Debt

6 Months Ended

Jun. 30, 2021

Note 10 – Debt

The following is a summary of our debt and finance leases as of June 30, 2021 (in millions):


					Unpaid		Unused
	Net Carrying Value				Principal		Committed		Contractual			Contractual
	Current		Long-Term		Balance		Amount (1)		Interest Rates			Maturity Date
Recourse debt:
2022 Notes	$	130	$	—	$	131	$	—		2.375	%	March 2022
2024 Notes		7		166		174		—		2.00	%	May 2024
2025 Notes		—		1,787		1,800		—		5.30	%	August 2025
Credit Agreement		—		1,878		1,878		280		3.3	%	July 2023
Solar Bonds and other Loans		2		7		9		—		4.0-5.8	%	October 2021-January 2031
Total recourse debt		139		3,838		3,992		280
Non-recourse debt:
Automotive Asset-backed Notes		869		1,455		2,333		—		0.2-7.9	%	August 2021-March 2025
Solar Asset-backed Notes		41		1,054		1,122		—		2.9-7.7	%	September 2024-February 2048
Cash Equity Debt		20		402		434		—		5.3-5.8	%	July 2033-January 2035
Solar Loan-backed Notes		13		115		134		—		4.8-7.5	%	September 2048-September 2049
Warehouse Agreements		—		—		—		1,100		Not applicable		September 2022
Automotive Lease-backed Credit Facilities		—		—		—		173		Not applicable		September 2022
Other Loans		—		14		14		23		5.1	%	February 2033
Total non-recourse debt		943		3,040		4,037		1,296
Total debt		1,082		6,878	$	8,029	$	1,576
Finance leases		448		993
Total debt and finance leases	$	1,530	$	7,871

The following is a summary of our debt and finance leases as of December 31, 2020 (in millions):


					Unpaid		Unused
	Net Carrying Value				Principal		Committed		Contractual			Contractual
	Current		Long-Term		Balance		Amount (1)		Interest Rates			Maturity Date
Recourse debt:
2021 Notes	$	419	$	—	$	422	$	—		1.25	%	March 2021
2022 Notes		115		366		503		—		2.375	%	March 2022
2024 Notes		171		856		1,282		—		2.00	%	May 2024
2025 Notes		—		1,785		1,800		—		5.30	%	August 2025
Credit Agreement		—		1,895		1,895		278		3.3	%	July 2023
Solar Bonds and other Loans		4		49		55		—		3.6%-5.8	%	January 2021 - January 2031
Total recourse debt		709		4,951		5,957		278
Non-recourse debt:
Automotive Asset-backed Notes		777		921		1,705		—		0.6%-7.9	%	August 2021-August 2024
Solar Asset-backed Notes		39		1,076		1,141		—		3.0%-7.7	%	September 2024-February 2048
China Loan Agreements		—		616		616		1,372		4.0	%	June 2021-December 2024
Cash Equity Debt		18		408		439		—		5.3%-5.8	%	July 2033-January 2035
Solar Loan-backed Notes		13		133		152		—		4.8%-7.5	%	September 2048-September 2049
Warehouse Agreements		37		257		294		806		1.7%-1.8	%	September 2022
Solar Term Loan		151		—		151		—		3.7	%	January 2021
Automotive Lease-backed Credit Facility		14		19		33		153		1.9%-5.9	%	September 2022-November 2022
Solar Revolving Credit Facility and other Loans		—		81		81		23		2.7%-5.1	%	June 2022-February 2033
Total non-recourse debt		1,049		3,511		4,612		2,354
Total debt		1,758		8,462	$	10,569	$	2,632
Finance leases		374		1,094
Total debt and finance leases	$	2,132	$	9,556

(1)

There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our credit facilities and financing funds, except certain specified conditions prior to draw-down, including pledging to our lenders sufficient amounts of qualified receivables, inventories, leased vehicles and our interests in those leases, solar energy systems and the associated customer contracts, our interests in financing funds or various other assets and as may be described below and in the notes to the consolidated financial statements included in our report on Form 10-K for the year ended December 31, 2020.

Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only assets of our subsidiaries. The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred financing costs. The debt discounts were updated as of January 1, 2021 for our convertible notes with the adoption of ASU 2020-06 as discussed in Note 2, Summary of Significant Accounting Policies. As of June 30, 2021, we were in material compliance with all financial debt covenants, which include minimum liquidity and expense-coverage balances and ratios.

2021 Notes, 2022 Notes and 2024 Notes

During the first two quarters of 2021, the closing price of our common stock continued to exceed 130% of the applicable conversion price of each of our 2022 Notes and 2024 Notes on at least 20 of the last 30 consecutive trading days of the quarter; causing the 2022 Notes and 2024 Notes to be convertible by their holders during the second and third quarters of 2021. As we now expect to settle a portion of the 2024 Notes in the third quarter of 2021, we reclassified $7 million of the carrying value of the 2024 Notes from debt and finance leases, net of current portion to current portion of debt and finance leases on our consolidated balance sheet as of June 30, 2021. Should the closing price conditions continue to be met in a future quarter for any of these notes, such notes will be convertible at their holders’ option during the immediately following quarter.

On January 1, 2021, we adopted ASU 2020-06 using the modified retrospective method. As a result of this adoption, we have de-recognized the remaining debt discounts on the 2022 Notes and 2024 Notes and therefore no longer recognize any amortization of debt discounts as interest expense (see Note 2, Summary of Significant Accounting Policies). During the first two quarters of 2021, $422 million, $372 million and $1.11 billion in aggregate principal amount of the 2021 Notes, 2022 Notes and 2024 Notes, respectively, were settled for $422 million, $372 million and $1.11 billion in cash for their par amount, and the issuance of 5.3 million, 5.1 million and 16.4 million shares of our common stock for the conversion premium, respectively. The note hedges we entered into in connection with the issuance of the 2021 Notes, 2022 Notes and 2024 Notes were automatically settled with the respective conversions of the 2021 Notes, 2022 Notes and 2024 Notes, resulting in the receipt of 5.3 million, 5.1 million and 16.4 million shares of our common stock, respectively. In March 2021, the 2021 Notes were fully settled. Additionally, during the second quarter of 2021, we settled portions of the warrants entered into in connection with the issuance of the 2021 Notes and 2024 Notes, resulting in the issuance of 7.9 million and 9.2 million shares of our common stock, respectively.

2025 Notes

On July 16, 2021, we issued a notice of redemption to the holders of the 2025 Notes informing the holders that we will redeem the notes in full in August 2021 at a redemption price equal to 102.65% of outstanding principal amount, plus accrued and unpaid interest, if any.

Automotive Asset-backed Notes and Warehouse Agreements

In March 2021, we transferred beneficial interests related to certain leased vehicles into an SPE and issued $1.08 billion in aggregate principal amount of Automotive Asset-backed Notes, with terms similar to our other Automotive Asset-backed Notes. The proceeds from the issuance, net of discounts and fees, were $1.07 billion. In conjunction with this financing we repaid the remaining outstanding balance of our vehicle lease-backed loan and security agreement (the "2016 Warehouse Agreement"), for which committed funds remained available for future borrowings.

China Loan Agreements

In April 2021, we fully repaid the $614 million in aggregate principal of our secured term loan facility in connection with the construction of Gigafactory Shanghai (the “Fixed Asset Facility”) and the facility was terminated.

In June 2021, our Working Capital Loan Contract entered in May 2020 (the “2020 China Working Capital Facility”) matured and the facility was terminated.

Solar Term Loan

In January 2021, our Solar Term Loan matured and was repaid.

Automotive Lease-backed Credit Facilities

In June 2021, we fully repaid $32 million in aggregate principal of our Automotive Lease-backed Credit Facilities and terminated one of the facilities.

Solar Revolving Credit Facility and other Loans

In April 2021, we fully repaid the $67 million in aggregate principal of our Solar Revolving Credit Facility and the facility was terminated.

Interest Expense

The following table presents the interest expense related to the contractual interest coupon, the amortization of debt issuance costs and the amortization of debt discounts on our convertible senior notes with cash conversion features, which include the 2021 Notes, the 2022 Notes and the 2024 Notes (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Contractual interest coupon	$	3	$	19	$	10	$	39
Amortization of debt issuance costs		1		2		3		4
Amortization of debt discounts (1)		—		44		—		88
Total	$	4	$	65	$	13	$	131

(1)

Under the modified retrospective method of adoption of ASU 2020-06, there was neither amortization of debt discounts, nor losses on extinguishment of debt recognized for the three and six months ended June 30, 2021. Refer to discussion above for further details.