Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Note 6—Derivative Instruments and Hedging Activities

In October 2018, the Company executed two commodity swap contracts with TotalEnergies Gas & Power North America, an affiliate of TotalEnergies and THUSA (as defined in Note 12), for a total of 5.0 million diesel gallons annually from April 1, 2019 to June 30, 2024. These commodity swap contracts are used to manage diesel price fluctuation risks related to the natural gas fuel supply commitments the Company makes in its fueling agreements with fleet operators that participate in the Zero Now truck financing program. These contracts are not designated as accounting hedges and as a result, changes in the fair value of these derivative instruments are recognized in "Product revenue" in the accompanying condensed consolidated statements of operations.

The Company has entered into fueling agreements with fleet operators under the Zero Now truck financing program. The fueling agreements contain a pricing feature indexed to diesel, which the Company determined to be embedded derivatives and recorded at fair value at the time of execution, with the changes in fair value of the embedded derivatives recognized in "Product revenue" in the accompanying condensed consolidated statements of operations.

Derivatives and embedded derivatives as of December 31, 2021 consisted of the following (in thousands):

	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Fueling agreements:
Prepaid expenses and other current assets	$	2,038	$	—	$	2,038
Notes receivable and other long-term assets, net		4,738		—		4,738
Total derivative assets	$	6,776	$	—	$	6,776
Liabilities:
Commodity swaps:
Current portion of derivative liabilities, related party	$	1,900	$	—	$	1,900
Long-term portion of derivative liabilities, related party		2,483		—		2,483
Total derivative liabilities	$	4,383	$	—	$	4,383

Derivatives and embedded derivatives as of September 30, 2022 consisted of the following (in thousands):

	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Fueling agreements:
Prepaid expenses and other current assets	$	2,619	$	—	$	2,619
Notes receivable and other long-term assets, net		3,827		—		3,827
Total derivative assets	$	6,446	$	—	$	6,446
Liabilities:
Commodity swaps:
Current portion of derivative liabilities, related party	$	3,912	$	—	$	3,912
Long-term portion of derivative liabilities, related party		1,694		—		1,694
Fueling agreements:
Accrued liabilities		14		—		14
Other long-term liabilities		39		—		39
Total derivative liabilities	$	5,659	$	—	$	5,659

As of December 31, 2021 and September 30, 2022, the Company had a total volume on open commodity swap contracts of 11.9 million and 8.1 million diesel gallons, respectively, at a weighted-average price of approximately $3.22 per gallon.

The following table reflects the weighted-average price of open commodity swap contracts as of December 31, 2021 and September 30, 2022, by year with associated volumes:

	December 31, 2021			September 30, 2022
	Volumes	Weighted-Average Price per		Volumes	Weighted-Average Price per
Year	(Diesel Gallons)	Diesel Gallon		(Diesel Gallons)	Diesel Gallon
2022	5,000,000	$	3.18	1,250,000	$	3.22
2023	5,000,000	$	3.18	5,000,000	$	3.22
2024	1,875,000	$	3.18	1,875,000	$	3.22