Stock-based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

Note 13. Stock-based Compensation

Stock Options

The Company maintains the 2016 Stock Incentive Plan and the 2021 Incentive Award Plan (the “Stock Plans”) under which incentive stock options, non-qualified stock options and RSUs may be granted to employees. Under the Stock Plans, the Company has 1,084,978 shares available for issuance as of December 31, 2024.

Under the terms of the Stock Plans, incentive stock options must have an exercise price at or above the fair market value of the stock on the date of the grant, while non-qualified stock options are permitted to be granted below fair market value of the stock on the date of grant. The majority of stock options granted have service-based vesting conditions only. The service-based vesting conditions vary though typically, stock options vest over four

years with 25% of stock options vesting on the first anniversary of the grant and the remaining 75% vesting monthly over the remaining 36 months. Option holders have a ten-year period to exercise the options before they expire.

The fair value of stock option awards was determined on the grant date using the Black-Scholes option-pricing model. No new stock options were granted during the year ended December 31, 2024 and 2023. The assumptions for the Black-Scholes model for options granted during the period ended December 31, 2022 were as follows:

Expected term (years)(1)	6.02
Expected volatility(2)	48.7% - 49.0%
Common Stock Value	2.92 - 3.28
Risk-free interest rate(3)	2.73% - 2.93%
Dividend yield(4)	0%

(1)Expected term is the length of time the grant is expected to be outstanding before it is exercised or terminated. This number is calculated as the midpoint between the vesting term and the original contractual term (contractual period to exercise). If the option contains graded vesting, then the vesting term would be based on the vesting pattern.

(2)Expected volatility was estimated based on comparable companies' reported volatilities.

(3)The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term.

(4)The Company has assumed a dividend yield of zero as they have no plans to declare dividends in the foreseeable future.

The following table summarized the stock option activity and related information under all stock option plans:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2021		2,771,692		$	1.93		8.27	$	140,560
Granted		267,000			15.40		—		—
Exercised		(292,944	)		1.19		—		—
Forfeited		(58,913	)		2.57		—		—
Outstanding as of December 31, 2022		2,686,835		$	3.34		6.77	$	11,593
Exercised		(131,444	)		1.80		—		—
Forfeited		(140,661	)		14.26		—		—
Outstanding as of December 31, 2023		2,414,730		$	2.79		5.73	$	4,004
Exercised		(43,660	)		1.81		—		—
Forfeited		(398	)		2.74		—		—
Outstanding as of December 31, 2024		2,370,672		$	2.81		4.75	$	6,055
Vested and exercisable as of December 31, 2024		2,330,866		$	2.61		4.71	$	6,055
Vested and expected to vest as of December 31,    2024		2,370,672		$	2.81		4.75	$	6,055

The intrinsic value of options exercised during years ended December 31, 2024, 2023 and 2022 was $0.1 million, $0.5 million, and $7.2 million, respectively.

As of December 31, 2024, the Company had $0.3 million of unrecognized stock-based compensation expense related to the stock options. This cost is expected to be recognized over a weighted-average period of 0.9 years.

Restricted Stock Units (“RSUs”) and Performance-based Restricted Stock Units (“PBRSUs”)

Beginning November 2020, Legacy Aeva granted RSUs and PBRSUs to certain employees and consultants pursuant to its 2016 and 2020 Stock Plans. RSU’s typically vest 25 percent upon the one-year anniversary date from the initial vesting date, with 12.5% vesting on each six-month anniversary date over the following three years. The RSUs are subject to a time-based vesting condition. PBRSUs are subject to a time-based vesting condition and a performance condition tied to the completion of the merger with InterPrivate, both of were required to be satisfied in order for the PBRSUs to be vested and settled for shares of common stock. The performance vesting condition for these PBRSUs were met on March 12, 2021. As a result, these PBRSUs and RSUs vested to the extent the applicable service condition was satisfied as of such date.

In May 2023, the Company granted a total of 1,176,471 PBRSUs pursuant to the 2021 Incentive Award Plan to certain executives that vest on achieving certain operational milestones as defined in the individual grant agreements subject to continued employment through 2025. Stock-based compensation expense is recognized over the expected performance/service achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. If satisfaction of the performance condition is not probable, stock-based compensation cost recognition is deferred until it becomes probable. The Company reassesses the probability as to whether satisfaction of the performance condition is probable on a quarterly basis, and stock-based compensation cost is adjusted based on the portion of the requisite service provided. These PBRSUs neither carry rights to dividends nor voting rights until the shares are issued or transferred to the recipient. Awards are forfeited if an employee leaves the Company before the PBRSUs vest or the performance period lapses. The weighted-average grant date PBRSU fair value of $5.10 per share is determined based upon the market closing price of the Company’s common stock on the date of grant. As of December 31, 2024, the total unrecognized compensation expense related to the performance-based PBRSUs was $2.3 million, which is expected to be amortized over a weighted-average period of 1.0 year.

In May 2023, the Company also granted a total of 735,294 market-based PBRSUs pursuant to the 2021 Incentive Award Plan to certain executives that vest over a multi-year period, upon continue service and when the volume-weighted average price per share (“VWAP Average”) of the Company’s common stock for the preceding 30 consecutive trading days equals or exceeds the target stock price for the indicated year. The Company recognizes stock-based compensation based upon the grant date fair value on an accelerated attribution basis over the requisite service period of the award. Provided that the requisite service is rendered, the total fair value of the market-based PBRSUs at the date of grant is recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the achievement of the specified market criteria. These PBRSUs neither carry rights to dividends nor voting rights until the shares are issued or transferred to the recipient. Awards are forfeited if an employee leaves the Company before the PBRSUs vest. The weighted-average grant date fair value of the market-based PBRSUs was $1.40 per share. The Company estimated the fair value of the market-based PBRSUs award on the grant date using the Monte Carlo simulation model with the following assumptions:

Expected term (years)	0.5 - 4.7
Expected volatility		70.9	%
Risk-free interest rate		3.29	%
Dividend yield		0	%
Share price	$	5.10

As of December 31, 2024, the total unrecognized compensation expense related to the market-based PBRSUs was $0.6 million, which is expected to be amortized over a weighted-average period of 2.4 years.

The following table summarizes the Company’s RSU activity for the year ended December 31, 2024:

	Shares			Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2021		1,326,172		$	50.20
Granted		1,840,011			15.99
Released		(504,365	)		43.76
Forfeited		(272,909	)		42.27
Outstanding as of December 31, 2022		2,388,909		$	26.11
Granted		5,143,160			6.04
Released		(1,205,704	)		18.87
Forfeited		(1,126,554	)		18.21
Outstanding as of December 31, 2023		5,199,811		$	9.65
Granted		4,502,661			3.57
Released		(1,921,646	)		10.91
Forfeited		(1,230,957	)		7.63
Outstanding as of December 31, 2024		6,549,869		$	5.48

The total fair value of restricted stock awards vested for the years ended December 31, 2024, 2023 and 2022, was $6.5 million, $6.2 million, and $8.3 million, respectively.

As of December 31, 2024, the Company had $28.8 million of unrecognized stock-based compensation expense related to the RSUs. This cost is expected to be recognized over a weighted average period of 2.6 years.

Employee Stock Purchase Plan

In November 2022, the Board and the Company’s stockholders adopted the 2022 Employee Stock Purchase Plan (“ESPP”) under which 1,831,812 shares were authorized for issuance. The ESPP permits eligible employees to purchase the Company’s common stock through payroll deduction with up to 15% of their pre-tax earnings subject to certain Internal Revenue Code limitations. The purchase price of shares is 85% of the lower of the fair market value of the Company’s common stock on the first day of a six-month offering period, or the relevant purchase date. In addition, participants are subject to $25,000 annual purchase restriction. No ESPP shares were purchased during 2024.

Compensation expense

Total stock-based compensation expense by function was as follows (in thousands):

	Year ended December 31,
	2024		2023		2022
Cost of revenue	$	279	$	965	$	1,161
Research and development expenses		16,657		16,760		17,197
General and administrative expenses		5,875		5,131		4,972
Sales and marketing expenses		897		819		917
Total	$	23,708	$	23,675	$	24,247

Stock-based compensation of $38 thousand was capitalized in deferred cost for the year ended December 31, 2022. Stock-based compensation capitalized will be recognized as cost when the related non-recurring service revenue is recognized.