FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2024

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The sensitivity of the fair value measurement to changes in unobservable inputs may result in a significantly higher or lower measurement.

Cash, cash equivalents and investments are reported at their respective fair values on the Company’s condensed consolidated balance sheets. The Company’s short-term and long-term investments are classified as available-for-sale securities.

The following table sets forth the Company’s financial assets subject to fair value measurements on a recurring basis by level within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024
									Reported As:
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and cash equivalents		Short-Term Investments		Long-Term Investments
Cash	$	1,388,590	$	—	$	—	$	1,388,590	$	1,388,590	$	—	$	—
Level 1:
Money market funds	638,232		—		—		638,232		638,232		—		—
U.S. Treasury securities	1,798,047		408		(2,627)		1,795,828		92,667		1,219,989		483,172
Subtotal	2,436,279		408		(2,627)		2,434,060		730,899		1,219,989		483,172
Level 2:
Certificates of deposit	67,899		50		(13)		67,936		—		67,936		—
Time deposits	100,000		—		—		100,000		50,000		50,000		—
Commercial paper	171,352		24		(17)		171,359		—		171,359		—
Corporate debt securities	460,025		451		(441)		460,035		—		315,616		144,419
Subtotal	799,276		525		(471)		799,330		50,000		604,911		144,419
Total	$	4,624,145	$	933	$	(3,098)	$	4,621,980	$	2,169,489	$	1,824,900	$	627,591


	December 31, 2023
									Reported As:
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and cash equivalents		Short-Term Investments		Long-Term Investments
Cash	$	516,673	$	—	$	—	$	516,673	$	516,673	$	—	$	—
Level 1:
Money market funds	698,702		—		—		698,702		698,702		—		—
U.S. Treasury securities	2,033,711		2,480		(2,073)		2,034,118		104,572		1,638,537		291,009
Subtotal	2,732,413		2,480		(2,073)		2,732,820		803,274		1,638,537		291,009
Level 2:
Certificates of deposit	105,993		97		(22)		106,068		—		106,068		—
Time Deposits	50,000		—		—		50,000		50,000		—		—
Commercial paper	299,248		191		(8)		299,431		—		299,431		—
Corporate debt securities	615,350		1,101		(669)		615,782		—		445,762		170,020
Subtotal	1,070,591		1,389		(699)		1,071,281		50,000		851,261		170,020
Total	$	4,319,677	$	3,869	$	(2,772)	$	4,320,774	$	1,369,947	$	2,489,798	$	461,029

During the three months ended March 31, 2024 and 2023, there were immaterial realized gains or losses on the sale of available-for-sale securities. Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale securities was $11.7 million and $11.1 million as of March 31, 2024 and December 31, 2023, respectively, and was recorded in other current assets on its condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, no allowance for credit losses was recorded related to an impairment of available-for-sale securities.

The following table summarizes our available-for-sale securities by contractual maturity:


	March 31, 2024
	Amortized cost		Estimated Fair Value
Within one year	$	1,826,205	$	1,824,900
After one year through three years	628,450		627,591
Total	$	2,454,655	$	2,452,491

On November 6, 2023, the Company received 28,352,273 ordinary shares of Aston Martin with an initial fair value of $73.2 million. The Company remeasured the shares and recorded the fair value of $60.8 million and $81.5 million within investments in equity securities of a related party in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively. These equity securities are publicly traded stocks (where shares are denominated in GBP) measured at fair value on a recurring basis and classified within level 1 in the fair value hierarchy. During the three months ended March 31, 2024, the Company recognized $19.9 million of unrealized loss in change in fair value of equity securities of a related party in the condensed consolidated statement of operations and comprehensive loss. During the three months ended March 31, 2024, the Company also recognized $0.8 million of unrealized foreign currency loss related to these equity securities in other income (expense), net in the condensed consolidated statement of operations and comprehensive loss. See Note 16 “Related Party Transactions” for more information.

Level 3 liabilities consist of the common stock warrant liability and the derivative liability, of which the fair values were measured upon issuance of the Private Placement Warrants and the Redeemable Convertible Preferred Stock, respectively, and are remeasured at each reporting period. The valuation methodology and underlying assumptions are discussed further in Note 7 “Common Stock Warrant Liability” and Note 8 “Redeemable Convertible Preferred Stock”, respectively. Level 3 liabilities also consist of residual value guarantee liabilities, of which the fair value measurement is nonrecurring and measured upon delivery of vehicles. Significant changes in the unobservable inputs used in determining the fair value would result in significant changes to the fair value measurement. The following table presents a reconciliation of the common stock warrant liability and derivative liability measured and recorded at fair value on a recurring basis (in thousands):


	Three Months Ended March 31,
	2024				2023
	Derivative Liability		Common Stock Warrant Liability		Common Stock Warrant Liability
Fair value-beginning of period	$	—	$	53,664	$	140,590
Issuance	497,100		—		—
Change in fair value	—		(27,054)		40,802
Fair value-end of period	$	497,100	$	26,610	$	181,392

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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