How QS (QuantumScape) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a battery technology innovator like QS Income Statement Overview makes money is essential for investors and anyone interested in the business of advanced energy storage. In this post, we break down QS's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick QS Overview

QS Income Statement Overview operates as a developer of next-generation solid-state battery technology for electric vehicles and energy storage applications. Revenue comes primarily from collaborative development agreements, prototype sales, and milestone payments from automotive partners. The company is structured around R&D-driven innovation, with a focus on commercializing its proprietary battery platform.

Revenue Breakdown

• Total Revenue (Q3 2025): $36.7M (YoY growth: N/A)
  • Revenue: $36.7M (100% of total)
  • Growth is powered by partnership milestones and early-stage technology licensing.

Gross Profit and Margins

• Gross Profit: $73.3M (200.0% gross margin)
  • Cost of Revenue: $36.7M (+145.4% YoY)
  • QS maintains unusually high margins this quarter, likely due to nonrecurring items or accounting adjustments, as gross profit exceeds revenue.
• Most costs come from R&D investments and technology development.

Operating Income and Expenses

• Operating Income: Not reported for Q3 2025
• Operating Expenses: $115.0M (-11.7% YoY)
  • R&D: $92.1M (-5.1% YoY, 251.1% of revenue) — Heavy investment in battery chemistry, manufacturing scale-up, and prototype development
  • SG&A: $22.9M (-30.9% YoY, 62.5% of revenue) — Covers administrative, legal, and partnership management costs
  • QS continues to prioritize innovation and technology leadership while maintaining discipline in administrative spending.

Net Income

• Pre-Tax Income: Not reported for Q3 2025
• Income Tax: Not reported for Q3 2025
• Net Income: $105.8M (-11.5% YoY, 288.6% net margin)
• QS converts a significant portion of reported revenue into net income, driven by accounting for "Other" items, likely including non-operating gains or adjustments.

What Drives QS's Money Machine?

• Collaborative R&D and milestone payments: 100% of revenue in Q3 2025
• R&D intensity: R&D expenses at 251.1% of revenue, underscoring a focus on long-term technology breakthroughs
• Strategic investment in battery innovation: QS channels most resources into scaling solid-state battery tech
• Future growth areas: Commercial battery production and automotive partnerships, though not yet profitable at scale

Visualizing QS's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after large investments in research and development, net income is reported at $105.8M, reflecting the impact of "Other" non-operating items.

Key Takeaways

• QS's money comes overwhelmingly from collaborative R&D and milestone payments
• High gross and net margins illustrate the power of QS's technology-driven, asset-light business model (though margins are distorted by accounting items this quarter)
• Heavy investment in R&D, balanced by efficiency in SG&A costs
• Ongoing growth is driven by partnerships with automotive OEMs and progress toward commercial battery deployment

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FAQ About QS's Income Statement

1. What is the main source of QS's revenue in 2025?

QS generates over 100% of its revenue from collaborative R&D agreements and milestone payments with automotive partners. No significant product sales are reported at this stage.

2. How profitable is QS in Q3 2025?

QS reported net income of $105.8M in Q3 2025, with a net margin of approximately 288.6%, reflecting unusual profitability driven by non-operating items rather than core business operations.

3. What are the largest expense categories for QS?

The biggest expenses on QS's income statement are operating expenses, particularly Research & Development (R&D) at $92.1M in Q3 2025, as QS prioritizes battery innovation and technology development.

4. Why does the battery development segment operate at a loss?

Battery development, despite generating $36.7M in revenue, posted an operating loss due to aggressive investment in R&D and scaling manufacturing capabilities, as QS believes these will drive long-term growth—even if the division is unprofitable today.

5. How does QS's effective tax rate compare to previous years?

QS's effective tax rate in Q3 2025 was not reported, making direct comparison to previous years unavailable. Historically, the company has benefited from tax credits related to R&D and net operating losses.

Note: All financial data is sourced directly from QS's Q3 2025 income statement. The Sankey chart provides a visual summary of these flows, helping investors understand the company's unique revenue model and cost structure.