On Wednesday, QuantumScape (NYSE:QS) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
QuantumScape announced a partnership with Honda to advance its solid-state lithium-metal battery technology, highlighting an expansion into high-value markets.
The company is establishing three business verticals: QS EV for electric vehicles, QSDC for AI data centers, and QSAS for aerospace and defense applications.
Operational progress includes significant advancements in the Eagle Line, their automated pilot production line, with plans to double cell output in the second half of 2026.
Financially, QuantumScape reported a GAAP net loss of $98.2 million and adjusted EBITDA loss of $64.2 million for Q2 2026, maintaining full year guidance for adjusted EBITDA loss.
Customer billings for 2026 have already surpassed those of 2025, with Q2 billings at $10.8 million, and the company ended Q2 with $859 million in liquidity.
The company is actively working with partners like Volkswagen PowerCo and exploring non-automotive markets, emphasizing the safety and scalability of their technology.
Management highlighted key goals such as advancing automotive commercialization and entering new high-value markets, with a focus on maintaining capital discipline.
Full Transcript
OPERATOR
Thank you for standing by and welcome to QuantumScape's second quarter 2026 earnings conference call. At this time all participants are in listen-only mode. After the speaker's presentation, there will be a Question and Answer session. To ask a question during the session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded.
And now I'd like to introduce your host for today's program, Seyeb Kumar, QuantumScape's Senior Director, Investor Relations. You may begin, sir.
Seyeb Kumar, Senior Director, Investor Relations
Thank you, operator. Good afternoon and thank you to everyone for joining QuantumScape's second quarter 2026 earnings call. To supplement today's discussion, please go to our Investor Relations website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress or future financial operating performance.
Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our shareholder letter, Form 10-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes.
Joining us today will be QuantumScape CEO Dr. Siva Sivaram and our CFO Kevin Hettrich. With that, I'd like to turn the call over to Siva.
Siva Sivaram, President & CEO
Thank you, Seyeb. I'd like to start by discussing our automotive commercialization progress. This quarter we announced a partnership with Honda. This is a multi-year agreement aimed at advancing our solid-state lithium-metal battery technology for automotive and other applications in the Honda product portfolio. Honda is renowned for their engineering excellence and product quality and has made significant investments in scaling up solid-state battery manufacturing capabilities.
This partnership results from one of the most rigorous assessments of our technology to date. Our ceramic separator and anode-free lithium-metal architecture enables QS to provide solutions to unlock the full potential of solid-state batteries. With Honda's diverse product portfolio, this collaboration allows us an additional pathway to expand into new high-value markets. We recently updated our ongoing collaboration and licensing arrangement with Volkswagen PowerCo with a set of milestones and payments focused on automotive cell development, larger-format cells and our future technology roadmap.
We are also working with two other top-10 automotive OEM customers under existing joint development agreements. We continue to strengthen our relationships with automakers in North America, Europe and Japan, and on this front we have shipped cells to an additional automotive OEM customer. We also see broad-based interest in our technology across a variety of applications beyond electric vehicles, including AI data centers and other advanced applications such as aerospace and defense.
We believe that all these end markets can be served by our fundamental technology stack, but each customer can benefit from an individually tailored go-to-market approach. In order to serve our diverse and growing customer base, we are establishing three business verticals: QS EV for electric vehicles, QSDC for AI data centers and QSAS for advanced solutions for applications including aerospace and defense. QS EV is working with auto OEMs around the world including Volkswagen and Honda.
QSDC is engaged with ODMs to design solutions based on QSC5 technology for the fast-moving AI data center market, and QSAS has shipped QSC5 cells to a major American defense prime and is engaged with global players across the aerospace and defense industries. Next, an update on the Eagle Line, our highly automated pilot cell production line in San Jose, California. The Eagle Line serves several purposes. Greater cell volumes allow us to meet customer demand for samples, higher throughput accelerates the process development cycle and automated equipment serves as a proving ground for scaling up production.
Demonstrating scalable production of a unique technology on a first-of-a-kind automated line is a significant challenge and as such it is one of our four key annual goals. Applying our systematic, methodical and iterative approach, we have made significant operational progress with the Eagle Line core tools showing uptime greater than 90%, key metrics of productivity are hitting our targets and we are currently ramping sample volumes and shipping cells to customers as we continue to improve process stability and control.
We aim to further double cell output in the second half of 2026 and anticipate customer sample shipments accelerating across all three verticals. We are orchestrating a network of partners within the QS technology ecosystem with the aim of scaling up cell production. As part of this effort, we are working closely with established battery equipment vendors to lay the groundwork for future factories. We also continue to collaborate with our ecosystem partners at Murata Manufacturing and Corning, working towards high-volume ceramic separator production using our COBRA process.
Next, two updates on our technology. First, we have received consistent customer feedback that in addition to the combination of energy density and power capability, the safety profile of our technology is highly valuable. Competing next-generation approaches such as silicon or lithium-metal anodes with liquid electrolytes can pose serious safety hazards. In contrast, our proprietary ceramic separator is non-flammable and non-combustible, which enables an improved safety profile relative to lithium-ion cells.
Thanks to the increased cell output from the Eagle Line, we are able to conduct larger-scale safety testing across a broad range of commercially relevant tests including nail penetration, external short circuit and thermal stability testing up to 300 degrees Celsius, whereas conventional lithium-ion testing stops at 200 degrees. We are pleased to report that larger-scale testing continues to show that QSC5 is a significantly safer cell design compared to both conventional and next-generation lithium-ion cells.
We have also seen customer interest for our technology in cell form factors that are larger than the QSC5. One benefit of larger-format cells is improved packing efficiency, which can result in higher cell-level energy density. In response to this customer interest, we have demonstrated that our COBRA process can produce larger-area separators for higher-capacity cell designs, which shows the flexibility and scalability of our ceramic separator technology to meet customer requirements.
Lastly, I want to take a step back and look at the big picture. QS was founded with the mission to revolutionize energy storage. Today it's becoming clear just how consequential that mission is. Transportation, AI and defense are simultaneously undergoing fundamental transformations. Electric vehicles are reshaping the global automotive market, drones and unmanned systems are rewriting the rules of defense strategy, and AI is unlocking new capabilities for every business and person on the planet.
These extraordinary developments all have one thing in common: they all need better batteries. We are positioning our organization to take advantage of these technology transformations. QSDC is working to capitalize on exciting high-value opportunities in the AI data center market and QSAS is engaging customers in high-value aerospace and defense applications. With QS EV, we are advancing automotive commercialization with our four top-10 OEM customers, including the newly announced Honda partnership.
The Eagle Line is ramping up to enable increased customer shipments in the second half of the year and we are investing in our future technology roadmap. With larger-format cells and more in the pipeline, there is much work still to do, but our team has the talent and tenacity to overcome challenges as we industrialize our technology to make the most of these transformational opportunities. Thank you for your support and we look forward to sharing more updates in the months ahead.
With that, I'll turn things over to Kevin for a word on our financial outlook.
Kevin Hettrich, Chief Financial Officer
Thank you, Siva. GAAP operating expenses and GAAP net loss in Q2 were $106.1 million and $98.2 million, respectively. Adjusted EBITDA loss was $64.2 million in Q2, in line with expectations. For full year 2026, we reiterate our adjusted EBITDA loss guidance of between $250 million and $275 million. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statements at the end of our shareholder letter. Capital expenditures in the second quarter were $4.6 million.
Q2 CapEx was primarily composed of investment into our technology roadmap and associated facility spend. For full year 2026, we lower our guidance for CapEx to be between $27 million and $37 million, reflecting capital discipline and cost savings on specific capital projects. We set a public goal for customer billings in 2026 to exceed customer billings in 2025. As of today, we've achieved this goal. Customer billings in Q2 were $10.8 million. Total customer billings through Q2 2026 are $21.8 million, exceeding fiscal year 2025 customer billings of $19.5 million.
Customer billings as a metric represents the total value of all invoices issued by QuantumScape to our customers and partners in the period, regardless of accounting treatment. As a reminder, customer billings may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of engagement. This operational metric is not a substitute for revenue under U.S. GAAP. We ended Q2 with $859 million in liquidity and will remain prudent with our strong balance sheet going forward.
As always, we encourage investors to read more on our financial information, business outlook and risk factors in our quarterly and annual SEC filings on our Investor Relations website.
Seyeb Kumar, Senior Director, Investor Relations
Thanks, Kevin. We will begin today's Q&A portion with a few questions we received from investors or that I believe would interest investors. Siva, we are now halfway through 2026. What proof points should investors evaluate to know if QuantumScape is tracking to our annual goals?
Siva Sivaram, President & CEO
Goal number one is to demonstrate scalable production with the Eagle line. Taking a unique technology on a highly automated process from the ceramic separator to the unit cell to the fully assembled QSE5 that meets customer requirements is a significant challenge. We are making strong operational progress. Goal number two is to advance automotive commercialization with QSEV. We are working with four of the top 10 global automakers, including our new deal with Honda.
Adding another paying customer is a big step forward in our commercialization efforts. We also updated the PowerCo Collaboration and Licensing arrangement with milestones for automotive cell development and we shipped cells to an additional automotive OEM in this past quarter. Goal three is to enter into new high-value markets. We are very excited about the progress we are making in these new business verticals. We have appointed talented leaders to run QSDC and QSAS.
QSDC is engaging with ODMs and data center architects to provide solutions for this fast-moving market. QSAS has shipped QSE5 cells to a major American defense prime and we are engaged with global customers in aerospace, defense, and other advanced applications. Goal four is to go beyond QSE5 with our future technology roadmap. This quarter we showed larger format separators from Cobra which enables higher energy density cells. We have also shown new safety data this quarter with thermal stability, external short circuit, and nail penetration results that are particularly outstanding compared to competitors.
We are committed to sharing more on our technology roadmap later this year.
Kevin Hettrich, Chief Financial Officer
We're making the progress Siva discussed toward our technical and commercial goals while remaining disciplined stewards of capital. We have reiterated adjusted EBITDA guidance, and total customer billings for 2026 are already higher than last year.
Seyeb Kumar, Senior Director, Investor Relations
Siva, we are now organized into three business verticals. What is our approach to serving automotive and non-automotive markets?
Siva Sivaram, President & CEO
We see broad-based demand for better batteries across the board: AI data centers, aerospace, consumer electronics, medical devices, defense, and many other applications. We believe they are all capable of being served by the QS technology platform. The benefits of energy density, power, safety, U.S. supply chain, and workforce all resonate with our customers. For the QSEV vertical, our automotive customers all have development pilot lines for batteries and high-volume manufacturing capabilities.
For QSDC and QSAS customers, this may not be the case. They are fast moving, the number of customers is larger, go-to-market has different channels, we may involve ODMs, and product integration looks different with more opportunities for value creation. These new verticals increase the size of the market, strengthen the fundamental technology platform, and benefit the QS ecosystem, which adds value to our customers across all verticals.
Seyeb Kumar, Senior Director, Investor Relations
Siva, what should investors take away from the recent updates to the VW and PowerCo relationship, and how do they reflect the progress being made towards commercialization?
Siva Sivaram, President & CEO
The relationship with VW PowerCo continues to be strong and the two teams are working closely together on site here in San Jose. The overall objectives of the collaborations are unchanged: industrialize the QS technology and transfer the technology to Volkswagen PowerCo for automotive commercialization. Over the past two years we have continued to update and revise the scope of work as we progress this relationship. The updated scope of work includes milestones related to larger form factor cells as well as technology elements from QuantumScape's advanced product roadmap, and we look forward to sharing more on that soon.
Kevin Hettrich, Chief Financial Officer
From a financial perspective, customer billings under the 2025 VW PowerCo Collaboration Agreement represent a cost share for QS expenses incurred under the agreed scope of work. Under the new scope of work, we've tied payments to deliverables aligned to our product roadmap. Additionally, we eliminated MotoE-related milestones, given that the organizers put that race series on hiatus. As a result, even though the total possible payments under the agreement have reduced from approximately 131 million to approximately 75 million, we now project significantly reduced expenses for the project.
We forecast a net neutral financial impact in terms of cash when compared to the 2025 scope of work. I'd refer investors to the 8-K on file for more information.
Seyeb Kumar, Senior Director, Investor Relations
Okay, thanks so much, Kevin. We are now ready to begin the live portion of today's call. Operator, please open up the line for questions.
OPERATOR
Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our first question for today comes from the line of Gabriel Gonzalez from UBS. Your question please.
Gabriel Gonzalez, Analyst at UBS
Hey guys, thanks for taking my question. So, firstly on the updated PowerCo agreement, the updated milestone framework appears to have shifted away from execution-oriented targets like battery cell delivery and validation over the next two years towards cell development and technology-related objectives. So can you just help us understand the reasoning behind that change? And should we view the absence of the earlier milestones as a change in expectations regarding their timing or achievability?
Siva Sivaram, President & CEO
The Volkswagen PowerCo agreements, we update them every year. We have done that three years in a row. As the relationship progresses, we update it based on the milestones yet to come, and we have done that consistently. The relationship is very strong and our objectives remain the same. This reflects that we will be paid based on the milestones that we both have agreed that we need to achieve, which are aligned with our technology roadmap—for instance, the larger format cell, the future technology milestones that we need to get, etc. There is not anything philosophically different about the objectives of the joint program.
Gabriel Gonzalez, Analyst at UBS
Okay, thank you for that color. And Kevin, you mentioned a neutral impact to cash flow, the lower expenses for the project offsetting the lower cash inflow. But is there any impact to the 130 million royalty prepayment from PowerCo? And if not, what's the progress update there? And should we expect those funds to come in this year or next year?
Kevin Hettrich, Chief Financial Officer
Great question, Gabe. You're correct that the 130 million prepay is unchanged here and is released by technical milestones and alignment on the form factor. And there, as we laid out in the letter, we've made nice progress as we've outlined with the Eagle line and also with the demonstration of those larger separators coming off of our Cobra line.
Gabriel Gonzalez, Analyst at UBS
Okay, thank you. I'll pass it on.
Seyeb Kumar, Senior Director, Investor Relations
Thanks, Gabe.
OPERATOR
Thank you. And our next question comes from the line of Itay Michaeli from TD Cowen. Your question please.
Justin, Analyst at TD Cowen
Hey, great. This is Justin on for Itay. How's everyone?
Siva Sivaram, President & CEO
Hi Justin.
Justin, Analyst at TD Cowen
So a super quick question. You guys highlighted QSAS, the shipments of the QSE5 cells in the quarter. I guess can you help us understand maybe some of the nuance around that shipment? Was it just natural ramp cadence associated with the Eagle line? Is there any kind of the deferral of milestones that might have freed up some incremental capacity that allowed those shipments? Just trying to get a better understanding, I guess, of maybe how that ramp is kind of progressing on yields, line times, cycle times, and any improvements or color you can provide—at least on that AI model update for the reliability improvements that may have contributed there as well.
Siva Sivaram, President & CEO
Justin, great question. So the answer is yes, the Eagle line obviously is improving in productivity, as you would expect. Taking a brand-new technology, a very unique technology, into a new highly automated line and getting the product out to meet customer demands is a difficult challenge. And we've been doing very good progress on the Eagle line through the last three months since we installed the line in February. And this allows us—the increased volume allows us to—there are three major benefits out of this: A, clearly it gives us more samples to ship to customers; B, the higher volume allows us to learn rapidly; and three, the Eagle line itself serves as the basis for the technology transfer for the higher volume lines later on with our customers. So this naturally allowed us to be able to ship this out of the Eagle line for a customer demand in the U.S. defense prime.
Justin, Analyst at TD Cowen
Super helpful. And then maybe on QSDC, while we're on the topic, how far away do you kind of envision the initial shipments of samples? Obviously there's been progress in the quarter—just trying to get an understanding of maybe the timeline as to when samples start hitting them and how quickly the conversion rate might be relative to the AS side of the business now.
Siva Sivaram, President & CEO
Yeah, QSDC, as you all observe, is a very fast-moving business and the demands are going up rapidly and there are significant players involved. We are working closely with data center architects and ODMs that supply to these architects. We are working closely to develop designs that can be delivered to these ODMs to integrate, and it also allows us to do higher value in our integration in the product. So this is all coming together very rapidly. We have a new general manager for the business.
Shahar Noi is getting ramped up on this very, very rapidly.
Justin, Analyst at TD Cowen
Perfect. And then if I could sneak one final one in before jumping into the queue—more mechanic-wise, on the Q2 billings of the 10.8, how much of that was PowerCo? I guess just trying to square up maybe the 75 in context of, I believe it was 20 as of the end of Q1. Just trying to figure out the incremental to see how much is left, at least on that milestone update that you guys provided from a payment perspective.
Kevin Hettrich, Chief Financial Officer
Yeah, thank you for the question. So they're certainly part of the mix. We don't as practice break out the billings into finer detail. I would mention that as part of our annual goals we have a number of customer-facing ones. One is to advance automotive collaboration—you have the update to VW today, you have the Honda relationship. Further success there means advancing those relationships and adding more. And also the letter goes into detail with making progress in other customer segments, including the AI data center and the advanced solutions spaces.
So the goal is to advance those relationships as well, and you get a broader and broader portfolio of customer activity across that metric.
Justin, Analyst at TD Cowen
Awesome. Thanks for the color. I'll jump back at you.
Kevin Hettrich, Chief Financial Officer
One other brief plug on the Eagle line: we did put out a video today between our COO, Luca, and his VP of automation and hardware talking about the importance of the line and what it meant to bring it up. And also in the quarter, to the extent there's interest in the data center piece, we do have that new GM talking about the data center piece, the segment that we're targeting, and some early details on go-to-market.
OPERATOR
Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11. Our next question comes in the line of Leicester Zak from HSBC. Your question please.
Leicester Zak, Analyst at HSBC
Hi Siva. Hi Kevin. Thank you so much for taking my question. I just wanted to touch a little bit on the new vertical. Do you have any plans to expand the business into other different verticals? I'm thinking about consumer and how the technology you're developing fits well into it. But I'm just wondering if the new business verticals, like, you know, the data centers and aerospace, will be your main focus with automotive, or are you open to exploring other opportunities?
Siva Sivaram, President & CEO
Laisha, good to hear from you. Thank you. Yes, is the answer to that question. We have clearly separated out QS EV and we have clearly separated out QSDC, which is the data center business. The Advanced Solutions business explores all of the other opportunities, including aerospace, defense, medical devices, and consumer electronics and other interesting areas. We do see substantive opportunities for the QS technology platform in many of these, particularly the QSC5 form factor.
The existing product can be shipped into many of these products. So we are actively exploring these opportunities as well.
Leysha
Okay, thank you so much. Just another follow-up. You have noted in the remarks that AI data centers are transitioning to 800-volt DC designs that are similar to EV architectures. So given that there's a power constraint that the hyperscalers are facing today, could that mean that QSDC could potentially reach higher volume commercialization faster than QS EV because of this very intense or strong demand from the market, which requires more complex vehicle integration?
Does that make sense?
Siva Sivaram, President & CEO
I do understand the question. The fact that the data center market has a lot of need, especially for energy to power, high-quality power delivery is one of their biggest bottlenecks and we, with our high energy and power density and particularly safety, are a great fit for this market, which means that there is a lot of opportunity here. So this is the reason we have stood up three verticals so that we can put the focus on each of these verticals without sacrificing our go-to-market focus on each of these.
We will be giving data center, with its 800-volt transition coming up, all the attention to make sure we capture that market as quickly as possible.
Kevin Hettrich, Chief Financial Officer
Last year, as you recall, expanding into high-value markets is one of our annual goals. Our annual operating plan includes investments into go-to-market and commercialization capability, notably in sales, product management, and engineering. That hiring is going well and we did reiterate our adjusted EBITDA guidance on this call.
Leysha
Okay, thank you so much and congratulations. Progress. Nice talking to you.
Siva Sivaram, President & CEO
Thank you, Leysha.
OPERATOR
Thank you. And our next question comes from the line of John Sager from Evercore ISI. Your question please.
John Sager, Analyst at Evercore ISI
Hey guys, how are you? Hey, wanted to get some additional clarity on the PowerCo agreement. So my understanding is under the old agreement you had up to $130 million that would be billed through Q2 of 2027. Under this new agreement it's $75 million through Q2 of 2028. So if we're to say like roughly $41 million remaining through Q2 '28. Is that correct? Sorry, $34 million remaining through Q2 of '28, because you've billed around $40 million so far, I think.
Kevin Hettrich, Chief Financial Officer
Yeah. You have the "up to" correct. We haven't cleanly kind of broken out which portion of that from PowerCo is over time. But we'll just reiterate that you have the basics right. The F2 changed. The forecast expenses also went down. And we see a neutral cash impact when related to the 2025 scope work. That's correct, John.
John Sager, Analyst at Evercore ISI
And then on the timing for PowerCo, I think the last understanding is that they had said start of production would begin in 2029. Are you still on track there? And what are the next milestones that we'll kind of hear about as it relates to this partnership so that we can track your progress towards that 2029 date?
Siva Sivaram, President & CEO
So, John, all of our work goes through the Eagle Line. The Eagle Line progress is what determines how quickly we can transfer the technology to PowerCo to take it up there. And we are seeing great progress here. Eagle Line got installed and released in February. And from February to now, we have integrated all the pieces of the Eagle Line and are now making sure their uptime is high, the productivity is good, and continuing to work on process stability and process control.
These are the kind of things that allow us to increase the volume of output, which we plan to double in the second half of the year. That allows us the confidence to work with Volkswagen PowerCo transfer.
John Sager, Analyst at Evercore ISI
And is 2029 still the target?
Siva Sivaram, President & CEO
That is correct. We have not announced any change from our original plans.
John Sager, Analyst at Evercore ISI
And on the two new business lines, if I could ask one more, what is the focus for those business lines this year? Are you more focused on driving customer demand and JDAs, or are you looking to sort of build out the ecosystem — meaning that like first step is kind of you need to sign some more, sign a battery manufacturing partner?
Siva Sivaram, President & CEO
Yeah. So these two new businesses, as they are starting up, the big advantage is that they use the power of the QSC5 platform. The QSC5 platform, with its no-compromise performance across all aspects, is the foundation on which they are built. Our immediate next focus is on go-to-market. We are reinforcing the go-to-market personnel strategies to make sure we are able to service these customers as rapidly as possible. You are right. Immediately afterwards, we should be focused on getting volumes out to them.
John Sager, Analyst at Evercore ISI
So first step, customers. Second step, find a partner to do the actual manufacturing.
Kevin Hettrich, Chief Financial Officer
Yeah. And John, if you recall, in the summer 2025 amendment to the PowerCo Collaboration Agreement, we expanded capacity of that license to up to 85 GWh and that incremental 5 GWh was permitted by VW PowerCo to go outside of the automotive market. So PowerCo is certainly one channel. In the fullness of time, we are engaged with multiple different customers in that QuantumScape Advanced Solutions channel. The Eagle Line is a very powerful capability to do customer sampling, but in the fullness of time, we absolutely will need to add capacity.
John Sager, Analyst at Evercore ISI
Okay, thanks.
OPERATOR
Thank you. And our next question comes from the line of Mark Delaney from Goldman Sachs. Your question please.
Ayush Ghosh, Analyst at Goldman Sachs
Hi, you've got Ayush Ghosh on for Mark Delaney. Thank you for taking the questions. And on billings, nice to see the progress there. With 2026 billings already exceeding 2025, can you discuss the outlook for overall customer billings in the second half of the year, maybe relative to the first half?
Kevin Hettrich, Chief Financial Officer
So, thank you. We have made kind of steady progress. Last quarter we added ecosystem partners for the first time and, as you mentioned, we have exceeded the 2025 levels in 2026 now that we're at 21. In addition to VW PowerCo, as highlighted in this letter, we added Honda, an amazing top-10 OEM partner with strength in engineering both within automotive and a broader set of product offerings at the end of quite an extensive diligence and selection process.
So we are going to keep making nice progress there. As I referred to earlier, you should expect customer billings to be a metric that has some variability to it. The things that we control would be to advance the relationships individually and to continue to add additional automotive partners as well as to start to add partners from these new spaces and to increasingly turn it into a portfolio.
Ayush Ghosh, Analyst at Goldman Sachs
Thank you for that. And one more from me on the sort of non-automotive markets, you know, QSDC and QSAS. And again, nice to see the progress there. Can you discuss some of the timelines you're seeing from customers and production volumes that prospective customers are requesting, and how closely do these specifications align with your more traditional automotive roadmap? Thank you.
Siva Sivaram, President & CEO
Great question. Now going back to the prior question, just to finish the thought, Kevin was talking about Honda. Adding another paying customer that we can disclose is actually a big deal. That helps us rounding out that portfolio. Now on to QSDC and QSAS. The automotive specifications are very well known. Each of the others have their own unique spec needs. For instance, safety is across the board very, very, very important to all of them — especially in a data center right next to very high-value GPUs, safety is extremely critical.
Power — especially in the case of data center, it is discharge power that is needed. In the case of the data center, again, low-temperature operation is not important, but higher-temperature operation is important. In the case of military applications that we are looking at, not losing capacity while being able to discharge substantive power is an important characteristic. These are what we claim credit on the QSC5 platform — that it is a no-compromise platform that is able to supply power without losing capacity, etc. So you can see that these new businesses, new verticals, are complementary and they play off of the basic capabilities of the platform.
Ayush Ghosh, Analyst at Goldman Sachs
Thank you.
OPERATOR
Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. And our next question comes from the line of Winnie Dung from Deutsche Bank. Your question please.
Winnie Dung, Analyst at Deutsche Bank
Hi, thanks so much for taking my question. First one is on Honda. I was wondering if you can sort of describe the next steps to securing a deal like PowerCo for Honda and any sort of high-level timelines you have going on internally.
Siva Sivaram, President & CEO
Thank you, Vinny. As you know, Honda is renowned for their engineering expertise. They have spent a lot of money on solid-state battery development already. They have a large pilot facility. They came in and did an incredibly deep evaluation of the technology and saw the synergies — how their core investments can be leveraged with our architecture. The ceramic is common. The Japanese ecosystem that exists, that we have spent so much time creating, they all go together with the ceramic, the separator, and the lithium-metal anode-free architecture.
They clearly see that this is the way for them to enhance their solid-state portfolio across all of their products. So our immediate job is to move this joint development into the next level of development and move it along the same template that we have developed with PowerCo. We can move very quickly across their product portfolio.
Winnie Dung, Analyst at Deutsche Bank
Got it. Thank you so much. Then on QSDC and QSAS, was wondering if you can perhaps talk about some specific milestones that you guys have in mind for those two business lines. For instance, would it be like shipping cells to the data center customers or some form of partnership, or any sort of announcement that we expect to see this year or perhaps into next year? Thanks.
Siva Sivaram, President & CEO
So Vinny, yes, you will see announcements from us on both of these and that will give you a timeline. But in a general sense I can use QSDC as an example. The 800-volt transition is in front of us. The megawatt rack also is just ahead of us. These all are going to be deployed in data centers towards the end of 2028, which means we need to be ahead of that with respect to developing an integrated product and delivering it to them, so you can see natural deadlines developing when these transitions are happening in the marketplace.
Winnie Dung, Analyst at Deutsche Bank
Okay, great. Thank you so much.
Siva Sivaram, President & CEO
Thank you, Vinny.
OPERATOR
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Siva for any further remarks.
Siva Sivaram, President & CEO
Thank you, operator. I'd like to recognize the entire QS team for their execution and to thank our shareholders for their continued support. We look forward to updating you on our progress in the months ahead. Thank you.
OPERATOR
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
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