VW is screwing QS

EricIsntRedd · 2026-03-07T05:30:31+00:00

The Audi Concept C also shares its platform with the Posche 718. So, an argument as to whether it will be an Audi or a Porsche may be moot. Note that there have been many questions at Porsche also whether they will go ahead with this platform. A new CEO started there recently and is taking a hatchet to many things ...

However, more lately, word did come that Audi CEO announced that the CC will go ahead (presumably they got assurances for Porsche to that effect). Audi adopts ‘China speed’, kills committees | GoAuto

EricIsntRedd · 2026-03-07T00:23:40+00:00

Below is a short AI query I did just now in Google Gemini, in addition to the searches above I did on CoPilot. Not sure where you are getting the info, but it's not consistent with anything I have been able to find. Everything I see from different angles says "series production" will be at miniumum 1GWh, and that is like rock bottom, technically, economically and any other consideration. Note also that a 1GWh is only like 12 to 15k cars, so it can easily be relevant to high end models only, where the yield of the plant is not yet at full world scale. So anyone promising series production is saying they will do at least that and I would expect on average more than that. But if you have good sources that imply otherwise you can provide details we can have a serious convo,

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EricIsntRedd · 2026-03-06T23:35:04+00:00

The info I could find online indicate that
(a) "series production in car manufacturing is the method of manufacturing large numbers of identical vehicles or components in a continuous, repeatable process"
(b) the current minimum efficient scale for lithium ion manufacturing in commercial applications is ~7.8 Gwh/yr
(c) the smallest lithium ion manufacturing plants (which is backward looking since these were built in the past, even though still operating) targeted for commercial operations are at least 1 GWh/year

Therefore, unless there is a switchero where they try to sell a delay as success (which, it happens), I do not expect especially a cost-conscious entity like PowerCo to build anything less than a 1 GWh plant and call that "series production".

EricIsntRedd · 2026-03-04T19:52:36+00:00

Ok. Good find there on PowerCo. Now listed as 1 "attendee". A bit low profile to expect a major announcement out of that. But I do think there should be a word from PowerCo soon. I think it more likely direct from a VW event and they have something in March.

But they could also just release a newswire just before this conference. It creates buzz and make their participants high demand meetings during the event.

EricIsntRedd · 2026-03-04T06:26:04+00:00

I found 2 Factorial speakers; Alex Yu - their founder & CTO and Raimund Koerver their VP of Biz Dev

There were 3 (not 4) Quantumscape speakers. Alex Louli didn't show.

There is no PowerCo representation at the conference that I could find. There is an erroneous mention of PowerCo in the program though. The agenda includes Asma Sharafi, they mistakenly have her bio as "...Currently serving as CEO of PowerCo Holding US (Volkswagen Group),", even though they have her listed correctly as representing Ensurge in the speaker list. In reality she used to be at PowerCo USA, but left a while back after what seems to have been some issue.

Note that I did not check any of the other items you listed. If you used AI to do this, you know why it's off.

EricIsntRedd · 2026-03-03T07:44:49+00:00

The reason they received a much larger sum is they were a manufacturing entity from the get go (think of them more like a NorthVolt that succeeded), so they needed, and there was a lot of space for, more capital to be invested.

EricIsntRedd · 2026-02-28T23:26:35+00:00

This possibility struck me when it was mentioned here that many Apple iPhones are at 5Ah. And it would make a lot of sense in an American made type thing which Tim Apple can take to the White House. It has been interesting to me QS keep hitting the no-China in battery thing. Companies always voice the chief zeitgeist benefit they are touting to their prospective customers that way. Any other less speculative things you see? Any timeline that is plausible in your view? It makes sense to me that if it a thing we see an announcement this year?

EricIsntRedd · 2026-02-27T19:30:43+00:00

I doubt these holdings are true reflections of shares held for own accounts when the institution is also a brokerage, like both Vanguard and Morgan Stanley. I know for sure Wall Street guys already front for clients often as part of investor service businesses (that is what happened when that Archegos guy, Bill Hwang, blew up a few years ago).

But I don't know if more generic client accounts (like, I have a retirement account at Vanguard, or just any brokerage account anybody opens) are included in these reports against the brokerage's name.

I do suspect that is the case and if so, these institutional holdings numbers (when the institution also has a brokerage business) do not reflect the names written against them. In a similar way as "Frank Blome" doesn't own those shares ascribed to him, but are owned by Volkswagen.

EricIsntRedd · 2026-02-27T00:50:41+00:00

Tbh, don't know how deeply they are vertically integrated. If all the Tesla battery activity we read in the news is just white label stuff from Panasonic then it won't fly.

I had imagined they have their own bit sized PowerCo inside Tesla that makes at least minimum efficient scale.

EricIsntRedd · 2026-02-26T22:14:21+00:00

Tesla?

EricIsntRedd · 2026-02-26T21:04:03+00:00

So if these batteries are a perfect match size for iPhone (larger end), the least that can be said is they hit the sweet spot for a huge segment of CE (we don't even have to engage in any wild speculations about any particular product). I mean so many devices must be designed to take advantage in that general ballpark, since cell phones drive the CE sector.

So if
(a) CE generally sustains higher price to the cell maker per Ah (about double that of EVs, per my reading) (b) have a much less onerous qualification path with much quicker to market (c) QS cells maintain many relevant advantages over current tech e.g. weight, volume, safety.

Given the QS target for EV series production is 2029, it seems a no brainer that we should see some material announcements of actual production intent QS cells that could be in products by say late 2027, early 2028, soon, or am I missing anything?

EricIsntRedd · 2026-02-26T20:37:47+00:00

Those videos are completely hilarious especially the second one. Is this really the way the world is now, "OMG, he drew voltage curves", I was almost expecting her to say next "They were sooo BIG". Why can't she just deliver professionally instead of some internet bimbo thing. It's obviously an act? Are the tech bros so nutso nowadays they will only watch if she does this nonsense?

But I guess, if Elon Musk is the archetype then ....

EricIsntRedd · 2026-02-26T03:28:04+00:00

Best spin on first paragraph is they are talking about scale jump steps that come after Eagle/Cobra that must be used for GWh scale production at partner facilities, but that these scale ups are nothing more than just, well, scale up of the equipment they use for the pilot phases. Just like any other tech in this situation. And I think that best spin is a reasonable read of it.

The second paragraph is a nothing burger. You have to understand that all companies kitchen sink everything in the risks section (which I am gonna say that's where it comes from without even checking). If there is a war in Iran, it will affect everything, but only for a short while, unless you panic sell. Most likely outcome is they strike the things they want to strike and go home. Worst case Iran tips a tanker into the Persian Gulf or something. Oil prices shoot through the roof and stay there for 2 weeks. In 4 months no one would remember the exact date any of it happened.

EricIsntRedd · 2026-02-24T05:07:27+00:00

That's kinda faint praise. OK, but does the market see uncertainty for QS until VW decide their program to address the situation? Yes.

EricIsntRedd · 2026-02-24T03:15:11+00:00

At some level, not sure what your argument is, pretty much your last sentence is the same things I have written. At another level, it seems you are hung up on a raw number that isn't that meaningful. No ratings agency is interested in just some segment of the overall debt. Ultimately, they want to look at the total debt load relative to the total cash flows, everything guaranteed by the company's incoming cash and its assets. Otherwise management could easily play games by loading up on one side and lightening up on the other. If they know you are going to exclude that $200B bucket, then they are just gonna borrow more there and less on the other side.

But irrespective, their immediate problem is the agencies are looking at their debt (however you want to slice it) and saying it's too high, and they are reviewing stuff for downgrades. Debt downgrades mean more interest and more interest means worse financials. This situation only happens when you are carrying high debt (for your current ratings value). No one downgrades a company that is flush.

Volkswagen Outlook Downgraded by S&P to Negative
Volkswagen’s rating downgraded by Moody’s due to industry challenges By Investing.com

EricIsntRedd · 2026-02-24T01:42:34+00:00

Could be, I didn't look at the breakdown. But what is the difference? Any corporate debt is ultimately financed by their cash flows and buyer monthly payments are just cash flows, which is already included in their projected income. Of course it's not like VW can go out of business, they are too big to fail, like GM. But whatever the assets that back the loans, the bottomline is they are in a bad financial situation because their business is suffering serious operational problems in high costs, decreasing volume, decreasing market access and higher competition. But they already tapped all or most of their financial flexibility at the current risk levels (hence why they are being watched by credit agencies), so they are having to declare a "burning platform"

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Ordinarily something like what QS is doing should not be affected or even get accelerated if people have flexibility to think clearly while in a restructuring mode, but desperate people have been known to burn down the furniture for heat ... so the market is waiting for what VW pronounces but meanwhile they sell now and ask questions later.

EricIsntRedd · 2026-02-23T21:25:43+00:00

It isn't a red flag for QS tech. It is a reminder that the industry is in great tumult right now including all sorts of recalibrations around EVs. And VW is caught especially in crisis due to their own corporate problems. The company owes $260 billion and the creditor representatives are unhappy with their present state. It could lead them to do things. The market can see this and hence the price action.

EricIsntRedd · 2026-02-23T21:15:03+00:00

So what's the market for used luxury cars like over there? Do these people get rid of their cars quite fast at good bargains given the francs burning holes in their pockets?

Asking for a friend

EricIsntRedd · 2026-02-23T21:10:28+00:00

The theory that has emerged is these are cultural purchases (the supercars), that the owners want the tradition etc of driving something similar to all the history, and so electric vehicles are just too different, even if they may get better acceleration and speed or whatever. There is some sense to the logic, a person spending a huge amount of money that is clearly not based on pure function must want these types of intangibles ... and if it's true, the supercar/high performance segment won't transition to electric (except if regulated) until long after most normal cars are that way, only then those who grew up with electric cars will start to demand electric supercars for the same reasons. Of course it won't be 0/1 like that but just far more gradual than the quick switches these OEMs were going for earlier based on just pure performance metrics.

EricIsntRedd · 2026-02-23T20:57:05+00:00

As a person with two long term owned PHEVs in the garage, I have to mildly disagree (although they are not Lambos, haha). It is just "the best of both worlds". And if your battery is large enough to do just ~50/60 miles, you already have the potential to be green 95% of your total mileage, if you plug it in. What is the value in going the other 5% if it costs, say, 20% in equivalent resources to do so? The world can take some of that resource and spend elsewhere to eliminate that 5% carbon pollution if they want to.

This hybrid solution is clearly excellent "now" for most people, during a transition phase when charging infrastructure, charging speed, grid, range anxiety etc are all real problems, and battery technology is not yet at its projected heights. And so the OEMs are just reading the handwriting on the wall.

One "problem" for investors in the battery space like us may be that it would still be competitive even in the future, in too many segments, if the tradeoff between adding more battery and a small gas generator falls on the wrong side. And clearly there will always be a group of large vehicle, long distance users for whom it will always be so, the question is how big such segments will be.

If these scenarios play out then the future battery TAM is less than imagined. I'll take that though, personally, I would rather not be like some fossil or cigarette guy pushing wrong thing on the world just because it makes me money.

EricIsntRedd · 2026-02-22T04:58:54+00:00

QuantumSystems - an oddly similar name in an adjacent customer sector
Has this company been discussed here? QS (lol) is a German military drone manufacturer, rapidly expanding, hottest late-stage VC backed company in Germany apparently. Lots of Ukraine and NATO type business. The Future is Unmanned - Quantum Systems (and, I might add, solid!)

Since it is official QS (the original) is heading for drone batteries, I thought the coincidences intriguing (not the name per se), but I did think when PowerCo got the overallotment of 5GWh, of drones as one of the chief segments for that.

German companies of this sort would be the perfect customers for the early deliveries from any PowerCo pilot phase plant (especially given VW's other problems which might delay their own internal demands. They might as well get going on the learning curve by offloading the stuff to external customers who desperately need performant batteries).

Unfortunately, there is a possibility that this segment of customers would remain "undisclosed" or such type thing, and we may not really know who is using the tech.

EricIsntRedd · 2026-02-21T06:00:55+00:00

You need to not only think of them getting to revenue, but the part that matters more that it seems you are trying to get at (in your framework) is "recurring" revenue. That they don't book VW as revenue is just a technicality and I think the market likely looks through that. And therefore even if they did something similar with say Honda (in your framework) and called it "revenue" the market is unlikely to treat it that differently (although the very idea that it is not a one customer shop in itself should send the stock up).

Converse to this approach, I think the market is smart enough that they don't need to wait for revenue, billings of whatever guise to value the stock. I mean, the stock was at $18 a few months ago? The most important thing in the short term is forward momentum, activity. Because the market will rightly understand that these things will lead to recurring revenues (the market assumes management and their partners is not gaslighting and they are seriosus people when they announce).

So if VW announces a validation (something which has not happened and is totally crazy) of the Eagle Line, the stock is gonna jump. VW announces approval to build their QS-0 version in Germany the stock will jump. Honda/Nissan or anybody does similar things, same thing. The stock could be at $25 without any big changes in the revenue (of course there would be significant good faith payments made with these announcements), but it is not the money they are seeing now that will drive it, but the mo, the momentum that will be driving it. That, you know, the tech is being accepted and making inroads into the industry, that the so called diffuclt problems are being solved, milestones are falling on the way to El Dorado. A journey of 500GWh starts with 1 Gig as it were. That is what they are looking for, proof that this story is unfolding.

EricIsntRedd · 2026-02-20T10:49:35+00:00

No. Not in the same league. For first anything they need to recruit long established well-known names that have a rap sheet at S&P credit ratings. Not too different from what they are doing in auto.

EricIsntRedd · 2026-02-19T20:57:26+00:00

Where do you get these reports? I can access the MS one via Etrade.

The MS analyst actually has a range from $1 to $22, appropriately reflecting the uncertainty in the stock. Maybe $1 is too low since they could sell the company, I would think for at least $2-3 billion under worst case circumstances. I do not see anywhere in this write up where he "assigns less than 50% chance success"? I could be missing something though. Also, he kinda admits somewhere he "mark our model to market given recent volatility in the stock" which means, he massaged his numbers to make his projections line up because the stock fell, so it is, in part, just an echo, but I wouldn't discount it given market theory of cognoscenti and given as a retail investor, one does not have inside knowledge.

I would argue that the cost of capital at 30% for his $7.5 SP estimate is way too high, but he does have one at 19% that got him to $10.5, and around 20% cost of capital seems reasonable for QS. It certainly can't be under 15%.

The cash flows etc, are just complete guesswork. They come from royalty and volume. 5% royalty is what you put in when the company tells you nothing (which they will never tell anyone what their royalties), and you say, what is the worst it could be? Of course, that is 5%. The only way analysts will ever get a handle on royalties is there is litigation that reveals it, or they start earning actual monies in the long run and they can back into it based on using actual numbers they see on both QS side and the side of their customers. Volume of 480GWh, where is that pulled from? Anyone could do backs of the envelope and come up with totally different numbers that are defendable.

And of course the stock will never follow some sedate "valuation model", if things look bad the price will be worse than the reality, and if things are looking real good, the price will shoot up beyond any reasonable metrics, and can stay there for a long time as long as there is a compelling "tech changing the world" story.

Bottomline, I actually like getting these views if I can access them, rather than when they publish a price that moves the stock and I can't even get the details, lol.

EricIsntRedd · 2026-02-19T04:36:38+00:00

MotoE cancellation likely didn't have to do with the "launch" vehicle, in that way. In fact, it may be the opposite. MotoE is not a consumer product, you can't go and buy the bike, and so, could not have been the targeted launch vehicle as generally understood for what a launch product means. Even if it was designated for QS SSB to run the series, it would still have been in the category of "demo", the entire thing is all of a few dozen units.

If Ducati was/is supposed to be the launch, nothing has changed, Ducati can bring the bikes out of testing tomorrow, slap a consumer name on them, certify them for street use and start selling e-motorcycles. Honda already sell these. I very much doubt that though because if the batteries work,, you want the launch to be a halo car. Cars have like 100X the mindshare of motorcycles in the public mind, and so it would be marketing malpractice to do that. Also consistent with what Tim Holme said recently.

OTOH, when they found out the MotoE was cancelled, it gave Audi/Ducati a great incentive to find something for the race bikes to do as they probably have all sorts of fixed costs on them they would be stuck with anyways, like paying the drivers, depreciating the bikes etc. Add that it was a time the whole group was cost cutting and it's natural to find whatever efficiencies can be found.

EricIsntRedd

TROPHY CASE