Good day, and welcome to QuantumScape's Third Quarter 2021 Earnings Conference Call. John Saager, QuantumScape's Head of Investor Relations. You may begin your conference.

Thanks, Operator. Good afternoon and thank you to everyone for joining QuantumScape's Third Quarter 2021 Earnings Conference Call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website and is part of our quarterly update. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The safe harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our Form 10-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's Co-Founder, CEO, and Chairman, Jagdeep Singh and our CFO, Kevin Hettrich. Jagdeep will provide a strategic update on the business. Then Kevin will cover the financial results and our outlook in more detail. With that, I'd like to turn the call over to Jagdeep.

Thanks, John. Welcome to our earnings call for the third quarter of 2021. Earlier today, we published our shareholder letter summarizing the major developments in the last quarter. I'd like to briefly describe a few of the highlights here. On the Q2 2021 earnings call, we disclosed that we submitted our single-layer cells for testing by an independent third-party lab. We can now report that the results from these tests replicate the impressive performance we first disclosed in our battery showcase presentation in December last year. The lab carried out what we believe is the most automotive-relevant test, over 800 cycles at 25 degree Celsius, 1C, i.e., 1 hour charge and discharge rates, 100% depth of discharge, and 3.4 atmospheres of pressure. This test is critical because an automotive battery cell that simultaneously satisfy all these requirements, missing even one renders the cell inadequate for automotive applications. Another important news, in September, we announced an agreement with the second top 10 global automotive OEM by sales revenue. This automotive OEM has already tested our cells in their labs, and the agreement calls for them to work with us to evaluate our batteries for inclusion into pre-series prototype vehicles and ultimately, for series production vehicle. We long held the belief that customer contracts are the ultimate external testing validation, so it's encouraging to have this agreement with a second automotive OEM as confirmation of the compelling value proposition offered by our technology. This OEM has committed to purchase 10-megawatt hours of batteries from QS-0, our pre-pilot production line, contingent upon achieving technical milestones that are in line with our preexisting technical development road map. As we said in the shareholder letter, although the potential near-term economic value of this agreement is in the high single-digit millions, we believe this deal represents a major long-term opportunity. On the cell development front, we saw important developments during the past quarter. In August, we announced the completion of our third key milestone of the year, our 4-layer cells successfully demonstrating 800 cycles to more than 80% capacity at 1-hour charge and discharge rates and 25 degrees Celsius. Today, we report these cells have now achieved 1,000 cycles, well in excess of the commercially relevant target. Construction and development of 10-layer cells continues with encouraging results. The first generation 10-layer cells reported in the second quarter shareholder letter displayed energy retention behavior similar to our four and single-layer cells, as well as cycling performance in excess of our expectations for such early cells, achieving over 300 cycles at a 1C rate. As we've said before, achieving our targets requires continued improvement of the quality, consistency, and throughput of our processes. Our testing at aggressive 1C charge/discharge rates allows us to quickly identify potential refinements in cell design and construction, dramatically shorten the development cycle, and deploy improvements rapidly. Following the LFP data we shared last quarter, we continue to improve our high-energy density LFP cells with refinements to the cathode material and manufacturing process. We believe combining LFP cathodes with our lithium metal platform provides our OEM customers an opportunity to minimize active material costs and address their supply chain issues while addressing the fundamental challenge conventional LFP cells face, which is low energy density. For a deeper dive on LFP with lithium-metal anodes, I'd encourage you to go to our website and check out our September 9th webinar on LFP batteries. From a manufacturing perspective, we wanted to lay out our scale-up plans, which called for a staged approach with several generations of manufacturing lines, which include an expanded engineering line, a pre-pilot production line, QS-0, and our joint venture production line with Volkswagen, QS-1. Our engineering line is used for cell and process development, as well as production of near-term customer prototypes, and expansion to this line will allow us to increase cell output, providing the test cells needed to further accelerate our development program. We tend to use QS-0 to both produce more cells for customer use in pre-series test vehicles and prove out the processes that will be used in our gigawatt-scale QS-1 production facility. This quarter, we finalized orders for large-scale heat treatment tooling for the QS-0 pre-product line, in close collaboration with our vendors and partners. These tools represent the core of our manufacturing capability. Finally, I wanted to say a few words about our strategic vision. As while our immediate focus remains on achieving our near-term goals, these near-term goals should always be understood in the context of this broader vision. Our Board of Directors recently laid out a series of ambitious targets for the Company to be achieved over the course of the coming decade, including cumulative delivery of 1-terawatt hour of battery cells, equivalent to the annual production of over 20 factories, the size of the Gigafactory outside Reno, Nevada. Of course, we have a lot of work to do with now and then, but our ambitions will not stop there. We believe that the once-in-a-generation shift electric vehicles, combined with our transformative lithium metal battery technology, represents an extraordinary opportunity with decarbonization, as well as shareholder value creation. Extraordinary opportunity demands extraordinary ambition. With that, I'll hand it over to our CFO, Kevin Hettrich, to say a few words on our financial performance before we open up to Q&A. Kevin?

Thank you, Jagdeep. In the third quarter, our operating expenses were $54 million. Excluding stock-based compensation, operating expenses were $41 million. This level of spend was in line with our expectations entering the quarter. For the full year, we expect cash operating expenses, OpEx, less depreciation and stock-based compensation, to be in the range of $130 million to $160 million, consistent with previous guidance. CapEx in the third quarter was approximately $39 million. For the full year, we now expect CapEx to be in the range of $135 million to $165 million. On the Q2 earnings call, we discussed 2021 CapEx tracking higher than $130 million to $160 million, primarily due to potential pull-in of some QS-0 equipment spend from 2022 into 2021. In Q3, our team secured shorter lead times for a portion of this equipment. We are consequently seeing less timing-based shift of QS-0 CapEx spend from 2022 into 2021. CapEx actuals are determined by lead times, order dates, and payment terms near year-end, changes in these factors can move lumpy payments either into or outside of the forecast period. We expect CapEx in 2022 to be significantly higher than 2021 as we continue to increase our engineering line capacity to support internal development and broader customer sampling, as well as to invest in our pre-pilot QS-0 line, consistent with our 2023 target of providing cells from that line for use in test cars. We'll provide more specifics regarding 2022 on our Q4 earnings call. With respect to cash, we spent $68 million on operations and CapEx in the third quarter. We expect full year 2021 free cash flow burn to be in the range of $260 million to $300 million. We continue to reiterate year-end liquidity guidance of greater than $1.3 billion. This quarter, our Company achieved progress on cell development, manufacturing scale-up, and prospective customer engagement, while maintaining a strong balance sheet. We ended the third quarter with more than $1.5 billion in liquidity. We believe exiting 2021 with more than $1.3 billion in expected liquidity provides sufficient capital to achieve our key milestones, including fully funding QuantumScape through initial QS-1 production. Our GAAP net income for the quarter was $15 million, including the impact of $69 million in non-cash fair value adjustment of the assumed common stock warrants. Excluding this non-cash adjustment, the net loss for the quarter was approximately $54 million, in line with our expectations. Lastly, this quarter, we completed the redemption of all assumed common stock warrants, an important step that further simplifies and streamlines our capital structure. Consequently, beginning in Q4 2021, we will no longer incur fair value adjustments related to these warrants. We're excited about the progress this quarter and look forward to the opportunities ahead. We'd like to thank our investors for supporting our mission to commercialize our solid-state lithium metal batteries, and to help accelerate the mass market adoption of electric vehicles. With that, over to you John. John?

Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors over the Say app and in our IR inbox. Our first question is actually a combination of questions that came in through the inbox. We've recently seen some new data from two of your competitors, and it's hard to tell the difference between your results and theirs. Why do you think QuantumScape is ahead of them?

The simple answer is, we have not seen any other data from any other lithium metal or solid-state player that meets the basic requirements of the automotive sector, which of course is to be able to cycle the 800 cycles at a 1C, i.e., 1-hour charge and 1-hour discharge rate, at room temperature, i.e., 25 degrees Celsius, while retaining more than 80% of the cell's capacity. If you miss any one of these requirements, we don't believe that the battery is viable for automotive applications. Now, neither of the players you mentioned has been able to demonstrate and need these requirements. For example, both have shown cycling data at C over 5 rates, that's a 5-hour charge. In one case which uses a liquid electrolyte with lithium metal anode. This is likely because like previous attempts and all of these lines, that presentation slides showed they're seeing dendrites and lowering the charge rate is one way to reduce the incidents of such dendrites. In the other case which uses a sulfide electrolyte with a carbon silicon anode, it could be because the cell internal impedance is too high to support higher rate charge. Furthermore, any approach that requires a lithium metal foil to start with, will face severe challenges from a cost standpoint. Given the cost of lithium foil and the manufacturing complexities of handling reacted lithium metal in a manufacturing environment. So, to summarize, to our knowledge, QuantumScape is the only next-gen battery player to have shown data that meets, what we believe, are the basic requirements of the automotive application. Until the Company shows data demonstrating their cells can meet these basic requirements, there might be other applications they can address. But we don't believe their approaches is going to work for automotive applications.

Thanks. Our second question also comes from the IR inbox. Can you talk a little bit more about the significance of signing the second OEM? It seems like this is just an agreement for samples.

So the significance of this is that this represents a second top 10 by revenue automotive OEM that is tested ourselves in their labs and confirmed that [Indiscernible] building pre-series and eventually, series production vehicle if our technology continues to meet the milestones laid out in the agreement, milestones that are along our existing development timeline. The agreement is to take 10-megawatt hours of capacity from our QS-0 pre-production line, representing on the order of 100,000 cells, which is a really significant number that supports the idea of evaluating this technology for pre-series and eventually, series production vehicles. We don't believe either side would have entered into this agreement if the intent wasn't to qualify this technology for use in production vehicle. If we successfully delivered the milestones and get into serious production, this OEM has the volumes to drive significant revenues for QuantumScape.

Okay. On the questions from the Say app, have you entered into any material agreements with manufacturers other than Volkswagen?

Yeah, John, so I think we directly answered this question with our announcement of an agreement with the second top 10 OEM this quarter, as we just discussed.

Okay. Great. Do you have an estimated date on your first usable product for mass use? What are the steps between now and then?

As we've said, our target is to start production in 2024, 2025 timeframe. In support of this, we're targeting having cells from our pre-production line QS-0 in 2023. Between now and then, we need to do a few key things, continue increasing our layer counts, improving the quality, consistency, and throughput of our separator, and some manufacturing processes.

Are EVs the only use case for your batteries or are you planning on entering other markets?

John, our focus remains on electrifying the automotive powertrain, which we believe is the most significant market, both in terms of market opportunity and de-carbonization potentially. But having said that, given, we're seeing strong interest from a range of other applications, and we believe our technology could add value in those sectors. But we would expect to also address those markets in the fullness of time.

Thanks. Do you have a sufficient amount of lithium supply secured to meet future demands?

Really interesting question, because even though we use a lithium-metal anode, we don't ever purchase any lithium metal. This is because in our anodes-free zero-lithium design, 100% of the lithium in our anode comes from the cathode. Remember that conventional cathodes such as NMC or LFP ship pre-lithiated, and this is the same lithium that becomes our anode once our cells are charged up, so there is no other excess lithium required. Note that this is not the case for all lithium metal approaches as there are some that require a lithium foil to start, and we believe those approaches will have a serious cost challenge to overcome. Also, it turns out looking into the earth abundant material. In fact, our CTO ones calculated that there's enough lithium in Earth's crust to ship, tend to the 9 long-range BVS pertaining to 9 years. So for our lithium, obviously, there's a lot of work required to extract that lithium. But the fact that it is there, means that if demand does go up, market mechanisms can encourage suppliers to extract more. Something that wouldn't be possible if it weren't as Earth abundant. Then finally, our strong relationships with some of the world's top automotive OEMs provide us an opportunity to leverage their scale and purchasing power to ensure our material supply.

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

Thank you, John. [Operator instructions] Please stand by while we compile the Q&A roster. Your first question comes from the line of Gabe Daoud from Cowen. Please proceed with your question.

Hey, good afternoon, everyone. Thanks for the prepared remarks and for taking my question. Jagdeep, maybe could we start with just manufacturing and any comments you could provide on improvements to uniformity on the separators since your last update? Then maybe just remind us, from a thickness standpoint, how big or how thick is the separator currently? Is it 20 micron? Where do you have to get to?

Hey, Gabe, how are you? Thanks for the question. Let me answer the second part first on the thickness of the separator. We've said publicly that our separator is in the tens of microns, in terms of thickness. We've also said that the VW milestone that we had in Q1 that we reported on actually required that our cells be in a commercially relevant thickness with a separator and commercially relevant area, and, of course, we all know we met that milestone, so we feel like the separator is, in fact, are all being made in those dimensions. Relative to manufacturing and the questions you asked about uniformity and consistency and throughput, those are exactly the things that we're working on. I would say that one data point on those items is that when you look at our progress from single layer cells last year to 4-layer cells earlier this year to 10-layer cell that we reported on first in July and then again today. That progress wouldn't have been possible if we had not been making steady improvement on all three of those metrics, that you need in better quality of the film correlates with better performance in terms of everything from the current density you can handle to the cycle life to the reliability of the films. Uniformity and consistency relates to how many useful films you get out of a given number of films that you start, and of course, throughput is the capability, the capacity of the tools that you have and how many films you can make. Of course, as we make higher layer count films, we need to get a lot more capacity out. So every single 10-layer cell needs 10 times as many films as a single layer cell. It sounds obvious to say, but the reality is, if you think about what that means for a manufacturing line, we need to have either tools that have 10x the capacity or 10 times as many tools and operators and so on. So the fact that we've moved from making single layer cells to 4-layer cells to 10-layer cells is indicative of progress on all 3 of those key metrics.

Thanks, Jagdeep. That's helpful, and then maybe a follow-up on the manufacturing side. Can you maybe refine a little bit or just better describe the current or dozens of layers that we need to get through next year for your [Indiscernible] sample? As we're now in November, getting close to next year, is there anything that you can say to try to help us understand what would that number could really look like?

I think the actual layer count as we've mentioned in the past, is going to vary by automotive OEM. Because the layer count impacts, of course, the overall cell dimensions, the cell thickness, for example, and that is going to be a function of the OEM-specific module intact design. We said dozens of layers because they're all going to be in that general range. I can also say, as I mentioned briefly on the call and in more detail in the letter, our manufacturing capability can be thought of as three phases. Currently, we're expanding our engineering line. That's the line which we are doing all the R&D development. The next phase, of course, will be QS-0, which is the pre-pilot line that you know about already. The final phase will be the production line with Volkswagen, which we're calling QS-1. So we ordered a number of tools for both the engineering line and QS-0, particularly the long lead time tools, and as those tools continue to arrive and be commissioned and turned up, our capacity continues to increase. So the net of it is that we remain committed to the goals that we had outlined in previous quarters, which is that in 2022, we hope to have samples to our customers that are a few dozen layers in thickness in the commercially relevant form factor that we call those customer prototype samples. Then in 2023, samples that rolled off the pre-pilot production line and those we sampled in enough quantities to basically assemble pre-series test vehicles to run test tracks. So those goals haven't changed.

Thanks, Jagdeep. Just one last one for me, just on commercialization. I know super early with this second OEM, but could you maybe just talk a little bit about what structure this could potentially look like over time, assuming they do become a customer upon commercialization? Would it be a JV similar to your deal with Volkswagen? Then finally, would QuantumScape represent the only solid-state provider that this second OEM is working with? Thank you.

Yes. So relative to the manufacturing model to supply this second OEM, it's a good question, and the answer is that there are two possibilities. We haven't yet decided which one, and those two are either to have the fully QuantumScape-owned facility, where we are simply a supplier to this OEM. The other option, of course, is more of a VW-style joint venture, where they're actually part owner in the manufacturing facility. We haven't yet made the final decision on what the parties are going to prefer. But those are both viable options. At the end of day, what I think they really care about is getting a sufficient quantity of high-performance sales to meet their needs. Relative to whether we're the only other solid-state player, I want to avoid addressing that directly, Gabe, because we haven't disclosed the identity of the OEM, and I think that if we comment on the other partnerships, then I think that starts to narrow down the players. But more importantly, I think what we can say is that, as you know, we don't believe we've seen any other solid-state or lithium-metal effort that meets even what we consider to be the basic requirements, right? Can you cycle for 800 cycles at 25 degrees at a 1-hour charge and discharge rate? We haven't seen that. So I think we feel comfortable that there's not a lot of viable competitive activity in this particular space.

Thanks, guys.

Thank you, Gabe.

Thank you, and your next question comes from the line of George Gianarikas from Baird. Please proceed with your question.

Hey, good afternoon, guys. Thanks for taking my questions. Maybe to start on the manufacturing side, you started to order parts and production tools. Can you talked about any additional learnings that you've had in that process? I think you could share with us both positive and negative.

Yeah. I mean, tons of learnings. Not sure how much we can share. But the tools themselves are really a key part of what we're doing right now is, of course, tuning and tweaking various parameters on the processes, on the various recipes, process conditions to find the ones that produce the best results. So we're doing a lot of that work. We are working closely with our tool suppliers to specify the tools in a way that we think meets our needs. In that process, there's a lot of earnings. We've tried a lot of things that, candidly, we found didn't work as well as we thought and other things that we found work better than we expected. So that process will continue. I think at the end of day, it's never a completely straight line. The real world is never a straight line anywhere. But the key is that you make steady progress over time towards your goals and I believe we're doing that. We're happy with that progress right now.

Thank you.

Sorry, one important thing to add to that, of course, is part of the outcome of all this process development as we enhance our portfolio of trade secrets, right? So trade secrets are, remember, those innovations that we don't patent because they're not discoverable by our competitors. So you can't take apart the cell, examine it. You can take apart a film, examine it and determine things like the chemical composition of the materials and the physical architecture of the layout and so on. But you can't tell what recipe we're using, which gases, which solvent or which temperatures and for how long to get those outcomes. So those are the kind of things that we keep as trade secrets, and all this work we're doing on equipment evaluation continues to increase the trade ticket portfolio, which we think is a good thing for our investors.

Thanks. Then one more, just on the second OEM agreement that you've signed. Can you at least share, was it a bake-off? Were there other solid-state companies in the mix as far as you can tell? Then with regards to other testing that you're doing, are you aware of other companies in the OEMs that are also being tested? Anything you can share on the competitive environment would be appreciated.

Yeah. So if you're talking to a top 10 automotive OEM, you can pretty much assume that all these guys are exploring every possible varied options that they can because, I would say, effectively all of them are committed in one form or another to electrifying the power train. If you look at the volume that ends up driving in terms of battery needs, it's enormous. So as a result of that, they are constantly looking not only to bolster their supply of current conventional lithium-ion batteries, which I'm sure you all know about well in terms of all the current supply constraints in that space, but also next-generation batteries that can help them meet their product activeness goals, if you will. Our view has always been, as you know, that while it's great to see governments actively try to encourage an EV industry for its decarbonization potential, at the end of the day, the product has to be attractive to the consumer. Our belief has been that until batteries get to be more competitive with the combustion engine, the product is going to be lagging combustion engine in this vehicles. So we're seeing a lot of interest from a lot of these top OEMs around getting better batteries. They can help narrow that gap with combustion engines and allow them to be competitive with traditional power trains. So I think you can assume that these guys have either looked at or evaluated every technology where they can get their hands on, and so their [Indiscernible] agreement to us with reflects a signal that the decline few approach is, in fact, the most compelling and viable of the options they look at.

Thanks, [Indiscernible]

Absolutely. Thanks for the question.

Thank you. Your next question comes from the line of Evan Silverberg from Morgan Stanley. Please proceed with your question.

Hi. Evan Silverberg here on behalf of Adam Jonas. First question for you guys. I know QS-0 is obviously more imminent in the future, but curious if you guys could give any color on QS-1 regarding site selection, location, start of construction? Initially, you guys have targeted a quarter of a gigawatt hour in '24. So curious if you guys still think that's on-time.

Yeah. Hi, Evan. We haven't said anything additional other than the press release and 8-K that we issued earlier in the year on the site selection process. But I think the point made is probably the key point, which is our focus in the near term is, of course, on QS-0, and we feel like if we can execute on QS-0, then we will acquire the learnings that we think are necessary to have a smooth turnup of QS-1. We don't currently believe that site selection is the gating item in turning up QS-1. We think it's really around making sure we get the full process details and blueprints, if you will, for a scalable pre-pilot production line, which we can then replicate at QS-1.

Great. Thanks, and one more. You've shown the single layer, the 4 layer, and the 10 layers now in the 70 by 85 millimeter size. For the cells that you plan to deliver to OEMs in 2022, will they also be in that size or will you need to scale up to a larger size for that?

Yeah, that's a good question, too, Evan. If you've noticed, we used the word commercially relevant in many of our communications with investors and the public, in general. The reason for that is because the precise dimensions, again, for every OEM are going to be somewhat different. Because every OEM is going to need our cell to be essentially an integral fraction of their module and tech dimensions. So not every vehicle has the exact same dimensions, and so not every cell is going to be exactly the same. However, it will be in that same general zip code, if you will, on dimension. So it might be slightly smaller in some dimensions, it might be slightly bigger, but it's not going to be multiple times smaller or bigger. That's why all the data we've been reporting this year, starting with a battery showcase last year, has been in the 70 by 85 form factor because we believe that is the commercially relevant size range for these cells, roughly the size of a deck of cards. Whether it's slightly bigger or slightly smaller, it's going to depend on the specific OEM, but it will be in that general range.

Great. Thank you very much.

Thank you.

Thank you. Your next question comes from the line of David Bell from Wolfe Research. Please proceed with your question.

Hi everyone. David Bell on for Rod Lache. Thanks for the presentation, Jagdeep. I just wanted to go back to the earlier questions on manufacturing, with yield being such a critical parameter. Could you describe to us what sort of liabilities you're actually going to improve the yield and improve the thickness?

Yeah. So the three main areas that we continue to work on are the ones I mentioned earlier, right? One is thumb quality. What I mean by its equality is, that's the uniformity across a given film. So if the film has compositional variance, or morphological variance, or any other variation across a given film, that will be lower quality than film that's more uniform, that's higher quality. So that's one key area. The second key area, of course, is consistency. By that, we mean hitting that high quality repeatedly every single time as we run the material to our process. So what consistency translates to is really what you call a yield. If we can consistently make films over given quality, then the yield will be higher. Then the final thing is throughput, which is, again, how many films you can run through the process in any given amount of time. Now, those three things are actually not uncorrelated. It turns out that as we move to more scalable tools, for example, we've spoken about the fact that we're using these continuous flow tools to make our separator films. But those continuous flow tools, as we get into larger tools, they require more automation because you have to be able to load, unload those films efficiently. Those more highly automated, larger, continuous flow tools, not only give you more throughput, but they also give you better efficiency and quality because you have a tighter control over the process, better metrology in terms of seeing what's happening with the films as they're going through the process. So we expect to see continued improvements on all three things because they're not really completely uncorrelated.

Okay. Thanks, Jagdeep. Just on the 10-layer cells, could you describe to us, in throughput you have, how many cells in the making on a weekly or monthly basis? What is the, I guess, automated processing that you were able to use? Are they analogous in terms of output to what we would see in the QS-0 line? Furthermore, how you've gone from 1 to 4 to 10 layers, has the challenge of using the cathode electrolyte become more difficult or it has it been just as easy to do it with many layers as it is with one?

Yes, so your first question has to do with 10 layers. We never disclosed the actual number of films or cells that we make in any period of time. But we are shifting to 10-layer cells. Next year, as you know, we've talked about shipping multi-dozens of layers in our cells. So we work on ways to do that. The key is to making that happen really are, one, is you've got to get throughput up, so we get to have more films to work with. Two, is you've got to be able to get good quality consistency. So as we stack these films up, they continue to work well together. If you have 10 layers in a cell and there's 1 bad layer, then you have a bad cell. So consistency becomes important to produce more and more 10-layer cells, and we're working that. Then relative to the electrolyte in the cathode, the catholyte, if you will, the fact that we can make these 10-layer cells, and as you see from the acting charts in our letter, the fact that the performance is so similarly, the cycling behavior is so similar to what we've shown before is an indication that there is no fundamental change to the catholyte separator interaction in the multilayer cell compared to what you see in a single layer cell.

Okay. Thank you, Jagdeep. Last one from me here. I just wanted to touch on this one terawatt hour target, which sounds really great and it's super ambitious. I just like you hear from you what your impression is of the market over the next 10 years? How do you expect to actually achieve this one terawatt hour?

I think it is an ambitious goal. I mean, as you said, it's the equivalent of what 20 Gigafactories we produce in one year. But I think where that goal comes from is the belief that if we truly believe that we have a technology that is capable of delivering higher energy density in commercial cells, maybe by 50% or more, that's capable of supporting faster charge times, that it's safer in many ways because of the non-flammable separator, These are really critical selling points, and if we can get this into mass production, the demand constraint, and so if we have the demand for it, then we should be able to build enough factories to really earn a meaningful share of the overall market for batteries. Now, we won't be in mass production to until mid-decade, say, a 25 timeframe or so. So that doesn't give us a lot of time to wrap up to a cumulative terawatt hour, but It's not impossible. It requires that we turn up Gigafactories that are of the size and scale of what's currently being planned by many of the leading battery manufacturers here. The original Panasonic Gigafactory is probably on the order of 30 to 40 gigawatt hours. Many of the currently being planned Valley facilities are in the order of a 100 gigawatt hours per year. So over 5 years, each of those factories is already capable of producing half a terawatt hour, so we don't think it's by any means impossible. It does require that we execute on getting this technology into mass production, and it does require that we be able to execute on turning up production facilities. But we believe the demand is there. We believe the fundamental technology has the capability to deliver on this. If we can continue our execution as we have been doing, we think we have a real shot at pulling [Indiscernible] I think what that goal represents is, it's fundamentally a way to quantify what we've been talking about, which is we really want to make an impact in two ways. One, of course, want to create value for our shareholders. The second thing is we want to play a role in the decarbonization of the transportation sector. We think both those goals are served well by having an aggressive, ambitious target of the type that we just talked about.

Thank you, guys. Thanks for taking my questions.

Absolutely.

Thank you. There are no further questions at this time. I will now turn the call back to Jagdeep. Please go ahead.

I want to thank everyone for taking the time to join the call today. Obviously, we're excited about the results that we shared. Independent third party testing was one of the things we've been hearing about from our investors. We're delighted that the independent test data is extremely similar to the data we've shown in the past. Of course, the test was also on under what we consider to be aggressive driving conditions in 1-hour charge and discharge, 25 degrees Celsius, 100% depth of discharge to 800 cycles to north of 80%. We're also pleased with our multi-layer results. Developments on the customer front remain positive as well. We're going to stay focused on these goals and tasks in the quarters coming, and we look forward to reporting our further progress on our next earnings call. Thank you all.

Thank you. Today's conference has been concluded. Thank you for participating. You may now disconnect.