PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE

12 Months Ended

Dec. 31, 2023

PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE

PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE

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

	December 31, 2023		December 31, 2022
Property, Plant & Equipment
Tooling		—		160,878
Construction in progress		—		41,378
	$	—	$	202,256
Less: Accumulated depreciation		—		(8,476)
Total	$	—	$	193,780

Due to the failure to identify a strategic partner for the Endurance, lack of expected funding and other support from Foxconn (as discussed in more detail above and elsewhere in this report) and extremely limited ability to raise sufficient capital in the current market environment, we determined it was in the best interests of the

Company’s stakeholders to take aggressive actions to cut costs and preserve cash, file the Chapter 11 Cases and cease production of the Endurance and new program development.

The Company determined that its property, plant, and equipment represent one asset group which is the lowest level for which identifiable cash flows are available. Historically, fair value of the Company’s property, plant, and equipment was derived from the Company’s enterprise value at the time of impairment as the Company believed it represented the most appropriate fair value of the asset group in accordance with accounting guidance. In light of the Chapter 11 Cases, as discussed above, the Company valued its property, plant and equipment based on their estimated residual value, less disposal costs. Additionally, for the year ended December 31, 2023, the Company recognized an impairment loss to write off its right of use assets as these assets were not assumed in the LandX Asset Purchase Agreement. The fair values were estimated using a cost approach based on the rejection damages on unexpired leases, considering that such damages reasonably approximate the cost to enter into a new lease for the remaining time period.

In conjunction with the Chapter 11 Cases, the Company commenced a comprehensive marketing and sale process for the Endurance and related assets to maximize the value of those assets. On October 27, 2023, we closed the transactions contemplated by the LandX Asset Purchase Agreement under which we sold specified assets related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances, and other interests, and the purchaser assumed certain specified liabilities of the Company for a total purchase price of $10.2 million in cash.

The Company evaluated the decision to pursue the asset sale against ASC Topic 360-10-45-9 “Long-Lived Assets to Be Disposed of By Sale” and determined that all criteria were met to present property, plant and equipment as “assets held for sale”. Based on the fact that there are significant unobservable inputs used to determine fair value, this is categorized as a Level 3 fair value measurement. Specifically, in this case since the assets were in most cases considered “Endurance-specific,” the estimates were primarily focused on residual or salvage value where appropriate.

For the year ended December 31, 2023, the Company recognized property, plant and equipment impairment and right of use asset impairment charges of $133.5 million and $1.3 million, respectively. The Company recognized $95.6 million in property, plant and equipment charges for the year ended December 31, 2022. There was no right of use asset impairment charge recognized for the year ended December 31, 2022.

For the year ended December 31, 2023, the Company recognized a net loss on the sale of property, plant and equipment and assets held for sale of $0.9 million. During the year ended December 31, 2022, the Company recognized a gain on the sale of property, plant and equipment of $100.9 million related to the sale of its manufacturing facility, certain equipment, and other assets located in Lordstown, Ohio.