PROPERTY, PLANT AND EQUIPMENT

9 Months Ended

Sep. 30, 2022

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net, consisted of the following:

(in thousands)

	September 30, 2022		December 31, 2021
Property, Plant & Equipment
Land	$	—	$	326
Buildings		—		6,223
Machinery and equipment		43,723		39,073
Tooling		127,225		—
Construction in progress		49,072		337,124
	$	220,020	$	382,746
Less: Accumulated depreciation		—		—
Total	$	220,020	$	382,746

As of December 31, 2021, construction in progress included manufacturing equipment, operating equipment and other general assets, retooling and construction at the Company's facilities in Lordstown, Ohio, Farmington Hills, Michigan, and Irvine, California, along with tooling held at various supplier locations. During the nine months ended September 30, 2022, the Company sold its manufacturing facility, certain equipment, and other assets located in Lordstown, Ohio and recorded a gain of $101.7 million. We continue to own our hub motor assembly line, as well as our battery module and pack line assets, certain tooling and other excluded assets. As all of our fixed assets currently support the production of the Endurance, we determined that our assets represent one asset group as this is the lowest level for which identifiable cash flows are

available. In September of 2022, we began commercial production with two vehicles completing assembly and completed assets were transferred to their respective asset classes. Depreciation during the quarter ended September 30, 2022 was immaterial.

As of the end of the fiscal years ended December 31, 2020 and December 31, 2021, the Company determined that there was a substantial doubt in our ability to continue as a going concern. Our capital constraints have limited our ability to: (a) invest in hard tooling for scaled production of the Endurance and (b) establish multi-year production volumes consistent with our suppliers’ expectations. These factors together result in a bill of materials (“BOM”) cost for the Endurance that is significantly higher than the expected selling price.

As of September 30, 2022, property, plant, and equipment was reviewed for potential impairment for recoverability by comparing the carrying amount of our asset group to estimated undiscounted future cash flows expected to be generated by the asset group. As the carrying amount of our asset group exceeds its estimated undiscounted future cash flows, we recognized a $74.9 million charge based on the difference between the carrying value of the fixed assets and their fair value. The fair value was based on total enterprise value using level 1 inputs as we believe this technique results in the highest and best use of a hypothetical marketplace participant. Additional impairments could occur in future periods.

As of September 30, 2022, construction in progress primarily includes certain production equipment and tooling not yet placed in service and uninstalled equipment acquired for higher capacity production, and general assets at Farmington Hills, Michigan, and Irvine, California.

We outsource all of the manufacturing of the Endurance and operation of certain remaining assets to Foxconn under the Contract Manufacturing Agreement.