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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-39408
Lucid Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
85-0891392
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
7373 Gateway Boulevard, Newark, CA 94560
(Address of principal executive offices) (Zip code)
(510) 648-3553
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share
LCID
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes   o  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    x  Yes    o  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x
Accelerated Filer
o
Non-accelerated Filer
o
Smaller Reporting Company
o
Emerging Growth Company
 o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).    o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o  Yes    x  No

Number of shares of the registrant’s common stock outstanding at April 30, 2024: 2,307,150,085







INDEX TO FORM 10-Q
Page
Item 1.
Item 1.
Item 6.
2



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “shall,” “expect,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “scheduled” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, capital expenditures, prospects, growth, production volumes, strategies and the markets in which we operate, including expectations of financial and operational metrics, projections of market opportunity, market share and product sales, expectations and timing related to commercial product launches, future strategies and products, including with respect to energy storage systems and automotive partnerships, technology, manufacturing capabilities and facilities, studio openings, sales channels and strategies, future vehicle programs, expansion and the potential success of our direct-to-consumer strategy, our financial and operating outlook, future market launches and international expansion, including our manufacturing facility in Saudi Arabia and related timing and value to us, and our needs for additional financing. Such forward-looking statements are based on available current market material and our current expectations, beliefs and forecasts concerning future developments. Factors that may impact such forward-looking statements include:
changes in domestic and foreign business, market, financial, political and legal conditions, including government closures of banks and liquidity concerns at other financial institutions, a potential global economic recession or other downturn and global conflicts or other geopolitical events;
risks related to changes in overall demand for our products and services and cancellation of orders for our vehicles;
risks related to prices and availability of commodities, our supply chain, logistics, inventory management and quality control, and our ability to complete the tooling of our manufacturing facilities over time and scale production of the Lucid Air and other vehicles;
risks related to the uncertainty of our projected financial information;
risks related to the timing of expected business milestones and commercial product launches;
risks related to the expansion of our manufacturing facility, the construction of new manufacturing facilities and the increase of our production capacity;
risks related to the issuance and sale of shares of our Redeemable Convertible Preferred Stock;
our ability to manage expenses and control costs;
risks related to future market adoption of our offerings;
the effects of competition and the pace and depth of electric vehicle adoption generally on our business;
changes in regulatory requirements, governmental incentives and fuel and energy prices;
our ability to rapidly innovate;
our ability to enter into or maintain partnerships with original equipment manufacturers, vendors and technology providers, including our ability to realize the anticipated benefits of our transaction with Aston Martin;
our ability to effectively manage our growth and recruit and retain key employees, including our chief executive officer and executive team;
risks related to potential vehicle recalls;
our ability to establish and expand our brand, and capture additional market share, and the risks associated with negative press or reputational harm;
our ability to effectively utilize zero emission vehicle credits and obtain and utilize certain tax and other incentives;
our ability to conduct equity, equity-linked, or debt financing in the future;
our ability to pay interest and principal on our indebtedness;
future changes to vehicle specifications which may impact performance, pricing, and other expectations;
the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; and
other factors disclosed in this Quarterly Report on Form 10-Q or our other filings with the Securities and Exchange Commission (the “SEC”).
3



The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in Part II, Item 1A. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that Lucid currently does not know or that Lucid currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our assessments to change. However, while we may elect to update the forward-looking statements at some point in the future, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Frequently Used Terms
Unless otherwise stated in Item 1. Financial Statements and accompanying footnotes, or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

“2026 Notes” are to the 1.25% Convertible Senior Notes due 2026;

“AMP-1” are to our Advanced Manufacturing Plant-1 in Casa Grande, Arizona;

“AMP-2” are to our planned Advanced Manufacturing Plant-2 in Saudi Arabia, which consists of a semi knocked-down (“SKD”) portion that has been completed and a completely-built-up (“CBU”) portion that will be constructed;

“Ayar” are to Ayar Third Investment Company, an affiliate of PIF and the controlling stockholder of the Company;

“Board” or “Board of Directors” are to the board of directors of Lucid Group Inc., a Delaware corporation;

“Churchill” or “CCIV” are to Churchill Capital Corp IV, a Delaware corporation and our predecessor company prior to the consummation of the Transactions, which changed its name to Lucid Group, Inc. following the consummation of the Transactions, and its consolidated subsidiaries;

“Churchill IPO” are to the initial public offering by Churchill which closed on August 3, 2020;

“Closing” are to the consummation of the Transactions;

“Closing Date” are to July 23, 2021, the date on which the Transactions were consummated;

“common stock” are to the Class A common stock of Lucid Group, Inc., par value $0.0001 per share;
“Redeemable Convertible Preferred Stock” are to the Series A Convertible Preferred Stock of Lucid Group, Inc., par value $0.0001 per share;

“ESG” are to Environmental, Social and Governance;

“EV” are to electric vehicle;

“Investor Rights Agreement” are to the Investor Rights Agreement, dated as of February 22, 2021 and as amended from time-to-time, by and among the Company, the Sponsor, Ayar and certain other parties thereto;

“Legacy Lucid” are to Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands, and its consolidated subsidiaries before the Closing Date;

“LPM-1” are to our Lucid Powertrain Manufacturing Plant-1 in Casa Grande, Arizona;

“Merger” are to the merger of a merger subsidiary of Churchill and Atieva, Inc., with Atieva, Inc. surviving such merger as a wholly owned subsidiary of Churchill;

4



“Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of February 22, 2021, by and among Churchill, Legacy Lucid and Air Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Churchill, as the same has been or may be amended, modified, supplemented or waived from time-to-time;

“PIF” are to the Public Investment Fund, the sovereign wealth fund of Saudi Arabia;

“Private Placement Warrants” are to Churchill’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO;

“Sponsor” are to Churchill Sponsor IV LLC, a Delaware limited liability company and an affiliate of M. Klein and Company;

“Transactions” are to the Merger, together with the other transactions consummated under the Merger Agreement and the related agreements; and

“Warrant Agreement” are to the Warrant Agreement, dated July 29, 2020, entered into in connection with the Churchill IPO by and between Continental Stock Transfer & Trust Company and Churchill.

Unless the context otherwise requires, all references in this section to “Lucid,” the “Company,” “we,” “us,” “our,” and other similar terms refer to Legacy Lucid and its subsidiaries prior to the Closing, and Lucid Group, Inc., a Delaware corporation, and its subsidiaries after the Closing.
5



PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
LUCID GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)
March 31,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$2,169,489 $1,369,947 
Short-term investments1,824,900 2,489,798 
Accounts receivable, net (including $84,884 and $35,526 from a related party as of March 31, 2024 and December 31, 2023, respectively)
126,930 51,822 
Inventory565,653 696,236 
Prepaid expenses72,135 69,682 
Other current assets74,890 79,670 
Total current assets4,833,997 4,757,155 
Property, plant and equipment, net2,971,601 2,810,867 
Right-of-use assets217,699 221,508 
Long-term investments627,591 461,029 
Other noncurrent assets185,352 180,626 
Investments in equity securities of a related party
60,801 81,533 
TOTAL ASSETS$8,897,041 $8,512,718 
LIABILITIES
Current liabilities:
Accounts payable$101,489 $108,724 
Accrued compensation100,641 92,494 
Finance lease liabilities, current portion7,548 8,202 
Other current liabilities (including $99,201 and $92,258 associated with related parties as of March 31, 2024 and December 31, 2023, respectively)
827,041 798,990 
Total current liabilities1,036,719 1,008,410 
Finance lease liabilities, net of current portion75,807 77,653 
Common stock warrant liability26,610 53,664 
Long-term debt1,998,251 1,996,960 
Other long-term liabilities (including $163,424 and $178,311 associated with related parties as of March 31, 2024 and December 31, 2023, respectively)
525,914 524,339 
Derivative liability (Note 8 and Note 16 )
497,100  
Total liabilities4,160,401 3,661,026 
Commitments and contingencies (Note 12)
REDEEMABLE CONVERTIBLE PREFERRED STOCK
Redeemable convertible preferred stock, par value $0.0001; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 100,000 and 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively (Note 8 and Note 16)
504,450  
STOCKHOLDERS’ EQUITY
Common stock, par value $0.0001; 15,000,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 2,307,786,638 and 2,300,111,489 shares issued and 2,306,928,813 and 2,299,253,664 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
231 230 
Additional paid-in capital15,134,686 15,066,080 
Treasury stock, at cost, 857,825 shares at March 31, 2024 and December 31, 2023
(20,716)(20,716)
Accumulated other comprehensive income (loss)
(2,400)4,850 
Accumulated deficit(10,879,611)(10,198,752)
Total stockholders’ equity4,232,190 4,851,692 
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
$8,897,041 $8,512,718 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6



LUCID GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
March 31,
20242023
Revenue (including $51,366 and $0 revenue from a related party for three months ended March 31, 2024 and 2023, respectively)
$172,740 $149,432 
Costs and expenses
Cost of revenue404,796 500,524 
Research and development284,627 229,803 
Selling, general and administrative213,232 168,770 
Restructuring charges
 22,496 
Total cost and expenses902,655 921,593 
Loss from operations(729,915)(772,161)
Other income (expense), net
Change in fair value of common stock warrant liability27,054 (40,802)
Change in fair value of equity securities of a related party
(19,933) 
Interest income50,631 40,005 
Interest expense(7,501)(7,108)
Other income (expense), net(1,007)667 
Total other income (expense), net49,244 (7,238)
Loss before provision for income taxes
(680,671)(779,399)
Provision for income taxes
188 129 
Net loss
(680,859)(779,528)
Accretion of redeemable convertible preferred stock (Note 8)
(3,901) 
Net loss attributable to common stockholders, basic and diluted
$(684,760)$(779,528)
Weighted average shares outstanding attributable to common stockholders, basic and diluted
2,301,870,644 1,831,725,009 
Net loss per share attributable to common stockholders, basic and diluted
$(0.30)$(0.43)
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax
$(3,262)$4,035 
Foreign currency translation adjustments(3,988) 
Total other comprehensive income (loss)(7,250)4,035 
Comprehensive loss
(688,109)(775,493)
Accretion of redeemable convertible preferred stock (Note 8)
(3,901) 
Comprehensive loss attributable to common stockholders
$(692,010)$(775,493)







The accompanying notes are an integral part of these condensed consolidated financial statements.
7



LUCID GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data)

Redeemable Convertible
Preferred Stock
Common StockAdditional
Paid-In
Capital
Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Three Months Ended March 31, 2024SharesAmountSharesAmount
Balance as of January 1, 2024
 $ 2,299,253,664 $230 $15,066,080 $(20,716)$4,850 $(10,198,752)$4,851,692 
Net loss       (680,859)(680,859)
Other comprehensive loss
— — — — — — (7,250)— (7,250)
Tax withholding payments for net settlement of employee awards— — — — (3,242)— — — (3,242)
Issuance of common stock upon vesting of employee RSUs— — 6,259,851 1 (1)— — —  
Issuance of common stock upon exercise of stock options— — 1,415,298 — 1,525 — — — 1,525 
Issuance of redeemable convertible preferred stock, net of derivative liability and issuance costs
100,000 500,549 — — — — — — — 
Accretion of redeemable convertible preferred stock
— 3,901 — — (3,901)— — — (3,901)
Stock-based compensation— — — — 74,225 — — — 74,225 
Balance as of March 31, 2024
100,000 $504,450 2,306,928,813 $231 $15,134,686 $(20,716)$(2,400)$(10,879,611)$4,232,190 


Common StockAdditional
Paid-In
Capital
Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Three Months Ended March 31, 2023SharesAmount
Balance as of January 1, 20231,829,314,736 $183 $11,752,138 $(20,716)$(11,572)$(7,370,332)$4,349,701 
Net loss— — — — — (779,528)(779,528)
Other comprehensive income
— — — — 4,035 — 4,035 
Tax withholding payments for net settlement of employee awards— — (6,499)— — — (6,499)
Issuance of common stock upon vesting of employee RSUs1,870,073 — — — — — — 
Issuance of common stock upon exercise of stock options2,200,365 — 2,181 — — — 2,181 
Stock-based compensation— — 61,961 — — — 61,961 
Balance as of March 31, 2023
1,833,385,174 $183 $11,809,781 $(20,716)$(7,537)$(8,149,860)$3,631,851 







The accompanying notes are an integral part of these condensed consolidated financial statements.
8



LUCID GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net loss$(680,859)$(779,528)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization68,838 49,838 
Amortization of insurance premium8,589 10,263 
Non-cash operating lease cost7,469 5,830 
Stock-based compensation63,696 53,819 
Inventory and firm purchase commitments write-downs132,298 227,048 
Change in fair value of common stock warrant liability(27,054)40,802 
Net accretion of investment discounts/premiums
(21,304)(21,395)
Change in fair value of equity securities of a related party
19,933  
Other non-cash items(1,255)2,345 
Changes in operating assets and liabilities:
Accounts receivable (including $(49,358) and $0 from a related party for the three months ended March 31, 2024 and 2023, respectively)
(75,196)17,009 
Inventory(21,002)(354,154)
Prepaid expenses(11,042)(9,082)
Other current assets3,914 22,193 
Other noncurrent assets(4,369)(27,337)
Accounts payable(3,533)(66,174)
Accrued compensation8,147 21,545 
Other current liabilities
(3,040)1,374 
Other long-term liabilities19,025 4,340 
Net cash used in operating activities(516,745)(801,264)
Cash flows from investing activities:
Purchases of property, plant and equipment (including $(6,026) and $(20,421) from a related party for the three months ended March 31, 2024 and 2023, respectively)
(198,197)(241,770)
Purchases of investments(514,548)(842,538)
Proceeds from maturities of investments1,030,291 1,041,151 
Proceeds from sale of investments
 13,244 
Other investing activities 1,197 
Net cash provided by (used in) investing activities
317,546 (28,716)
Cash flows from financing activities:
Payment for finance lease liabilities(1,081)(1,427)
Proceeds from exercise of stock options1,525 2,181 
Proceeds from issuance of redeemable convertible preferred stock to a related party
1,000,000  
Tax withholding payments for net settlement of employee awards(3,242)(6,499)
Net cash provided by (used in) financing activities
997,202 (5,745)
Net increase (decrease) in cash, cash equivalents, and restricted cash
798,003 (835,725)
Beginning cash, cash equivalents, and restricted cash1,371,507 1,737,320 
Ending cash, cash equivalents, and restricted cash$2,169,510 $901,595 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized$1,031 $857 
Cash paid for taxes$9 $ 
Supplemental disclosure of non-cash investing and financing activity:
Increases (decreases) in purchases of property, plant and equipment included in accounts payable and other current liabilities
$40,464 $(19,812)
Property, plant and equipment and right-of-use assets obtained through leases
$4,327 $3,862 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9


LUCID GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2024
NOTE 1DESCRIPTION OF BUSINESS
Overview

Lucid Group, Inc. (“Lucid”) is a technology company focused on designing, developing, manufacturing, and selling the next generation of electric vehicles (“EV”), EV powertrains and battery systems.
Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Lucid and its subsidiaries prior to the consummation of the Merger, and Lucid and its subsidiaries after the consummation of the Merger.
Liquidity
The Company devotes its efforts to business planning, selling and servicing of vehicles, providing technology access, research and development, construction and expansion of manufacturing facilities, expansion of retail studios and service center capacities, recruiting of management and technical staff, acquiring operating assets, and raising capital.
From inception through March 31, 2024, the Company has incurred operating losses and negative cash flows from operating activities. For the three months ended March 31, 2024 and 2023, the Company has incurred net losses of $680.9 million and $779.5 million, respectively. The Company had an accumulated deficit of $10.9 billion as of March 31, 2024.
The Company completed the first phase of the construction of its Advanced Manufacturing Plant-1 in Casa Grande, Arizona (“AMP-1”) in 2021, transitioned general assembly to the AMP-1 phase 2 manufacturing facility and completed the semi knocked-down (“SKD”) portion of its Advanced Manufacturing Plant-2 in Saudi Arabia (“AMP-2”) in September 2023. The Company began commercial production of its first vehicle, the Lucid Air, in September 2021 and delivered its first vehicles in late October 2021. The Company continues to expand AMP-1, construct the completely-built-up (“CBU”) portion of AMP-2, and build a network of retail sales and service locations. The Company has plans for continued development of additional vehicle model types for future release. The aforementioned activities will require considerable capital, which is above and beyond the expected cash inflows from the initial sales of the Lucid Air. As such, the future operating plan involves considerable risk if secure funding sources are not identified and confirmed.
The Company’s existing sources of liquidity include cash, cash equivalents, investments, credit facilities, and issuance of convertible preferred stock. Historically, the Company funded operations primarily with issuances of common stock, and convertible notes.
In 2022, the Company entered into a loan agreement with the Saudi Industrial Development Fund (“SIDF”) with an aggregate principal amount of up to approximately $1.4 billion, a five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”) with an initial aggregate principal commitment amount of up to $1.0 billion and revolving credit facilities (the “GIB Facility Agreement”) with Gulf International Bank (“GIB”) in an aggregate principal amount of approximately $266.1 million. The GIB Facility Agreement provided for two committed revolving credit facilities, of which $173.0 million was available as a bridge financing (the “Bridge Facility”) and $93.1 million was for general corporate purposes (the “Working Capital Facility”).
In March 2023, the Company amended the GIB Facility Agreement (together with the GIB Facility Agreement, the “Amended GIB Facility Agreement”) to combine the Bridge Facility and the Working Capital Facility into a committed $266.6 million revolving credit facility (the “GIB Credit Facility”), which will bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees. See Note 6 “Debt” for more information.
On November 8, 2022, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with BofA Securities, Inc., Barclays Capital Inc. and Citigroup Global Markets Inc., under which the Company could offer and sell shares of its common stock having an aggregate offering price up to $600.0 million (the “At-the-Market Offering”). On November 8, 2022, the Company also entered into a subscription agreement (the “2022 Subscription Agreement”) with Ayar Third Investment Company, the controlling stockholder of the Company (“Ayar”), pursuant to which Ayar agreed to purchase from the Company, up to $915.0 million of shares of its common stock in one or more private placements through March 31, 2023. In December 2022, the Company completed its At-the-Market Offering program pursuant to the Equity Distribution Agreement for net proceeds of $594.3 million after deducting commissions and other issuance costs and also consummated a private placement of shares to Ayar pursuant to the 2022 Subscription Agreement for $915.0 million. No shares remain available for sale under the Equity Distribution Agreement.
10


On May 31, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc. (the “Underwriter”), under which the Underwriter agreed to purchase from the Company shares of the Company’s common stock in a public offering for aggregate net proceeds to the Company of $1.2 billion. On May 31, 2023, the Company also entered into a subscription agreement (the “2023 Subscription Agreement”) with Ayar, pursuant to which Ayar agreed to purchase from the Company shares of the Company’s common stock in a private placement for aggregate net proceeds of $1.8 billion. In June 2023, the Company completed the public offering pursuant to the Underwriting Agreement for aggregate net proceeds of $1.2 billion and also consummated the private placement to Ayar pursuant to the 2023 Subscription Agreement for aggregate net proceeds of $1.8 billion. See Note 16 “Related Party Transactions” for more information.
On March 24, 2024, the Company entered into a subscription agreement (the “2024 Subscription Agreement”) with Ayar. Pursuant to the 2024 Subscription Agreement, Ayar agreed to purchase from the Company 100,000 shares of its Series A Convertible Preferred Stock, par value $0.0001 per share (the “Redeemable Convertible Preferred Stock”), for an aggregate purchase price of $1.0 billion in a private placement. On March 29, 2024, the Company issued the shares to Ayar pursuant to the 2024 Subscription Agreement and received aggregate gross proceeds of $1.0 billion. The Redeemable Convertible Preferred Stock is convertible at the option of the holder (i) at any time the closing price per share of the common stock on the trading date immediately preceding the date on which the holder delivers the relevant notice of conversion is at least a certain price threshold as noted in the Certificate of Designations of Convertible Preferred Stock of the Company (the “Certificate of Designations”) or (ii) during specified periods preceding a fundamental change or optional redemption by the Company under the terms of the Redeemable Convertible Preferred Stock. See Note 8 “Redeemable Convertible Preferred Stock” for more information.
Certain Significant Risks and Uncertainties

The Company’s current business activities consist of (i) generating sales from the deliveries and service of vehicles, (ii) research and development efforts to design, engineer and develop high-performance fully electric vehicles and advanced electric vehicle powertrain components, including battery pack systems, (iii) further construction of AMP-1 phase 2 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, (v) expansion of its retail studios and service centers capabilities throughout North America and across the globe, and (vi) providing its technology access to third parties. The Company is subject to the risks associated with such activities, including the need to further develop its technology, its marketing, and distribution channels; further develop its supply chain and manufacturing; and hire additional management and other key employees. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including our ability to access potential markets, and secure long-term financing.
The Company participates in a dynamic high-technology industry. Changes in any of the following areas could have a material adverse impact on the Company’s future financial position, results of operations, and/or cash flows: changes in the overall demand for its products and services; advances and trends in new technologies; competitive pressures; acceptance of the Company’s products and services; litigation or claims against the Company based on intellectual property (including patents), regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its business operations.

A global economic recession or other downturn, whether due to inflation, global conflicts or other geopolitical events, public health crises, interest rate increases or other policy actions by major central banks, government closures of banks and liquidity concerns at other financial institutions, or other factors, may have an adverse impact on the Company’s business, prospects, financial condition and results of operations. Adverse economic conditions as well as uncertainty about the current and future global economic conditions may cause the Company’s customers to defer purchases or cancel their orders in response to higher interest rates, availability of consumer credit, decreased cash availability, fluctuations in foreign currency exchange rates, and weakened consumer confidence. Reduced demand for the Company’s products may result in significant decreases in product sales, which in turn would have a material adverse impact on the Company’s business, prospects, financial condition and results of operations. Because of the Company’s premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on the Company compared to many of its electric vehicle and traditional automotive industry competitors, to the extent that consumer demand for luxury goods is reduced in favor of lower-priced alternatives. In addition, any economic recession or other downturn could also cause logistical challenges and other operational risks if any of the Company’s suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations, fulfill their obligations to the Company, or meet the Company’s future demand. In addition, the deterioration of conditions in the broad financing markets may limit the Company’s ability to obtain external financing to fund its operations and capital expenditures on terms favorable to the Company, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q (the “Quarterly Report”) for more information regarding risks associated with a global economic recession, including under the caption “A global economic recession, government closures of banks and liquidity concerns at other financial institutions, or other downturn may have a material adverse impact on our business, prospects, results of operations and financial condition.
In the current circumstances, any impact on the Company’s financial condition, results of operations or cash flows in the future continues to be difficult to estimate and predict, as it depends on future events that are highly uncertain and cannot be predicted with accuracy.
11


NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Form 10-K filed with the SEC on February 27, 2024.
In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2024 and the results of operations for the three months ended March 31, 2024 and 2023. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or any other future interim or annual period.
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates, assumptions and judgments made by management include, among others, inventory valuation, warranty reserve, useful lives of property, plant and equipment, fair value of common stock warrants, fair value of derivative liability, estimates of residual value guarantee (“RVG”) liability, deferred revenue related to technology access fees and over-the-air (“OTA”) software updates, sales return reserves, assumptions used to measure stock-based compensation expense, and estimated incremental borrowing rates for assessing operating and finance leases. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
Reclassifications
Certain prior-period amounts have been reclassified in the accompanying condensed consolidated financial statements and notes thereto in order to conform to the current period presentation.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.
Restricted cash in other current assets is primarily related to letters of credit issued to the landlords for certain of the Company’s leased facilities.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the statements of cash flows (in thousands):
March 31, 2024December 31, 2023
Cash and cash equivalents$2,169,489 $1,369,947 
Restricted cash included in other current assets
21 1,560 
Total cash, cash equivalents, and restricted cash$2,169,510 $1,371,507 
Accounts Receivable, Net
Accounts receivable consist of receivables from our customers and from financial institutions offering financing products to our customers for the sale of vehicles, sales of powertrain kits and services. The Company provides an allowance against accounts receivable for any potential uncollectible amounts. The Company recorded immaterial allowance for uncollectible amounts as of March 31, 2024 and December 31, 2023.
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Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, investments and accounts receivable. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits, but its deposits exceed federally insured limits. As of March 31, 2024 and December 31, 2023, accounts receivables from the EV purchase agreement with the Government of Saudi Arabia, a related party of PIF, which is an affiliate of Ayar, as represented by the Ministry of Finance (the “EV Purchase Agreement”), represented 66.9% and 68.5% of the total accounts receivable balance, respectively. See Note 16 “Related Party Transactions” for more information.
Concentration of Supply Risk
The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.
Revenue from Contracts with Customers
Vehicle Sales
Vehicle Sales without Residual Value Guarantee
Vehicle sales revenue is generated from the sale of electric vehicles to customers. There are two performance obligations identified in vehicle sale arrangements. These are the vehicle including an onboard advanced driver assistance system (“ADAS”), and the right to unspecified OTA software updates to be provided as and when available over the term of the basic vehicle warranty, which is generally 4 years. Payment is typically received at the time of delivery or shortly after delivery of the vehicle to the customer, except for vehicle sales under the EV Purchase Agreement. The Company recognizes revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer.
At the time of revenue recognition, the Company reduces the transaction price and records a sales return reserve against revenue for estimated variable consideration related to future product returns. Return rate estimates are based on historical experience and sales return reserve balance was not material as of March 31, 2024 and December 31, 2023.
Vehicle Sales with Residual Value Guarantee
The Company provides an RVG to its commercial banking partner in connection with its vehicle leasing program. Vehicle sales with RVG totaled $89.5 million and $18.7 million during the three months ended March 31, 2024 and 2023, respectively. Under the vehicle leasing program, the Company generally receives payment for the vehicle sales price at the time of delivery or shortly after the delivery. The Company recognizes revenue when control transfers upon delivery when the consumer-lessee takes physical possession of the vehicle, and bifurcates the RVG at fair value and accounts for it as a guarantee liability. The remaining amount of the transaction price is allocated among the performance obligations, including the vehicle, the right to unspecified OTA software updates and remarketing activities, in proportion to the standalone selling price of the Company’s performance obligations. The guarantee liability represents the estimated amount the Company expects to pay at the end of the lease term. The Company is released from residual risk upon either expiration or settlement of the RVG. The Company evaluates variables such as third-party residual value publications, risk of future price deterioration due to changes in market conditions and reconditioning costs to determine the estimated residual value guarantee liability. The RVG liabilities were not material as of March 31, 2024 and December 31, 2023.
As of March 31, 2024 and December 31, 2023, the Company recorded $33.4 million and $28.7 million of total deferred revenue primarily related to OTA and remarketing activities for vehicle sales, respectively. The Company recorded $9.0 million and $7.7 million of the total deferred revenue within other current liabilities and the remaining $24.4 million and $21.0 million within other long-term liabilities in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively. Revenue recognized during the three months ended March 31, 2024 and 2023 from the prior period deferred revenue balances was not material.
Other
Other consists of revenue from non-warranty after-sales vehicle services, sales of battery pack systems, powertrain kits, retail merchandise, and regulatory credits.
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The disaggregation of the Company’s revenue by geographic area based on the sales location of vehicles was as follows (in thousands):

Three Months Ended March 31,
20242023
North America
$114,756 $148,762 
Middle East
54,582 668 
Other international
3,402 2 
Total Revenue
$172,740 $149,432 
Redeemable Convertible Preferred Stock

Accounting for the Redeemable Convertible Preferred Stock requires an evaluation to determine if liability classification is required under ASC 480-10. Liability classification is required for freestanding financial instruments that are (1) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets, such as those that are mandatorily redeemable, (2) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (3) certain types of instruments that obligate the issuer to issue a variable number of equity shares.

Securities that do not meet the scoping criteria to be classified as a liability under ASC 480 are subject to redeemable equity guidance, which prescribes securities that may be subject to redemption upon an event not solely within the Company’s control to be classified as temporary equity. Securities classified in temporary equity are initially measured at the proceeds received, net of issuance costs and excluding the fair value of bifurcated embedded derivatives, if any. Subsequent measurement of the carrying value of the Redeemable Convertible Preferred Stock is required as the instrument is probable of becoming redeemable. The Company accretes the Redeemable Convertible Preferred Stock to its redemption value. In certain circumstances, the redemption price may vary based on changes in stock price, in which case the Company will recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period.

Derivative Liability

The Company evaluates all of its financial instruments, including convertible notes and redeemable convertible preferred stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in these contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss at each reporting period end. Bifurcated embedded derivatives are classified as a separate asset or liability in the condensed consolidated balance sheet.

The Company’s derivative liability is related to the conversion features embedded in the Redeemable Convertible Preferred Stock. See Note 8 “Redeemable Convertible Preferred Stock” for more information.
Except for the policies described above, there have been no significant changes to accounting policies during the three months ended March 31, 2024.
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Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental segment information disclosure on an annual and interim basis. This amendment includes disclosure of significant segment expenses which are regularly provided to the CODM and included within each reported measure of segment profit or loss; other segment items by reportable segment and a description of its composition; reportable segment’s profit or loss and assets; additional measures of segment profit or loss if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance, and the title and position of the entity’s CODM and how the CODM uses the reported measures of segment profit or loss in assessing segment performance and determining resource allocation. The Company with a single reportable segment is required to provide all the disclosures from this amendment. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and should be applied retrospectively. The Company is evaluating the impact of this amendment to the related financial statement disclosures and expects to adopt them for the year ended December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires incremental annual income tax disclosures. This amendment includes disclosures of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold; income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions that meet a quantitative threshold; income (or loss) from continuing operations before income tax expenses (or benefit) disaggregated between domestic and foreign; and income tax expense (or benefit) from continuing operations disaggregated by federal, state and foreign. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and should be applied prospectively (with retrospective application permitted). The Company is evaluating the impact of this amendment to the related financial statement disclosures.
In March 2024, the SEC issued its final rule that requires certain climate-related disclosures in annual reports, including governance, oversight, and risk management processes on material climate-related risks; material impact of climate risks on the Company’s strategy, business model, and outlook; material climate targets and goals; and material financial statements impacts due to severe weather events and other natural conditions. This SEC rule provides phased effective dates, starting with fiscal years beginning on or after January 1, 2025. The Company is evaluating the impact of this rule on its annual reports.
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements or notes thereto.
NOTE 3 - RESTRUCTURING
On March 28, 2023, the Company announced a restructuring plan (the “Restructuring Plan”) intended to reduce operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. The Company completed the Restructuring Plan in 2024.
During the three months ended March 31, 2024 and 2023, the Company recorded charges of nil and $22.5 million, respectively, related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense. These charges were recorded within restructuring charges in the condensed consolidated statements of operations and comprehensive loss.
A summary of restructuring liabilities associated with the Restructuring Plan was as follows (in thousands):
Three Months Ended March 31,
20242023
Restructuring liabilities - beginning of period$54 $ 
Restructuring charges excluding non-cash items(1)
 23,939 
Cash payments
(54) 
Restructuring liabilities - end of period$ $23,939 
(1) Excluded non-cash items of $1.4 million for the three months ended March 31, 2023, which was net of accelerated stock-based compensation expense of $3.4 million and a reversal of $4.8 million related to previously recognized stock-based compensation expenses for unvested restricted stock awards.
As of March 31, 2024, there were no restructuring liabilities associated with the Restructuring Plan included in accrued compensation in the condensed consolidated balance sheet. Restructuring liabilities associated with the Restructuring Plan were immaterial as of December 31, 2023.
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NOTE 4 – BALANCE SHEETS COMPONENTS
Inventory
Inventory as of March 31, 2024 and December 31, 2023 was as follows (in thousands):
March 31,
2024
December 31,
2023
Raw materials$147,156 $210,283 
Work in progress57,902 53,227 
Finished goods
360,595 432,726 
Total Inventory$565,653 $696,236 
Inventory as of March 31, 2024 and December 31, 2023 was comprised of raw materials, work in progress related to the production of vehicles for sale and SKD units for final assembly in Saudi Arabia, and finished goods inventory including new vehicles available for sale, vehicles in transit to fulfill customer orders, and internally used vehicles which the Company intends to sell. During the three months ended March 31, 2024 and 2023, the Company recorded write-downs of $137.8 million and $227.0 million to reduce its inventories to its net realizable values and for any excess or obsolete inventories, as well as losses from firm purchase commitments, respectively.
Property, plant and equipment, net
Property, plant and equipment, net as of March 31, 2024 and December 31, 2023 was as follows (in thousands):
March 31,
2024
December 31,
2023
Land and land improvements$69,718 $69,718 
Building and improvements(1)
602,772 576,097 
Machinery, tooling and vehicles(2)
1,076,742 1,045,485 
Computer equipment and software81,559 74,336 
Leasehold improvements235,271 221,619 
Furniture and fixtures46,287 45,315 
Finance leases91,182 94,285 
Construction in progress1,334,675 1,185,413 
Total Property, plant and equipment3,538,206 3,312,268 
Less accumulated depreciation and amortization(566,605)(501,401)
Property, plant and equipment, net$2,971,601 $2,810,867 
(1) As of March 31, 2024 and December 31, 2023, $123.1 million and $120.2 million of capital expenditure support received from Ministry of Investment of Saudi Arabia (“MISA”) was primarily recorded as a deduction to the AMP-2 building balance, respectively. See Note 16 “Related Party Transactions” for more information.
(2) Included $34.8 million and $32.5 million of service loaner vehicles as of March 31, 2024 and December 31, 2023, respectively.
Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities including tooling, which is with outside vendors. Costs classified as construction in progress include all costs of obtaining the asset, installation of the asset, and bringing it to the location and the condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the asset is completed and is ready for its intended use. Construction in progress consisted of the following (in thousands):
March 31,
2024
December 31,
2023
Machinery and tooling$846,452 $728,751 
Construction of AMP-1 and AMP-2(1)
466,077 430,878 
Leasehold improvements22,146 25,784 
Total construction in progress$1,334,675 $1,185,413 
(1) As of March 31, 2024 and December 31, 2023, $24.3 million and $12.1 million, of capital expenditure support received from MISA was recorded primarily as a deduction to the AMP-2 facility construction in progress balance, respectively. See Note 16 “Related Party Transactions” for more information.
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Depreciation and amortization expense was $68.8 million and $49.8 million for the three months ended March 31, 2024 and 2023, respectively. The amount of interest capitalized on construction in progress related to significant capital asset construction was $3.0 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively.
Other current liabilities
Other current liabilities as of March 31, 2024 and December 31, 2023 were as follows (in thousands):
March 31,
2024
December 31,
2023
Engineering, design, and testing accrual$45,825 $42,176 
Construction in progress177,989 156,414 
Accrued purchases(1)
43,414 44,957 
Retail leasehold improvements accrual4,498 6,005 
Third-party services accrual38,911 41,478 
Tooling liability75,308 49,925 
Short-term borrowings72,524 72,533 
Operating lease liabilities, current portion30,258 28,431 
Reserve for loss on firm inventory purchase commitments118,927 143,566 
Accrued warranty13,470 22,677 
Other current liabilities205,917 190,828 
Total other current liabilities
$827,041 $798,990 
(1) Primarily represent accruals for inventory related purchases and transportation charges that had not been invoiced.
Other long-term liabilities
Other long-term liabilities as of March 31, 2024 and December 31, 2023 were as follows (in thousands):
March 31,
2024
December 31,
2023
Operating lease liabilities, net of current portion$239,081 $244,122 
Other long-term liabilities(1)(2)
286,833 280,217 
Total other long-term liabilities
$525,914 $524,339 
(1) As of March 31, 2024 and December 31, 2023, $47.4 million and $62.5 million of capital expenditure support received from MISA was recorded as deferred liability within other long-term liabilities in the condensed consolidated balance sheets, respectively. See Note 16 “Related Party Transactions” for more information.
(2) As of March 31, 2024 and December 31, 2023, $107.8 million of deferred revenue was recorded within other long-term liabilities in the condensed consolidated balance sheets, in connection with the strategic technology and supply arrangement, and integration and supply arrangements with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”). See Note 16 “Related Party Transactions” for more information.
Accrued warranty
Accrued warranty activities consisted of the following (in thousands):
Three Months Ended March 31,
20242023
Accrued warranty - beginning of period(2)
$46,076 $22,949 
Warranty costs incurred(18,068)(8,260)
Provision for warranty(1)
20,155 11,186 
Accrued warranty - end of period(2)
$48,163 $25,875 

(1) Provision for warranty for the three months ended March 31, 2024 and 2023 included estimated costs related to the recalls identified and/or special campaigns to repair or replace items under warranties.
(2) Accrued warranty balance of $13.5 million and $22.7 million, respectively, was recorded within other current liabilities, and $34.7 million and $23.4 million, respectively, was recorded within other long-term liabilities, in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.
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NOTE 5 - FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The sensitivity of the fair value measurement to changes in unobservable inputs may result in a significantly higher or lower measurement.
Cash, cash equivalents and investments are reported at their respective fair values on the Company’s condensed consolidated balance sheets. The Company’s short-term and long-term investments are classified as available-for-sale securities.
The following table sets forth the Company’s financial assets subject to fair value measurements on a recurring basis by level within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands):
March 31, 2024
Reported As:
Amortized costGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueCash and cash equivalentsShort-Term InvestmentsLong-Term Investments
Cash$1,388,590 $— $— $1,388,590 $1,388,590 $ $ 
Level 1:
Money market funds638,232   638,232 638,232   
U.S. Treasury securities1,798,047 408 (2,627)1,795,828 92,667 1,219,989 483,172 
Subtotal2,436,279 408 (2,627)2,434,060 730,899 1,219,989 483,172 
Level 2:
Certificates of deposit67,899 50 (13)67,936  67,936  
Time deposits
100,000   100,000 50,000 50,000  
Commercial paper171,352 24 (17)171,359  171,359  
Corporate debt securities460,025 451 (441)460,035  315,616 144,419 
Subtotal799,276 525 (471)799,330 50,000 604,911 144,419 
Total
$4,624,145 $933 $(3,098)$4,621,980 $2,169,489 $1,824,900 $627,591 
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December 31, 2023
Reported As:
Amortized costGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueCash and cash equivalentsShort-Term InvestmentsLong-Term Investments
Cash $516,673 $— $— $516,673 $516,673 $ $ 
Level 1:
Money market funds698,702   698,702 698,702   
U.S. Treasury securities2,033,711 2,480 (2,073)2,034,118 104,572 1,638,537 291,009 
Subtotal2,732,413 2,480 (2,073)2,732,820 803,274 1,638,537 291,009 
Level 2:
Certificates of deposit105,993 97 (22)106,068  106,068  
Time Deposits
50,000   50,000 50,000   
Commercial paper299,248 191 (8)299,431  299,431  
Corporate debt securities615,350 1,101 (669)615,782  445,762 170,020 
Subtotal1,070,591 1,389 (699)1,071,281 50,000 851,261 170,020 
Total$4,319,677 $3,869 $(2,772)$4,320,774 $1,369,947 $2,489,798 $461,029 

During the three months ended March 31, 2024 and 2023, there were immaterial realized gains or losses on the sale of available-for-sale securities. Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale securities was $11.7 million and $11.1 million as of March 31, 2024 and December 31, 2023, respectively, and was recorded in other current assets on its condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, no allowance for credit losses was recorded related to an impairment of available-for-sale securities.

The following table summarizes our available-for-sale securities by contractual maturity:

March 31, 2024
Amortized costEstimated Fair Value
Within one year$1,826,205 $1,824,900 
After one year through three years628,450 627,591 
Total$2,454,655 $2,452,491 

On November 6, 2023, the Company received 28,352,273 ordinary shares of Aston Martin with an initial fair value of $73.2 million. The Company remeasured the shares and recorded the fair value of $60.8 million and $81.5 million within investments in equity securities of a related party in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively. These equity securities are publicly traded stocks (where shares are denominated in GBP) measured at fair value on a recurring basis and classified within level 1 in the fair value hierarchy. During the three months ended March 31, 2024, the Company recognized $19.9 million of unrealized loss in change in fair value of equity securities of a related party in the condensed consolidated statement of operations and comprehensive loss. During the three months ended March 31, 2024, the Company also recognized $0.8 million of unrealized foreign currency loss related to these equity securities in other income (expense), net in the condensed consolidated statement of operations and comprehensive loss. See Note 16 “Related Party Transactions” for more information.

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Level 3 liabilities consist of the common stock warrant liability and the derivative liability, of which the fair values were measured upon issuance of the Private Placement Warrants and the Redeemable Convertible Preferred Stock, respectively, and are remeasured at each reporting period. The valuation methodology and underlying assumptions are discussed further in Note 7 “Common Stock Warrant Liability” and Note 8 “Redeemable Convertible Preferred Stock”, respectively. Level 3 liabilities also consist of residual value guarantee liabilities, of which the fair value measurement is nonrecurring and measured upon delivery of vehicles. Significant changes in the unobservable inputs used in determining the fair value would result in significant changes to the fair value measurement. The following table presents a reconciliation of the common stock warrant liability and derivative liability measured and recorded at fair value on a recurring basis (in thousands):
Three Months Ended March 31,
2024
2023
Derivative Liability
Common Stock Warrant Liability
Common Stock Warrant Liability
Fair value-beginning of period$ $53,664 $140,590 
Issuance
497,100   
Change in fair value (27,054)40,802 
Fair value-end of period$497,100 $26,610 $181,392 
NOTE 6 – DEBT
2026 Notes
In December 2021, the Company issued an aggregate of $2,012.5 million principal amount of 1.25% convertible senior notes due in December 2026 (the “2026 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, at an issuance price equal to 99.5% of the principal amount of 2026 Notes. The Company has designated the 2026 Notes as green bonds, whose proceeds will be allocated in accordance with the Company’s green bond framework. The 2026 Notes were issued pursuant to and are governed by an indenture dated December 14, 2021, between the Company and U.S. Bank National Association as the trustee. The proceeds from the issuance of the 2026 Notes were $1,986.6 million, net of the issuance discount and debt issuance costs.
The 2026 Notes are unsecured obligations which bear regular interest at 1.25% per annum and will be payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2022. The 2026 Notes will mature on December 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at the Company’s election, at an initial conversion rate of 18.2548 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $54.78 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain dilutive events. The Company may redeem for cash all or any portion of the 2026 Notes, at the Company’s option, on or after December 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest up to the day before the redemption date. The holders may require the Company to repurchase the 2026 Notes upon the occurrence of certain fundamental change transactions at a redemption price equal to 100% of the principal amount of the 2026 Notes redeemed, plus accrued and unpaid interest up to the day before the redemption date.
Holders of the 2026 Notes may convert all or a portion of their 2026 Notes at their option prior to September 15, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:
during any calendar quarter commencing after the quarter ended on March 31, 2022 (and only during such calendar quarter), if the Company’s common stock price exceeds 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days at the end of the prior calendar quarter;
during the five consecutive business days immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;
upon the occurrence of specified corporate events; or
if the Company calls any or all 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called for redemption.
On or after September 15, 2026, the 2026 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 2026 Notes who convert the 2026 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2026 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate.
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The Company accounted for the issuance of the 2026 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. The following table is a summary of the 2026 Notes as of March 31, 2024 and December 31, 2023 (in millions):

March 31, 2024December 31, 2023
Principal Amount$2,012.5 $2,012.5 
Unamortized Debt Discounts and Issuance Costs(14.2)(15.5)
Net Carrying Amount $1,998.3 $1,997.0 
Fair Value (Level 2)$1,041.5 $1,061.6 
The effective interest rate for the convertible note is 1.5%. The components of interest expense related to the 2026 Notes were as follows (in millions):
Three Months Ended March 31,
20242023
Contractual interest$6.3 $6.3 
Amortization of debt discounts and debt issuance costs1.3 1.3 
Interest expense$7.6 $7.6 
The 2026 Notes were not eligible for conversion as of March 31, 2024 and December 31, 2023. No sinking fund is provided for the 2026 Notes, which means that the Company is not required to redeem or retire them periodically. As of March 31, 2024 and December 31, 2023, the Company was in compliance with applicable covenants under the indenture governing the 2026 Notes.
SIDF Loan Agreement
On February 27, 2022, Lucid, LLC, a limited liability company established in Saudi Arabia and a subsidiary of the Company (“Lucid LLC”) entered into a loan agreement (as subsequently amended, the “SIDF Loan Agreement”) with SIDF, a related party of Public Investment Fund (“PIF”), which is an affiliate of Ayar. Under the SIDF Loan Agreement, SIDF has committed to provide loans (the “SIDF Loans”) to Lucid LLC in an aggregate principal amount of up to SAR 5.19 billion (approximately $1.4 billion); provided that SIDF may reduce the availability of SIDF Loans under the facility in certain circumstances. SIDF Loans will be subject to repayment in semi-annual installments in amounts ranging from SAR 25 million (approximately $6.7 million) to SAR 350 million (approximately $93.3 million), commencing on April 3, 2026 and ending on November 12, 2038. SIDF Loans are financing and will be used to finance certain costs in connection with the development and construction of AMP-2. Lucid LLC may repay SIDF Loans earlier than the maturity date without penalty. Obligations under the SIDF Loan Agreement do not extend to the Company or any of its other subsidiaries.
SIDF Loans will not bear interest. Instead, Lucid LLC will be required to pay SIDF service fees, consisting of follow-up and technical evaluation fees, ranging, in aggregate, from SAR 415 million (approximately $110.7 million) to SAR 1.77 billion (approximately $471.9 million), over the term of the SIDF Loans. SIDF Loans will be secured by security interests in the equipment, machines and assets funded thereby.
The SIDF Loan Agreement contains certain restrictive financial covenants and imposes annual caps on Lucid LLC’s payment of dividends, distributions of paid-in capital, or certain capital expenditures. The SIDF Loan Agreement also defines customary events of default, including abandonment of or failure to commence operations at the plant in the King Abdullah Economic City (“KAEC”), and drawdowns under the SIDF Loan Agreement are subject to certain conditions precedent. As of March 31, 2024 and December 31, 2023, no amount was outstanding under the SIDF Loan Agreement.
GIB Facility Agreement
On April 29, 2022, Lucid LLC entered into the GIB Facility Agreement with GIB, maturing on February 28, 2025. GIB is a related party of PIF, which is an affiliate of Ayar. The GIB Facility Agreement provided for two committed revolving credit facilities in an aggregate principal amount of SAR 1 billion (approximately $266.1 million). SAR 650 million (approximately $173.0 million) under the GIB Facility Agreement was available as the Bridge Facility for the financing of Lucid LLC’s capital expenditures in connection with AMP-2. The remaining SAR 350 million (approximately $93.1 million) was available as the Working Capital Facility and might be used for general corporate purposes. Loans under the Bridge Facility and the Working Capital Facility had a maturity of no more than 12 months. The Bridge Facility incurred interest at a rate of 1.25% per annum over 3-month SAIBOR and the Working Capital Facility incurred interest at a rate of 1.70% per annum over 1~3-month SAIBOR and associated fees.
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On March 12, 2023, Lucid LLC entered into the Amended GIB Facility Agreement to combine the Bridge Facility and the Working Capital Facility into a committed SAR 1 billion (approximately $266.6 million) GIB Credit Facility which may be used for general corporate purposes. Loans under the Amended GIB Credit Facility Agreement have a maturity of no more than 12 months and bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees.
The Company is required to pay a quarterly commitment fee of 0.15% per annum based on the unutilized portion of the GIB Credit Facility. Commitments under the Amended GIB Facility Agreement will terminate, and all amounts then outstanding thereunder would become payable, on the maturity date of the Amended GIB Facility Agreement. The Amended GIB Facility Agreement contains certain conditions precedent to drawdowns, representations and warranties and covenants of Lucid LLC and events of default.
As of March 31, 2024 and December 31, 2023, the Company had outstanding borrowings of SAR 272 million (approximately $72.5 million). The weighted average interest rate on the outstanding borrowings was 7.60% and 7.49% as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024 and December 31, 2023, availability under the GIB Credit Facility was SAR 726 million (approximately $193.6 million) and SAR 727 million (approximately $193.9 million), respectively, after giving effect to the outstanding letters of credit. The outstanding borrowings were recorded within other current liabilities in the condensed consolidated balance sheets. The interest expense recorded during the three months ended March 31, 2024 and 2023 was not material. As of March 31, 2024 and December 31, 2023, the Company was in compliance with applicable covenants under the Amended GIB Facility Agreement.
ABL Credit Facility
In June 2022, the Company entered into the ABL Credit Facility with a syndicate of banks that may be used for working capital and general corporate purposes. The ABL Credit Facility provides for an initial aggregate principal commitment amount of up to $1.0 billion (including a $350.0 million letter of credit subfacility and a $100.0 million swingline loan subfacility) and has a stated maturity date of June 9, 2027. Borrowings under the ABL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the ABL Credit Facility. Availability under the ABL Credit Facility is subject to the value of eligible assets in the borrowing base and is reduced by outstanding loan borrowings and issuances of letters of credit which bear customary letter of credit fees. Subject to certain terms and conditions, the Company may request one or more increases in the amount of credit commitments under the ABL Credit Facility in an aggregate amount up to the sum of $500.0 million plus certain other amounts. The Company is required to pay a quarterly commitment fee of 0.25% per annum based on the unutilized portion of the ABL Credit Facility.
The ABL Credit Facility contains customary covenants that limit the ability of the Company and its restricted subsidiaries to, among other activities, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of certain assets, consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions or consummate mergers and other fundamental changes. The ABL Credit Facility also includes a minimum liquidity covenant which, at the Company’s option following satisfaction of certain pre-conditions, may be replaced with a springing, minimum fixed charge coverage ratio (“FCCR”) financial covenant, in each case on terms set forth in the credit agreement governing the ABL Credit Facility. As of March 31, 2024 and December 31, 2023, the Company was in compliance with applicable covenants under the ABL Credit Facility.
As of March 31, 2024 and December 31, 2023, the Company had no outstanding borrowings under the ABL Credit Facility. Outstanding letters of credit under the ABL Credit Facility were $47.7 million and $45.4 million as of March 31, 2024 and December 31, 2023, respectively. Availability under the ABL Credit Facility was $360.6 million (including $146.0 million cash and cash equivalents) and $413.4 million (including $144.0 million cash and cash equivalents) as of March 31, 2024 and December 31, 2023, respectively, after giving effect to the borrowing base and the outstanding letters of credit. The Company incurred issuance costs of $6.3 million to obtain the ABL Credit Facility, which was capitalized within other noncurrent assets in the condensed consolidated balance sheets and amortized over the facility term using the straight-line method. During the three months ended March 31, 2024 and 2023, amortization of the deferred issuance costs and commitment fee were immaterial.
NOTE 7 - COMMON STOCK WARRANT LIABILITY
On July 23, 2021, in connection with the reverse recapitalization treatment of the Merger, the Company effectively issued 44,350,000 Private Placement Warrants to purchase shares of Lucid’s common stock at an exercise price of $11.50. The Private Placement Warrants were initially recognized as a liability with a fair value of $812.0 million and was remeasured to fair value of $53.7 million as of December 31, 2023. The Private Placement Warrants remained unexercised and were remeasured to fair value of $26.6 million as of March 31, 2024. The Company recognized a gain of $27.1 million and a loss of $40.8 million for the three months ended March 31, 2024 and 2023, respectively, in the condensed consolidated statements of operations and comprehensive loss.
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The fair value of the Private Placement Warrants that are not subject to the contingent forfeiture provisions was estimated using a Black-Scholes option pricing model, and were as follows:

March 31, 2024December 31, 2023
Fair value of Private Placement Warrants per share
$0.60 $1.21 
Assumptions used in the Black-Scholes option pricing model take into account the contract terms as well as the quoted price of the Company’s common stock in an active market. The volatility is based on the actual market activity of the Company’s peer group as well as the Company’s historical volatility. The expected life is based on the remaining contractual term of the warrants, and the risk free interest rate is based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the warrants’ expected life. The level 3 fair value inputs used in the Black-Scholes option pricing models were as follows:
March 31, 2024December 31, 2023
Volatility90.0 %85.0 %
Expected term (in years)2.32.6
Risk-free rate4.5 %4.1 %
Dividend yield % %
NOTE 8 – REDEEMABLE CONVERTIBLE PREFERRED STOCK

On March 24, 2024, the Company entered into the 2024 Subscription Agreement with Ayar. Pursuant to the 2024 Subscription Agreement, Ayar agreed to purchase from the Company 100,000 shares of the Redeemable Convertible Preferred Stock for an aggregate purchase price of $1.0 billion in a private placement. On March 29, 2024, the Company issued the shares to Ayar pursuant to the 2024 Subscription Agreement and received aggregate gross proceeds of $1.0 billion. The shares of the Redeemable Convertible Preferred Stock were issued pursuant to the Certificate of Designations. Pursuant to the 2024 Subscription Agreement, Ayar has agreed, with certain exceptions, that without prior written consent of the Company, it will not sell or transfer the Redeemable Convertible Preferred Stock for the twelve months after the date of the closing of the private placement.
Dividends: The Redeemable Convertible Preferred Stock ranks senior to the common stock with respect to dividends and distributions of assets upon the Company’s liquidation, dissolution or winding up. The Redeemable Convertible Preferred Stock has an initial value of $10,000 per share (the “Initial Value” and the Initial Value plus compounded and accrued dividends, the “Accrued Value”). Dividends on the Redeemable Convertible Preferred Stock are payable in the form of preferred stock (paid-in-kind) compounded cumulative dividends upon each share of the Redeemable Convertible Preferred Stock. Dividends accrue daily on the Initial Value (as increased for any compounded dividends previously compounded thereon) of each share of the Redeemable Convertible Preferred Stock at a rate of 9% per annum and compound on the basis of quarterly dividend payment dates on each March 31, June 30, September 30 and December 31 of each year, commencing June 30, 2024.

Liquidation Preference: Upon a liquidation, dissolution or winding up of the Company, each holder of shares of the Redeemable Convertible Preferred Stock (“Holder”) will be entitled to receive, with respect to each share of then-outstanding Redeemable Convertible Preferred Stock, out of the assets of the Company available for distribution to its stockholders an amount in cash equal to the greater of (a) an amount per share of the Redeemable Convertible Preferred Stock as of the date of such liquidation, dissolution or winding up equal to (i) the per share Accrued Value as of the relevant date multiplied by (ii) the relevant percentage (the product of (i) and (ii), the “Minimum Consideration”); and (b) the amount that such Holder would have received with respect to such share of the Redeemable Convertible Preferred Stock if all shares of the Redeemable Convertible Preferred Stock had been converted at their Accrued Value into shares of common stock on the business day immediately prior to the date of such liquidation, dissolution or winding up. As of March 31, 2024, the liquidation preference of the Redeemable Convertible Preferred Stock was $1,001.6 million.

Voting Rights: Each Holder is entitled to the number of votes equal to the number of whole shares of common stock into which the aggregate shares of the Redeemable Convertible Preferred Stock held by such Holder are convertible on the record date for determining stockholders entitled to vote on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders and on which matter holders of the common stock shall be entitled to vote. Holders are entitled to notice of any meeting of stockholders and, except as otherwise provided in the Certificate of Designations or otherwise required by law, to vote together as a single class with the holders of the common stock and any other class or series of stock entitled to vote thereon. The voting power of Holders is subject to a voting cap per share equal to the quotient of the $10,000 Initial Value and $2.77.





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As long as at least 10% of the aggregate number of shares of the Redeemable Convertible Preferred Stock issued on the initial issue date remain outstanding, and subject to certain other conditions, Holders are entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the Redeemable Convertible Preferred Stock, authorizations or issuances by the Company of capital stock of the Company that ranks senior or equal to the Redeemable Convertible Preferred Stock with respect to dividends or distributions on liquidation or the terms of which provide for cash dividends (other than the common stock), winding-up and dissolution, and decreases in the number of authorized shares of the Redeemable Convertible Preferred Stock. The Company also agreed that as long as Ayar owns at least 50% of the Redeemable Convertible Preferred Stock issued on the initial issue date, the Company will comply with certain debt incurrence covenants in its Credit Agreement, dated as of June 9, 2022, by and among the Company, as the Borrower Representative, the other Borrowers party thereto from time to time, the Lenders and Issuing Banks from time to time party thereto and Bank of America, N.A., as Administrative Agent, as amended, which agreement may be waived with the sole consent of Ayar.

Conversion: Each share of the Redeemable Convertible Preferred Stock is convertible, at the option of the respective Holder, from time-to-time after the initial issue date, and without the payment of additional consideration by the Holder, (a) at any time that the closing price per share of the common stock on the trading day immediately preceding the date on which the Holder delivers the relevant notice of conversion is at least $5.50 (subject to certain adjustments), unless the Company otherwise consents to such conversion in its sole discretion, or (b) in all events during certain specified periods relating to a fundamental change or optional redemption by the Company, into such number of fully paid and non-assessable shares of common stock as is determined by dividing (i) the applicable Accrued Value as of the conversion date by (ii) the applicable conversion price in effect as of such conversion date, which shall initially be $3.5952, subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events (the “Conversion Price”).

Mandatory Conversion: On or after the third anniversary of the initial issue date, if at any time (i) the daily VWAP of the common stock has been at least 200% of the Conversion Price for at least twenty (20) trading days (whether or not consecutive) during any thirty (30) consecutive trading days (including the last day of such period) and (ii) certain common stock liquidity conditions are satisfied, the Company will have the right, exercisable at its election within fifteen (15) business days following completion of the applicable thirty (30) trading day period, to cause all or any portion of the Redeemable Convertible Preferred Stock to convert into number of fully paid and non-assessable shares of common stock, as determined by dividing (i) the applicable Accrued Value as of the conversion date by (ii) the Conversion Price in effect as of such conversion date. The Company will be required to pay an additional amount per share of the Redeemable Convertible Preferred Stock payable in cash, shares of common stock valued based on a five-day average daily VWAP or a combination thereof in respect of such conversion equal to the greater of (x) the difference between (i) the Minimum Consideration and (ii) the value of the shares of common stock delivered upon mandatory conversion thereof and (y) zero.

Fundamental Change: Upon a fundamental change, the Holders will be entitled, on the fundamental change repurchase date specified by the Company, to receive an amount equal to the greater of (a) the Minimum Consideration and (b) an amount equal to the value that such Holder would have received if it had converted its shares of the Redeemable Convertible Preferred Stock into shares of common stock on the business day immediately before the fundamental change repurchase date. The fundamental change repurchase price may be paid in cash, shares of common stock (or other securities to be received by a holder of common stock in such fundamental change) valued based on a five-day average daily VWAP (with the number of shares of common stock rounded up to the nearest whole share), or a combination thereof, at the Company’s election. The Company may not elect to deliver shares of its common stock (or other securities to be received by a holder of common stock in such fundamental change) in partial or full satisfaction of the fundamental change repurchase price, if certain common stock liquidity conditions are not satisfied.

Optional Redemption: On or after the fifth anniversary of the initial issue date, the Company may redeem all or any portion of the Redeemable Convertible Preferred Stock at a redemption price per share equal to the greater of (a) the Minimum Consideration and (b) an amount equal to the value (calculated based on a twenty (20)-day average daily VWAP) of the number of shares of common stock if it had converted its shares of the Redeemable Convertible Preferred Stock into shares of common stock as of the redemption date. Such redemption price may be paid in cash, shares of common stock valued based on a twenty (20)-day average daily VWAP, or a combination thereof, at the Company’s election. The Company may not pay any portion of such redemption price in shares of common stock if the common stock liquidity conditions are not satisfied.


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While the Redeemable Convertible Preferred Stock is callable after five years at the Company’s option, the Redeemable Convertible Preferred Stock is considered redeemable at the option of Ayar because it is the majority shareholder of the Company. The Company classified the Redeemable Convertible Preferred Stock as mezzanine equity and recorded initially at its issuance price, net of issuance costs of $2.4 million and net of the initial value of the bifurcated derivative liability of $497.1 million as discussed below. The Company accretes the Redeemable Convertible Preferred Stock to its redemption value, which is greater of (a) the Minimum Consideration and of (b) an amount equal to the value that such Holder would have received if it had converted its shares of the Redeemable Convertible Preferred Stock into shares of common stock as of the Redemption Date. The Company recorded $3.9 million of accretion as a reduction to additional paid-in capital in the condensed consolidated balance sheet as of March 31, 2024. The carrying value of the Redeemable Convertible Preferred Stock was $504.5 million as of March 31, 2024.
The Company assessed the above features to determine whether any features are required to be bifurcated and separately accounted for as an embedded feature. The Company concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meets all the requirements to be separately accounted for as a bifurcated derivative. As a result, the Company bifurcated the Redeemable Convertible Preferred Stock between (i) the host contract which is accounted for within mezzanine equity as described above, and (ii) the bifurcated derivative liability related to the conversion features. The proceeds from issuance will first be allocated to the fair value of the bifurcated derivative with the residual being allocated to the host contract. The bifurcated derivative will be remeasured to fair value at each reporting period with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss. As of March 31, 2024, the Company recorded an embedded derivative liability of $497.1 million with no change in fair value as the Redeemable Convertible Preferred Stock was issued on the last business day of the quarter.

The Company estimated the fair value of the derivative liability using a binomial lattice model with the volatility, credit spread, and term as significant unobservable inputs. Assumptions used in the valuation also take into account the contractual terms as well as the quoted price of the Company’s common stock in an active market. Significant changes in any of those inputs in isolation would result in significant changes to the fair value measurement.

The level 3 fair value inputs used in the valuation of the derivative liability were as follows:
March 31, 2024
Volatility
40 %
Credit spread
28.5 %
Stock price
$2.85
Term (in years)
5
Risk-free rate
4.2 %
NOTE 9 – STOCKHOLDERS’ EQUITY
Treasury Stock
During the year ended December 31, 2021, the Company repurchased an aggregate of 857,825 shares of its common stock, including 712,742 shares from certain employees and 145,083 shares from Board of Directors of the Company’s predecessor, Atieva, Inc. at $24.15 per share. No common stock was repurchased during the three months ended March 31, 2024 and 2023.
Common Stock Reserved for Issuance
The Company’s common stock reserved for future issuances as of March 31, 2024 was as follows:
March 31, 2024
Private Placement Warrants to purchase common stock44,350,000 
Stock options outstanding31,299,940 
Restricted stock units outstanding64,518,413 
Shares available for future grants under equity plans11,563,534 
If-converted common shares from convertible note36,737,785 
If-converted common shares from redeemable convertible preferred stock
278,357,254 
Total shares of common stock reserved466,826,926 
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NOTE 10 – STOCK-BASED AWARDS
Stock Options
A summary of stock option activity for the three months ended March 31, 2024 was as follows:
Outstanding Options
Number of OptionsWeighted Average Exercise PriceWeighted-Average Remaining Contractual Term
Intrinsic Value
(in thousands)
Balance as of December 31, 2023
32,911,135 $1.99 5.5$91,785 
Options granted
118,456 4.57 
Options exercised
(1,415,298)1.08 
Options canceled
(314,353)6.38 
Balance as of March 31, 2024
31,299,940 $2.00 5.19$50,669 
Options vested and exercisable as of March 31, 2024
26,319,750 $1.21 4.94$49,301 
As of March 31, 2024, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $13.3 million, which is expected to be recognized over a weighted-average period of 3.0 years.
Restricted Stock Units (“RSUs”)
A summary of RSUs activity for the three months ended March 31, 2024 was as follows:
Restricted Stock Units
Time-Based SharesPerformance-Based SharesTotal SharesWeighted-Average Grant-Date Fair Value
Balance as of December 31, 2023
54,699,739 9,305,825 64,005,564 $10.90 
Granted9,880,263 1,550,107 11,430,370 2.93 
Vested(6,683,649)(535,598)(7,219,247)12.39 
Cancelled/Forfeited(2,095,984)(1,602,290)(3,698,274)8.03 
Balance as of March 31, 2024
55,800,369 8,718,044 64,518,413 $9.48 
As of March 31, 2024, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $392.9 million, which is expected to be recognized over a weighted-average period of 2.0 years.
In 2021, the Company granted performance-based RSUs to the CEO and they are subject to performance and market conditions. The performance condition was satisfied upon the closing of the Merger. The fair value of these performance-based RSUs was measured on the grant date, March 27, 2021, using a Monte Carlo simulation model, with the following assumptions:
Weighted average volatility60.0 %
Expected term (in years)5.0
Risk-free interest rate0.9 %
Expected dividends %
The Company recognizes compensation expense using a graded vesting attribution method over the derived service period for the CEO performance-based awards. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the year ended December 31, 2022, the market condition was met for the CEO performance-based awards for four of the five tranches and certified by the Board of Directors, representing an aggregate of 13,934,271 performance RSUs. The unamortized expense of $8.2 million as of December 31, 2022 for the fifth tranche, representing 2,090,140 RSUs, was fully recognized during the year ended December 31, 2023. For the three months ended March 31, 2024 and 2023, the Company withheld 0.5 million shares of common stock by net settlement to meet the related tax withholding requirements related to the CEO time-based and performance-based RSUs.


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The Company granted performance-based RSUs to certain employees and they are subject to (i) corporate performance conditions and/or individual performance and (ii) a service condition which will be met generally over 3 years. The number of awards granted represents 100% of the target goal. Under the terms of the awards, the recipient may earn between 0% to 150% of the original number of grants based on actual achievement of corporate performance goals and/or individual performance. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expenses of $4.7 million and nil, respectively, related to these performance-based RSUs. As of March 31, 2024, the unamortized expense for the performance-based RSUs was $13.1 million, which will be recognized over a weighted-average period of 1.4 years contingent upon realization of the corporate performance conditions and/or individual performance.
Employee Stock Purchase Plan (“ESPP”)
The ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. The plan provides for 24-month offering periods beginning in December and June of each year, and each offering period will consist of four six-month purchase periods. The purchase price for each share purchased during an offering period will be the lesser of 85% of the fair market value of the share on the purchase date or 85% of the fair market value of the share on the offering date. As of March 31, 2024, unrecognized stock-based compensation cost related to the ESPP was $29.9 million which is expected to be recognized over a weighted-average period of 1.7 years.
Stock-based Compensation Expense
Total employee and nonemployee stock-based compensation expense for the three months ended March 31, 2024 and 2023, was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):
Three Months Ended March 31,
20242023
Cost of revenue$912 $574 
Research and development37,533 27,983 
Selling, general and administrative25,251 26,705 
Restructuring charges
 (1,443)
Total$63,696 $53,819 
For the three months ended March 31, 2024 and 2023, the Company capitalized stock-based compensation expenses of $10.5 million and $8.1 million, respectively, primarily as part of the cost of inventory.
NOTE 11 – LEASES
The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.
In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of March 31, 2024 and December 31, 2023, assets associated with the finance lease were $79.3 million. As of March 31, 2024 and December 31, 2023, liabilities associated with the finance lease were $79.2 million and $80.6 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.
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The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):
March 31,
2024
December 31,
2023
Operating leases:
Right-of-use assets$217,699 $221,508 
Other current liabilities$30,258 $28,431 
Other long-term liabilities239,081 244,122 
Total operating lease liabilities$269,339 $272,553 
Finance leases:
Property, plant and equipment, net$84,036 $85,055 
Total finance lease assets$84,036 $85,055 
Finance lease liabilities, current portion$7,548 $8,202 
Finance lease liabilities, net of current portion75,807 77,653 
Total finance lease liabilities$83,355 $85,855 
The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):
Three Months Ended March 31,
20242023
Operating lease expense:
Operating lease expense (1)
$15,010 $12,815 
Variable lease expense447 445 
Finance lease expense:
Amortization of leased assets$1,019