significant expenses for the years ended December 31, 2025, 2024, and 2023 , respectively, include non-cash stock-based compensation of $ 127.5 million, $ 144.7 million, and $ 166.3 million, depreciation and amortization of $ 65.6 million, $ 57.8 million, and $ 42.0 million, wr ite-off of property and equipment of $ 26.6 million, $ 13.3 million, and $ 21.5 million, which are reflected in the Consolidated Statement of Cash Flows. Significant expenses for the years ended December 31, 2025, 2024, and 2023 , respectively, also include personnel costs of $ 140.0 million, $ 153.1 million, and $ 135.3 million, and professional services and legal contingency of $ 14.2 million, $ 58.6 million and $ 27.2 million. Other expenses include materials, facilities, other research, development, and administrative expenses, which are recorded within operating expenses. Other segment items included in consolidated net loss are interest income, interest expense, and other income (expense), which are reflected in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2025, 2024 and 2023.
The long-lived assets outside of United States are not material as of December 31, 2025. The measure of segment assets is reported on the consolidated balance sheet as total assets. Refer to the Consolidated Balance Sheets as of December 31, 2025 and 2024 for total consolidated assets.
Research and Development Cost
Costs related to research and development are expensed as incurred.
General and Administrative Expenses
General and administrative expenses represent costs incurred by the Company in managing the business, including salary, benefits, incentive compensation, marketing, insurance, professional fees and other operating costs associated with the Company’s non-research and development activities.
Stock-Based Compensation
The Company measures and recognizes compensation expense for all stock-based awards made to employees and directors, including stock options, restricted stock units and restricted shares, based on estimated fair values recognized over the requisite service period. The Company accounts for forfeitures when they occur.
The fair values of options granted with only service conditions are estimated on the grant date using the Black-Scholes option pricing model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, and an assumed risk-free interest rate. The Company recognizes compensation expense for all options with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the option vesting term of four years .
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
The fair values of options granted with performance (e.g., business milestone) and market conditions (e.g., stock price target) are estimated at the grant date using a Monte Carlo simulation model. The model determined the grant date fair value of each vesting tranche and the future date when the market condition for such tranche is expected to be achieved. The Monte Carlo valuation requires the Company to make assumptions and judgements about the variables used in the calculation including the expected term, volatility of the Company’s common stock, an assumed risk-free interest rate, and cost of equity.
For performance-based options with a vesting schedule based on the attainment of both performance and market conditions, along with service conditions, each quarter the Company assesses whether it is probable that it will achieve each performance condition that has not previously been achieved or deemed probable of achievement and if so, the future time when the Company expects to achieve that business milestone, or its “expected business milestone achievement time.” When the Company first determines that a business milestone has become probable of being achieved, the Company allocates the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting date,” which represents the requisite service period. The requisite service period at any given time is generally the period between the grant date and the later of (i) the expected time when the performance condition will be achieved (if the related performance condition has not yet been achieved) and (ii) the expected time when the market condition will be (if the related market condition has not yet been ). The Company immediately recognizes a cumulative catch-up expense for all accumulated expense for the quarters from the grant date through the quarter in which the performance condition was first deemed probable of being . Each quarter thereafter, the Company recognizes the then-remaining expense for the tranche through the end of the requisite service period except that upon vesting of a tranche, all remaining expense for that tranche is immediately recognized.
The fair values of restricted stock units granted with service conditions only are based on the closing price of the Company’s Class A Common Stock on the date of grant. The Company recognizes compensation expense for restricted stock units with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the award vesting term of four years .
The fair values of restricted stock units granted with service and performance conditions are based on the closing price of the Company’s Class A Common Stock on the grant date. The vesting schedule of such awards is based entirely on the attainment of both service and performance conditions. Each quarter the Company assesses whether it is probable that it will achieve each performance condition and if so, the future time when the Company expects to achieve that performance condition, the “expected vesting date”. When the Company first determines that a performance condition has become probable of being achieved, the Company allocates the entire expense for the related tranche over the number of quarters between the grant date and expected vesting date, which represents the requisite service period. The requisite service period at any given time is generally the period between the grant date and the expected time when the performance condition will be achieved with the service condition also being met.
The Company’s 2020 Employee Stock Purchase Plan (the “ESPP”) is compensatory in accordance with ASC 718-50-25. The Company measures and recognizes compensation expense for shares to be issued under the ESPP based on estimated grant date fair value recognized on a straight-line basis over the offering period.
The ESPP provides eligible employees with the opportunity to purchase shares of the Company’s Class A Common Stock at a discount through payroll deductions. There were approximately 1.2 million shares purchased under the ESPP during the year ended December 31, 2025. As of December 31, 2025 , 8.1 million shares of Class A Common Stock were reserved for future issuance under the ESPP.
The Company has established the corporate bonus plan since 2023 to settle in the form of restricted stock units to eligible employees upon the achievement of certain service and performance conditions (“the Bonus Plan”). The awards under the Bonus Plan are classified as a liability prior to the settlement of vested restricted stock units, upon which the liability is reclassified into equity. The Company recognizes compensation expense for the annual Bonus Plan to be settled in restricted stock units on a straight-line basis over the requisite service period of approximately a year. The Bonus Plan awards are measured at the grant date fair value, i.e., the closing price of the Company’s Class A Common Stock on the grant date, which is the settlement date.
Income Taxes
The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss carryforwards, measured by applying currently enacted tax laws. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.
The Company recognizes tax liabilities based upon its estimate of whether, and the extent to which, additional taxes will be due when such estimates are more likely than not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
The Company has no material provision for income taxes for the years ended December 31, 2025, 2024 and 2023 . The Company has no material current tax expense from losses and no deferred expense from the valuation allowance. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to a valuation allowance against its net deferred tax assets as it is more likely than not that some or all of the deferred tax assets will not be realized.
Net Loss per Share
Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.
Diluted net loss per share adjusts basic earnings per share for the potentially dilutive impact of stock awards. For awards that are liability-classified, during the periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the period end date and adjusts the denominator to include the dilutive shares calculated using the treasury stock method.
Note 3. Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The ASU is effective for all public business entities for annual periods beginning after December 15, 2024. The Company adopted this guidance in the fourth quarter of fiscal 2025 . The adoption of such guidance did no t have a material impact on its consolidated financial statements. See Note 10, Income Taxes, to the consolidated financial statements for more information.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specified information about certain costs and expenses in the notes to financial statements at interim and annual reporting periods. The ASU is effective for all public business entities for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates accounting consideration of software project development stages and clarifies the threshold applied to begin capitalizing costs. The ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, and permits prospective, modified prospective, or retrospective adoption. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides updated guidance on how to recognize, measure, and present government grants. The ASU is effective for all public business entities for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The ASU also includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The ASU is effective all public business entities for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Note 4. Fair Value Measurement
The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (amounts in thousands):
Fair Value Measured as of December 31, 2025
Level 1
Level 2
Total
Assets included in:
Money market funds (1)
Commercial paper (2)
U.S. government and agency securities (2)
Corporate notes and bonds (2)
Total fair value
Fair Value Measured as of December 31, 2024
Level 1
Level 2
Total
Assets included in:
Money market funds (1)
Commercial paper (2)
U.S. government and agency securities (2)
Corporate notes and bonds (2)
Total fair value
Money market funds are included in cash and cash equivalents on the Consolidated Balance Sheets.
Marketable securities consist of commercial paper, U.S. government and agency securities, corporate notes and bonds. As of December 31, 2025 and 2024 , marketable securities with original maturities of three months or less of $ 91.2 million and $ 42.1 million, respectively, are included in cash and cash equivalents on the Consolidated Balance Sheets.
Level 1 assets: Money market funds are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets.
Level 2 assets: Investments in commercial paper, U.S. government and agency securities, and corporate notes and bonds are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.
The Company had no financial liabilities subject to fair value measurements on a recurring basis as of December 31, 2025 and 2024.
There have been no changes to the valuation methods utilized during the year ended December 31, 2025. As of December 31, 2025 and 2024, the carrying values of cash and cash equivalents, accounts payable and accrued liabilities approximate their respective fair values due to their short-term nature.
Marketable Securities
The following table summarizes, by major security type, the Company’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Amortized cost net of unrealized gain (loss) is equal to fair value as of December 31, 2025 and 2024. The fair value as of December 31, 2025 and 2024 are as follows (amounts in thousands):
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
December 31, 2025
Amortized Cost
Gross
Unrealized Gain
Gross
Unrealized Loss
Fair Value
Level 1 securities
Money market funds
Level 2 securities
Commercial paper
U.S. government and agency securities
Corporate notes and bonds
Total
December 31, 2024
Amortized Cost
Gross
Unrealized Gain
Gross
Unrealized Loss
Fair Value
Level 1 securities
Money market funds
Level 2 securities
Commercial paper
U.S. government and agency securities
Corporate notes and bonds
Total
Realized gains and losses and interest income from the investment are included in interest income.
The Company regularly reviews its available-for-sale marketable securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. The following tables display additional information regarding gross unrealized losses and fair value by major security type for the 3 and 17 marketable securities in unrealized loss positions held by the Company as of December 31, 2025 and 2024, respectively (amounts in thousands):
December 31, 2025
Less than 12 Consecutive Months
12 Consecutive Months or Longer
Total
Gross
Unrealized Loss
Fair Value
Gross
Unrealized Loss
Fair Value
Gross
Unrealized Loss
Fair Value
U.S. government and agency securities
Corporate notes and bonds
Total
December 31, 2024
Less than 12 Consecutive Months
12 Consecutive Months or Longer
Total
Gross
Unrealized Loss
Fair Value
Gross
Unrealized Loss
Fair Value
Gross
Unrealized Loss
Fair Value
U.S. government and agency securities
Corporate notes and bonds
Total
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
The unrealized losses were attributable to changes in interest rates that impacted the value of the investments, and not increased credit risk. There were no sales of available-for-sale marketable securities during the year ended December 31, 2025. During the years ended December 31, 2024 and 2023 , the Company received proceeds of $ 1.2 million and $ 1.5 million, including interest, from the sale of available-for-sale marketable securities, respectively. The Company realized immaterial gains as a result of such sales. The Company does not intend to sell the investments that are in an unrealized loss position, nor is it more likely than not that the Company will be required to sell the investments before the recovery of the amortized cost basis, which may be its maturity. Accordingly, the Company did no t record an allowance for credit losses associated with these investments.
The estimated amortized cost and fair value of available-for-sale securities by contractual maturity as of December 31, 2025 are as follows (amounts in thousands):
December 31, 2025
Amortized Cost
Fair Value
Due within one year
Due after one year and through five years
Total
Note 5. Balance Sheet Components
Property and Equipment
Property and equipment as of December 31, 2025 and 2024 consisted of the following (amounts in thousands):
December 31,
Computer equipment, hardware, and software
Furniture and fixtures
Leasehold improvements
Machinery and equipment
Construction-in-progress
Property and equipment, gross
Accumulated depreciation and amortization
Property and equipment, net
Depreciation and amortization expense related to property and equipment was $ 64.7 million, $ 57.0 million and $ 41.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Accrued Liabilities
Accrued liabilities as of December 31, 2025 and 2024 consisted of the following (amounts in thousands):
December 31,
Litigation-related accrual
Accrued property and equipment
Other
Accrued liabilities
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Other Liabilities
Other liabilities as of December 31, 2025 and 2024 consisted of the following (amounts in thousands):
December 31,
Asset retirement obligation
Long-term advance payments and others
Other liabilities
Note 6. Leases
The Company leases its facilities and certain equipment, with current lease terms running through 2032 . Many leases include options to renew. The Company did not include renewal options in the calculation of the lease liability and right-of use asset at the lease inception unless the exercise of such options was reasonably certain. Fixed rent generally escalates each year, and the Company is responsible for a portion of the landlords’ operating expenses such as property tax, insurance and common area maintenance.
The Company’s leases include various operating leases expiring at various dates through September 2032 and a finance lease expiring September 2032 for one of our buildings in San Jose. The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees.
In July 2025, the Company entered into a Lease Termination Agreement to terminate the Company’s lease for certain premises outside of the Company’s headquarters, consisting of approximately 80,641 rentable square feet of space located in San Jose, California, effective in August 2025 . The original term of the Lease commenced on November 1, 2021 and was to expire on September 30, 2032 . The Company recognized a loss of approximately $ 8.3 million on its Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2025 , which includes the write-off of approximately $ 7.6 million related to leasehold improvements and a lease termination loss of approximately $ 0.7 million.
In December 2025, the Company entered into an agreement to sublease certain premises outside of its headquarters through the duration of the lease term which expires on September 30, 2032 , unless terminated earlier in accordance with its terms. Under the sublease, the Company expects to receive approximately $ 11.5 million as base rent over the term of the sublease. During the year ended December 31, 2025, sublease income recognized was immaterial.
The components of lease related expense are as follows (amounts in thousands):
Year Ended December 31,
Lease costs
Finance lease costs:
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease costs
Variable lease costs
Total lease expense
The components of supplemental cash and non-cash information related to leases are as follows (amounts in thousands):
Year Ended December 31,
Operating outgoing cash flows - finance lease
Financing outgoing cash flows - finance lease
Operating outgoing cash flows - operating lease
Right-of-use assets obtained in exchange for new operating lease liabilities
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
The table below displays additional information for leases as of December 31, 2025 and 2024:
December 31,
Finance lease
Weighted-average remaining lease term - finance lease (in years)
Weighted-average discount rate - finance lease
Operating lease
Weighted-average remaining lease term - operating lease (in years)
Weighted-average discount rate - operating lease
As of December 31, 2025, future minimum payments during the next five years and thereafter are as follows (amounts in thousands):
Fiscal Year
Operating
Lease
Finance
Lease
Thereafter
Total
Less present value discount
Lease liabilities
As the Company’s lease agreements do not provide an implicit rate, the Company used an estimated incremental borrowing rate that will be incurred to borrow on a collateralized basis over a similar term at the lease commencement date or modification date in determining the present value of lease payments.
Asset Retirement Obligations
The Company establishes asset s and liabilities for the present value of estimated future costs to return certain of our leased facilities to their original condition upon the termination or expiration of a lease. The recognition of an asset retirement obligation requires the Company to make assumptions and judgments including the actions required to satisfy the liability, inflation rates and the credit-adjusted risk-free rate. The initially recognized asset retirement cost is amortized using the same method and useful life as the long-lived asset to which it relates. Accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The Company recorded asset retirement obligation of approximately $ 13.7 million and $ 12.4 million as of December 31, 2025 and 2024 , respectively, in Other liabilities in the Consolidated Balance Sheets.
Note 7. Commitments an d Contingencies
From time to time, and in the ordinary course of business, the Company is subject to certain claims, charges and litigation concerning matters arising in connection with the conduct of the Company’s business activities.
Shareholder Derivative Litigation
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Two shareholder derivative suits were filed in February 2021 in the United States District Court for the Northern District of California against 11 officers and directors of the Company and have been consolidated into one action, with the first-filed complaint being designated the operative one. The Company is the nominal defendant. The complaint alleges that the individual defendants breached various duties to the Company and contains similar allegations to the settled and dismissed securities class action brought against the Company and three of its executives in January 2021, in which it was alleged that materially false and misleading statements were made concerning the Company’s business, operations, and prospects, including information regarding its battery technology. VGA is also named as a in the derivative . The action is currently stayed. A shareholder derivative suit was filed in October 2024 in the United States District Court for the Northern District of California current and former officers and directors of the Company and VGA of duties to the Company. The Company is the nominal . The action was deemed related to the consolidated action and is currently stayed.
In June through August 2022, four shareholder derivative suits were filed in the Court of Chancery of the State of Delaware against current and former directors and officers of the Company. The Company is the nominal defendant. The complaints allege that the individual defendants breached various duties to the Company. VGA is also named as a defendant in three of those actions. In September 2022, the four actions were consolidated and stayed. A consolidated amended complaint was filed on July 30, 2024.
A shareholder derivative action was filed in the United States District Court for the District of Delaware on February 22, 2024, against current and former directors and officers of the Company. The Company is the nominal defendant. The complaint alleges that the individual defendants breached various duties to the Company and includes a claim for contribution related to the securities class action that was brought against the Company and three of its executives in January 2021 and subsequently settled and dismissed. The complaint also alleges that plaintiff previously sent a litigation demand to the Board and alleges that the demand has effectively been rejected. The action is currently stayed.
Two additional shareholder derivative actions were filed in the Court of Chancery of the State of Delaware in May 2024 and October 2024, against current and former directors and officers of the Company. The Company is the nominal defendant. The complaints allege that the individual defendants breached various duties to the Company. The complaints also allege that the plaintiffs previously sent a litigation demand to the Board and allege that the demands had effectively been rejected. The action filed in May 2024 is currently stayed.
A settlement in principle to resolve all the above-described derivative actions was reached in February 2026. This pending settlement is subject to final documentation, notice to stockholders, and preliminary and final approval of the court.
Private Attorneys General Actions
The Company is a defendant in two Private Attorneys General Act (“PAGA”) wage-and-hour actions filed in Santa Clara County Superior Court by former employees, along with a related class action in arbitration. The complaints allege violations of California’s Labor Code. The actions are presently stayed. The Company denies the allegations. In April 2025, the parties reached an agreement in principle to settle the claims.
For many legal matters, particularly those in early stages, the Company cannot reasonably estimate the possible loss (or range of loss), if any. The Company records an accrual for legal matters at the time or times it determines that a loss is both probable and reasonably estimable. As of December 31, 2025 and 2024 , the amount accrued for each matter was individually not material, and the aggregate amount accrued was approximately $ 4 million as of December 31, 2025 and $ 12 million as of December 31, 2024. Regarding matters for which no accrual has been made (including the potential for losses in excess of amounts accrued), the Company currently believes, based on its own investigations, that any losses (or ranges of losses) that are reasonably possible and estimable will not, in the aggregate, have a material adverse effect on its financial position, results of operations, or cash flows. However, the ultimate outcome of legal proceedings involves judgments, estimates, and inherent uncertainties and cannot be predicted with certainty. Should the ultimate outcome of any legal matter be unfavorable, the Company’s business, financial condition, results of operations, or cash flows could be materially and affected. The Company may also incur substantial legal fees, which are expensed as incurred, in legal .
Other commitments
The Company’s minimum purcha se commitments consist of non-cancellable agreements to purchase goods and services, primarily for materials, and licenses and hosting services, entered into in the ordinary course of business.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
As of December 31, 2025, future minimum purchase commitments in aggregate during the next five years and thereafter are as follows (amounts in thousands):
Fiscal Year
Minimum Purchase Commitments
Thereafter
Total
Note 8. Stockholders’ Equity
As of December 31, 2025 and 2024 , 1,350,000,000 shares, $ 0.0001 par value per share are authorized, of which, 1,000,000,000 shares are designated as Class A Common Stock, 250,000,000 shares are designated as Class B Common Stock, and 100,000,000 shares are designated as Preferred Stock.
Common Stock
Holders of common stock are entitled to dividends when, as, and if, declared by the Company’s Board of Directors (the “Board”), subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of December 31, 2025 , the Company had not declared any dividends. The holder of each share of Class A Common Stock is entitled to one vote, and the holder of each share of Class B Common Stock is entitled to ten votes.
In August 2023, the Company completed an underwritten public offering of 37.5 million shares of its Class A Common Stock for an aggregate purchase price of $ 288.2 million, net of issuance costs of $ 11.8 million (the “August 2023 Public Offering”).
In February 2023, the Company entered into separate Distribution Agreements with J.P. Morgan Securities LLC, Cowen and Company, LLC, Deutsche Bank Securities Inc. and UBS Securities LLC, as sales agents, pursuant to which the Company issued and sold, from time to time, common stock with an aggregate offering price of $ 400 million (the “ATM offering”) under the prospectus supplement dated February 28, 2023 to a shelf registration statement on Form S-3 (the “Form S-3”). During the year ended December 31, 2024 , 24.9 million shares of the Company’s Class A Common Stock were sold pursuant to the ATM offering for aggregate proceeds of approximately $ 128.5 million, net of issuance costs paid. During the year ended December 31, 2025 , 29.5 million shares of the Company’s Class A Common Stock were sold pursuant to the ATM offering for aggregate proceeds of approximately $ 264.2 million, net of issuance costs paid completing the ATM offering.
Equity Incentive Plans
Prior to the Business Combination, the Company maintained its 2010 Equity Incentive Plan (the “2010 Plan”), under which the Company granted options and restricted stock units to purchase or directly issue shares of common stock to employees, directors, and non-employees.
Upon the closing of the Business Combination, awards under the 2010 Plan were converted at an exchange ratio of 4.02175014920 , and assumed into the 2020 Equity Incentive Award Plan (the “2020 Plan”, and together with the 2010 Plan, the “Plans”). The 2020 Plan permits the granting of awards in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted shares, restricted stock units and performance awards to employees, directors, and non-employees.
As of December 31, 2025 , 136,592,934 shares of Class A Common Stock are authorized for issuance pursuant to awards under the 2020 Plan, plus any shares of Class A Common Stock subject to stock options, restricted stock units or other awards that were assumed in the Business Combination and terminate as a result of being unexercised or are forfeited or repurchased by the Company, with the maximum number of shares to be added to the 2020 Plan equal to 69,846,580 shares of Class A Common Stock. As of December 31, 2025 , 58,843,980 shares of Class A Common Stock are reserved and available for future issuance under the 2020 Plan.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Stock Options
Stock option activity under the Plans, including the EPA Program discussed below, is as follows:
Number of
Shares
Outstanding
(in thousands)
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term
(Years)
Intrinsic value
(in thousands)
Balance as of December 31, 2024 (1)
Cancelled and forfeited (2)
Expired
Exercised
Balance as of December 31, 2025
Vested and expected to vest as of December 31, 2025 (3)
Vested and exercisable as of December 31, 2025
(1) This includes 5.9 million options outstanding as of December 31, 2024 pursuant to the EPA Program.
(2) This represents options cancelled and forfeited under the EPA Program.
(3) This includes 0.3 million options granted pursuant to the EPA Program that are expected to vest as of December 31, 2025. None of the options granted pursuant to the EPA Program were vested and exercisable as of December 31, 2025 .
There were no options granted during the year ended December 31, 2025, 2024 or 2023.
The aggregate intrinsic value of options exercised during the year ended December 31, 2025, 2024 and 2023 was $ 77.8 million, $ 39.9 million and $ 49.8 million, respectively.
Additional information regarding options outstanding as of December 31, 2025, is as follows:
Range of Exercise Price per Share
Number of Options Outstanding
(in thousands)
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (Years)
Stock-based compensation expense is based on the grant-date fair value. The Company recognizes compensation expense for awards with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the option vesting term of four years .
Excluding options granted pursuant to the EPA Program, as of December 31, 2025 , there was no unrecognized compensation cost related to stock options.
EPA Program
In December 2021, the Company granted stock options for the purchase of an aggregate of approximately 14.7 million shares of the Company’s Class A Common Stock to the Company’s Chief Executive Officer at the time and other members of the Company’s management team pursuant to the EPA Program that was approved by the Company’s stockholders in December 2021. In December 2022, the remaining 2.1 million stock options under the EPA Program were granted to members of the Company’s management team under the same terms as those in the initial grant in 2021, representing the final grant pursuant to the EPA Program approved in December 2021. The EPA Program consists of five equal tranches (each a “Tranche”) that vest if the Company meets certain business milestones (performance conditions) and stock price targets (market conditions).
The Company accounts for the compensation expense associated with each Tranche when it determines that achievement of a related business milestone is considered probable. As of December 31, 2025 , the business milestone for one Tranche had been achieved; however, because the related stock price target has not yet been achieved, no shares have vested to date. As of December 31, 2025 , one other Tranche was considered probable.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
In February 2025, certain named executive officers and certain other senior employees entered into agreements with the Company to waive the stock options granted to them under the Company’s 2021 Extraordinary Performance Award Program. The total number of shares of the Company’s Class A Common Stock underlying such waived stock options was 3,989,584 . As such, these stock options were cancelled in February 2025. The remaining number of shares outstanding under the EPA Program is approximately 0.8 million as of December 31, 2025.
For the year ended December 31, 2025 , the Company recorded stock-based compensation expense of $ 4.8 million related to the EPA Program, net of expense including $ 5.7 million for the EPA awards cancelled in February 2025 where the unamortized expense was fully recognized offset by the forfeitures of awards. For the years ended December 31, 2024 and 2023 , the Company recorded a credit in stock-based compensation expense of $ 13.4 million, primarily due to the reversal of the previously recognized expense for the options where the requisite service period had not been completed at the time of forfeiture and stock-based compensation expense of $ 26.3 million, respectively, related to the EPA Program. As of December 31, 2025, the Company had immaterial unrecognized stock-based compensation expense for the business milestones currently achieved or considered probable of achievement, which will be recognized over an estimated weighted-average period of 1.4 ye ars. As of December 31, 2025 , the Company had approximately $ 4.4 million of total unrecognized stock-based compensation expense for the business milestones currently considered not probable of achievement.
Restricted Stock Units Activities
In 2023, 2024, and 2025, the Company granted 4.4 million, 4.2 million, and 5.4 million shares of restricted stock units with service and performance conditions (“PSU”), respectively, to members of the Company’s management team and certain other employees under the Company’s 2020 Plan. The performance conditions for these PSUs are related to the Company’s product development, operational, and business milestones through May 2026, May 2027, and May 2028, respectively. These PSUs will expire in May 2026, May 2027, and May 2028, respectively, if performance conditions are not met. For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense of $ 14.4 million, $ 24.3 million and $ 15.8 million, respectively, related to these PSUs, for the milestones achieved or considered probable of achievement.
The Company’s Bonus Plan is settled in the form of restricted stock units to eligible employees upon the achievement of certain service and performance conditions. These performance conditions are related to the Company’s product development, operational, and business milestones for the year. The stock-based compensation expense related to the Bonus Plan were recorded as liabilities under Accrued compensation and benefits prior to the settlement of vested restricted stock units, upon which the liability is reclassified into equity. For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense of $ 17.8 million, $ 22.3 million and $ 20.7 million, respectively, related to the Bonus Plans. In February 2025, approximately 4.3 million restricted stock units were granted and vested under the 2024 Bonus Plan for final settlement, resulting in approximately $ 20.3 million in additional paid in capital, of which $ 16.9 million was reclassified from Accrued compensation. This represents a non-cash financing activity during the year ended December 31, 2025. S tock-based compensation expense related to the 2025 Bonus Plan of approximately $ 14.5 million are recorded as liabilities under Accrued compensation and benefits in the Consolidated Balance Sheets as of December 31, 2025 , and will be reclassified to additional paid-in capital upon issuance of the restricted stock units. On February 24, 2026, approximately 2.3 million restricted stock units were granted and vested under the 2025 Bonus Plan for the settlement, and as a result, approximately $ 14.3 million will be reclassified to additional paid-in capital in the first fiscal quarter of 2026.
Restricted stock units with service conditions only (“RSU”) and PSU activities under the Plans are as follows:
RSUs Outstanding
PSUs Outstanding
Number of
Units
(in thousands)
Weighted
Average Grant
Date Fair Value
Number of
Units
(in thousands)
Weighted
Average Grant
Date Fair Value
Balance as of December 31, 2024
Granted
Vested
Forfeited
Balance as of December 31, 2025
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
The fair value of RSUs which vested during the years ended December 31, 2025, 2024 and 2023 was $ 97.5 million, $ 58.3 million and $ 68.1 million, respectively. The fair value of PSUs which vested during the year ended December 31, 2025 was $ 44.2 million in total, consisting of the final settlement under the 2024 Bonus Plan and the PSUs granted to the management team and certain other employees. The fair value of PSUs which vested during the year ended December 31, 2024 was $ 29.3 million in total, consisting of the final settlement under the 2023 Bonus Plan, the interim settlement under the 2024 Bonus Plan, and the PSUs granted to members of the Company’s management team and certain other employees. The fair value of PSUs which vested during the year ended December 31, 2023 was $ 2.9 million, which was the interim settlement under the 2023 Bonus Plan.
As of December 31, 2025 , unrecognized compensation costs related to unvested RSUs and PSUs were $ 135.6 million and $ 14.0 million, respectively, and are expected to be recognized over a weighted average period of 2.6 years and 1.2 years, respectively.
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the accompanying Consolidated Statements of Operations and Comprehensive Loss for all awards is as follows (amounts in thousands):
Year Ended December 31,
Research and development
General and administrative
Total stock-based compensation expense
Note 9. Net Loss Per Share
Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share adjusts basic earnings per share for the potentially dilutive impact of stock options. As the Company has reported a loss for the year ended December 31, 2025, potentially dilutive securities, are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.
The following table sets forth the computation of basic and diluted loss per Class A Common Stock and Class B Common Stock (amounts in thousands, except per share amounts):
Year Ended December 31,
Numerator:
Net loss attributable to common stockholders
Denominator:
Weighted average Class A and Class B Common Stock outstanding - Basic and Diluted
Net loss per share attributable to Class A and Class B Common stockholders - Basic and Diluted
Basic and diluted earnings per share were the same for each period presented as the inclusion of all potential Class A Common Stock and Class B Common Stock outstanding would have been anti-dilutive.
The following table presents the potential common stock outstanding that was excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive (amounts in thousands):
Year Ended December 31,
Options
RSUs
PSUs
Total
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Note 10. Income Taxes
The Company has no U.S. provision for income taxes for the years ended December 31, 2025, 2024 and 2023 due to net operating losses generated and full valuation allowance against US deferred tax assets. The Company has a subsidiary in Japan and the foreign tax provision (benefit) in Japan for the years ended December 31, 2025, 2024 and 2023 are $ 1.5 million, $( 0.3 ) million and $ 20 thousand, respectively, which are presented in the Consolidated Statements of Operations and Comprehensive Income (Loss).
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This update requires annual disclosure of disaggregated rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024. Accordingly, this guidance is effective for the Company for the calendar year beginning January 1, 2025, on a prospective basis. Early adoption and retrospective application are permitted. Therefore, the Company has adopted a retrospective approach for the effective tax rate disclosure requirement.
A reconciliation from U.S. statutory rate of 21 % to the effective rate and the reconciling item threshold are as follows:
Year Ended December 31,
Amount
Percent
Amount
Percent
Amount
Percent
U.S. Federal Statutory Tax Rate
Foreign Tax Effects
Tax Credits:
Research and development tax credits
Changes in Valuation Allowances - Federal
Nontaxable or Nondeductible Items:
Stock-based compensation
Sec. 162(m) wage limitation
Non deductible expense under collaboration agreement
Other
Effective Tax Rate
Significant components of the Company’s net deferred tax assets as of December 31, 2025 and December 31, 2024, are as follows (amounts in thousands):
Year Ended December 31,
Deferred tax assets:
Net operating losses
Tax credits
Accruals and stock-based compensation
Lease liability
Section 174 capitalized research & development
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Right of use assets
Intangibles
Fixed assets
Total deferred tax liabilities
Total net deferred tax assets
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. Based upon the weight of available evidence, which includes the Company’s historical operating performance, cumulative net losses since inception, and financial conditions of the consolidated group, the Company has provided a full valuation allowance against all deferred tax assets as of December 31, 2025. The Company’s valuation allowance increased by $ 111.4 million and $ 129.7 million for the years ended December 31, 2025 and 2024 , respectively. A reconciliation of the beginning and ending balances of the valuation allowance is as follows (amounts in thousands):
Year Ended December 31,
Beginning of the year
Increase
End of the year
As of December 31, 2025 , the Company had U.S. federal and state net operating loss carryforwards of approximately $ 2.60 billion and $ 2.35 billion, respectively. The U.S. federal net operating loss carryforwards of $ 170.2 million generated prior to 2018 will expire at various dates beginning in 2030 , if not utilized. The remaining U.S. federal net operating loss carryforwards of $ 2.43 billion can be carried forward indefinitely. The state net operating loss carryforwards will expire at various dates beginning in 2030, if not utilized.
In the event of a change in ownership, as defined under federal and state tax laws, the Company’s net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization.
As of December 31, 2025 , the Company also has U.S. federal and California research and development credits of $ 111.5 million and $ 81.4 million, respectively. The U.S. federal tax credit carryforwards will expire beginning in 2031 if not utilized. The state tax credit carryforwards do not expire.
The Company records unrecognized tax benefits in accordance with ASC 740-10, Income Taxes . ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in the Company’s income tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows (amounts in thousands):
Year Ended December 31,
Beginning of the year
Increase—current year positions
Decrease—current year positions
Increase—prior year positions
Decrease—prior year positions
End of the year
Due to the Company’s full valuation allowance, the unrecognized tax benefits would not materially impact the Company’s effective tax rate when recognized.
The Company’s policy is to classify interest and penalties associated with uncertain tax positions, if any, as a component of its income tax provision. For the years ended December 31, 2025, 2024 and 2023 , the Company had no interest or penalties related to unrecognized tax benefits.
The U.S. federal, state and Japan income tax returns remain open under the statute of limitations, as all years since the Company’s formation are subject to potential tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the IRS or state tax authorities to the extent utilized in a future period.
QuantumScape Corporation
Notes to Consolidated Financial Statements — Continued
December 31, 2025
On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “OBBBA”), which includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act that were set to expire. For example, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, allowing these expenditures to be fully deductible in the tax year they were incurred. The OBBBA also permanently extends the full expensing of qualifying assets through accelerated bonus depreciation in the tax year such amounts were acquired. Given that the Company maintains a full valuation allowance, the impact of the tax law changes to the financial statements is not material.
Note 11. Related Party Transactions
In July 2025, the Company entered into an Amended and Restated Collaboration Agreement (the “PowerCo Amendment”) with PowerCo SE (“PowerCo”), a battery cell company wholly owned by the Volkswagen Group, which is a major investor in the Company, for the industrialization by PowerCo of QS technology based on QSE-5.
Under the Amendment, QS and PowerCo entered into a statement of work outlining the scope and responsibilities of the joint scale-up team working on the Company’s battery development. PowerCo has agreed that it will contribute up to $ 130.7 million for the project over the next two years, subject to the completion of certain technical milestones and other project goals by the joint scale-up team. The Amendment does not require the Company to repay funds contributed under the statement of work, and there are no restrictions on the use of the cash receipts.
The Company determined that such payments should be accounted for in accordance with ASC 730-20 Research and Development Arrangements, as there is a presumption of a repayment obligation due to the significant related party relationship between the parties. Further, ASC 470-50 Debt – Modifications and Extinguishments indicates extinguishment transactions between related entities may be in essence capital transactions. During the year ended December 31, 2025 , the Company received $ 19.5 million from PowerCo and such amount was recorded as a capital contribution to Additional Paid-In Capital in the Consolidated Statement of Shareholders’ Equity upon legal extinguishment. No shares were issued related to this capital transaction.
