Stock Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Upon completion of the Business Combination, the 2016 Stock Plan was renamed the 2020 Equity Incentive Plan (the “Plan”). All outstanding awards under the 2016 Stock Plan are modified to adopt the terms under the 2020 Equity Incentive Plan. The modifications are administrative in nature and have no effect on the valuation inputs, vesting conditions or equity classification of any of the outstanding original awards immediately before and after the close of the

Business Combination. The Plan is a stock-based compensation plan which provides for the grants of options and restricted stock to employees and consultants of the Company. Options granted under the Plan may be either incentive options (“ISO”) or non-qualified stock options (“NSO”). The Plan added 24,097,751 shares of Class A Common Stock on October 29, 2020 to increase the maximum aggregate number of shares that may be issued under the Plan to approximately 48 million shares (subject to adjustments upon changes in capitalization, merger or certain other transactions). Also, upon completion of the Business Combination, the Company established a 2020 Employee Stock Purchase Plan (the “ESPP”) under which up to 3,213,034 Class A Common Stock may be issued. As of December 31, 2023, no shares have been issued under the ESPP.

Stock-based compensation expense was classified in the Consolidated Statements of Operations as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Selling, general and administrative	$	3,277	$	6,861	$	1,135
Research and development	3,974		12,741		4,487
Cost of goods sold	925		—		—
Total	$	8,176	$	19,602	$	5,622

Stock options

Options under the Plan may be granted at prices as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a 15% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The fair value of the shares is determined by the Board of Directors on the date of grants. Stock options generally have a contractual life of 10 years. Upon exercise, the Company issues new shares.

In 2016 and 2017, the Company’s founders were granted an aggregate of 15,882,711 options which are fully vested and are not related to performance. Options granted to other employees and consultants become vested and are exercisable over a range of up to six years from the date of grant.

The following table summarizes option activity under the Plan:


	Options	Weighted Average Exercise Price		Weighted Average Contractual Term (in Years)
Balance as of December 31, 2021	17,695,560	$	1.44	5.6
Granted	495,700	10.15
Exercised	(213,048)	2.13
Forfeited	(297,616)	12.09
Balance as of December 31, 2022	17,680,596	$	1.51	4.7
Granted	7,000	7.05
Exercised	(60,340)	0.44
Forfeited	(387,041)	11.87
Balance as of December 31, 2023	17,240,215	$	1.29	3.3

The fair value of each stock option grant under the Plan was estimated on the date of grant using the Black-Scholes option pricing model, with the following range of assumptions:


	Year Ended December 31,
	2023	2022
Expected term (in years)	6.3	6.3
Volatility	74.5% to 75.2%	74.9% to 76.4%
Dividend yield	0.0%	0.0%
Risk-free interest rate	3.4% to 4.0%	3.7% to 4.3%
Common stock price	$6.98 to $7.10	$6.95 to $7.99

The Black-Scholes option pricing model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s common stock, volatility, risk-free interest rates, expected term, and dividend yield. As the Company’s shares have actively traded for a short period of time subsequent to the Business Combination, volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.

The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of the time-to-vesting and the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on historical volatility of publicly-traded peer companies.

Additional information regarding stock options exercisable as of December 31, 2023 is summarized below:


	Options Exercisable at December 31, 2023
Range of Exercise Price	Number	Weighted Average Exercise Price		Weighted Average Contractual Term (in Years)
$0.06 - $24.48	17,240,215	$	1.29	3.3

The aggregate intrinsic value represents the total pretax intrinsic value (i.e., the difference between the fair value of the Company’s common stock price and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options. The aggregate intrinsic value of options outstanding as of December 31, 2023 was $25.8 million. The intrinsic value of options exercisable was $25.8 million as of December 31, 2023. The total intrinsic value of options exercised was $0.4 million, $1.8 million, and $26.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The weighted-average grant date fair value per share for the stock option grants during the years ended December 31, 2023, 2022, and 2021 was $7.05, $10.25, and $15.96, respectively. As of December 31, 2023, the total unrecognized compensation related to unvested stock option awards granted was $22.2 million, which the Company expects to recognize over a weighted-average period of approximately 3.3 years.

Restricted stock unit awards

The Company granted employees, who rendered services during the years ended December 31, 2021 and December 31, 2020 and were employees of the Company on the respective grant dates, a restricted stock unit (“RSU”) award based in proportion to the service period beginning from the employee’s hire date to the end of the year. The restricted stock unit awards vested on the grant dates occurring in May of 2021 and March of 2022 for the respective preceding years resulted in stock-based compensation expense of $1.1 million recognized for the year ended December 31, 2023 and $4.6 million for the year ended December 31, 2022. The Company’s founders declined to receive an award related to performance in 2020 and 2021. In accordance with the Company’s Outside Director Compensation Policy, each

outside Board of Directors member received an annual RSU equal to $200,000 granted on the date of the Company’s annual shareholders’ meeting which vests in 25% increments at the end of each calendar quarter. Each Outside Director may elect to convert all or a portion of his or her annual Board of Directors retainer, excluding any annual retainer that an Outside Director may receive for serving as Lead Director and any annual retainers for committee service, into RSUs in lieu of the applicable cash retainer payment (“RSU Election”).

The number of Class A common shares granted to Outside Directors annually are based on the 30-day average closing trading price of Class A common stock on the day preceding the grant date (“RSU Value”). When an Outside Director exercises his or her RSU Election, the number of Class A common shares equal the amount of cash subject to such RSU Election divided by the applicable RSU Value and are fully vested.

The following table summarizes RSU activity under the Plan:


	RSU Awards	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	17,174	$	13.47
Awarded	494,091	10.25
Vested	(498,497)	11.19
Forfeited	(1,016)	11.46
Unvested at December 31, 2022	11,752	$	12.45
Awarded	24,009,880	2.14
Vested	(331,873)	7.65
Forfeited	(487,519)	4.76
Unvested at December 31, 2023	23,202,240	$	2.16

Performance-based restricted stock unit awards

In the third quarter of 2021, the Company’s compensation committee ratified and approved performance-based restricted stock units (“PRSUs”) to all employees (“Grantee”) the value of which is determined based on the Grantee’s level within the Company (“PRSU Value”). Each PRSU is equal to one underlying share of Class A common stock. Also, PRSUs were awarded to any new employee hired in the fourth quarter of 2021 and during 2022 on a pro-rata basis based on a reduction in time of service. The number of shares subject to a Grantee’s PRSU award equals the Grantee’s PRSU Value divided by the closing price per Class A common share on the service inception date, or if the service inception date is not a trading day, the closing price per Share on the closest trading day immediately prior to the service inception date; in each case rounded down to the nearest whole number. Each PRSU award shall vest as to 50% of the PRSU Value upon the Committee’s determination, in its sole discretion, and certification of the occurrence of the Ocean Start of Production and shall vest as to 50% of the PRSUs upon the first anniversary of the Ocean Start of Production, in each case, subject to (i) the Grantee’s continuous service through the applicable vesting date, (ii) the Grantee’s not committing any action or omission that would constitute Cause for termination through the applicable vesting date, as determined in the sole discretion of the Company, and (iii) the Ocean Start of Production occurring on or before December 31, 2022. The compensation committee has discretion to reduce or eliminate the number of PRSUs that shall vest pursuant to each PRSU award upon the certification of the occurrence of the Ocean Start of Production and/or upon the first anniversary of the Ocean Start of Production, after considering, any factors that it deems relevant, which could include but are not limited to (i) Company performance against key performance indicators, and (ii) departmental performance against goals. The service inception date precedes the grant dates for both performance conditions. The grant date for each of the performance conditions is the date Grantees have a mutual understanding of the key terms and conditions of the PRSU, which will occur when the performance condition is objectively determinable and measurable, and the compensation committee has determined whether it will exercise its discretion to adjust the PRSU award. Recognition of stock-based compensation occurs when performance conditions are probable of achievement. Measurement of stock-based compensation attributed to the PRSU awards will be based on the fair value of the underlying Class A Common Stock once the grant date is determined (e.g., variable accounting).

As of December 31, 2023, the Company has approved and authorized PRSUs equal to 1,446,943 shares of Class A common stock with a PRSU value of $3.4 million of which 1,278,465 awards vested on March 24, 2023, the grant and vesting date for the first tranche of the PRSU award. As of December 31, 2022, achievement of the first tranche of the PRSU awards was deemed probable resulting in recognition of cumulative expense of $10.1 million. During the year ended December 31, 2023, the Company measured the cumulative expense to be recognized upon vesting based on the closing stock price on the grant and vesting date, which resulted in cumulative expense of $7.3 million, a reduction of $2.8 million from the Company's measurement of compensation expense as of the end of 2022.

As of December 31, 2023, achievement of the second tranche of the PRSU awards was deemed probable resulting in the recognition of compensation expense of $3.4 million for the year ending December 31, 2023. However, a grant date has not yet been established for the second tranche because there has not been a mutual understanding of the key terms and conditions with the grantees. Measurement of PRSU compensation expense is based on the closing price on the last day of the quarter multiplied by the outstanding approved and authorized PRSUs.