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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes Loss before provision for income taxes consisted of the following (in thousands):
 Years Ended December 31,
 201920202021
US$(57,789)$(95,000)$(673,941)
Cayman Islands
(1,144)(50,358)— 
Foreign
(25,950)(32,512)(58,732)
Loss before provision for income taxes
$(84,883)$(177,870)$(732,673)
Provision for income taxes consisted of the following (in thousands):
 Years Ended December 31,
 201920202021
Current:
US
$—$—$—
Cayman Islands———
Foreign
———
Total current provision
———
Deferred:
US
$—$—$—
Cayman Islands———
Foreign
———
Total deferred provision
———
Total provision for income taxes
$—$—$—
Prior to February 2021, the Company was a Cayman Islands incorporated holding company and subject to taxation under the laws of Cayman Islands, for which there is no current tax regime. In February 2021, the Company completed a domestication pursuant to Section 388 of the Delaware General Corporation Law pursuant to which it became a Delaware corporation and was no longer subject to the laws of the Cayman Islands. Following the Domestication, the U.S. federal income tax rate is the applicable statutory rate. The provision for income taxes differs from the amount computed by applying the U.S. statutory tax rate of 21% and Cayman Islands statutory tax rate of 0% as follows (in thousands):
 Years Ended December 31,
 201920202021
Tax at statutory rate
$— $— $(153,862)
State and local taxes (net of federal tax benefit)— — (3,531)
Tax rate change— — 11,317 
Change in valuation allowances
26,011 38,984 99,129 
Foreign tax rate differential
(20,883)(30,633)2,354 
Research and development tax credits
(5,841)(8,874)(15,465)
Warrant fair market value adjustment— — 68,649 
Section 162(m) limitation - officers compensation— — 6,672 
Uncertain tax position reserves
724 364 1,800 
Stock-based compensation
— (354)(16,344)
Other
(11)513 (719)
Total
$— $— $— 
The effective tax rate for 2019, 2020, and 2021 was 0% and is primarily due to the valuation allowances recorded on US and other local jurisdiction activities that the Company concluded do not meet the more likely than not criteria for realization.
The Company recognizes the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when it is more likely than not that the position will be sustained upon examination by authorities. Recognized tax positions are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The total amount of unrecognized tax benefits (“UTBs”) at December 31, 2021 was $6.9 million. If recognized in the future, $5.8 million of the UTBs would impact the effective tax rate (prior to consideration of valuation allowance). The Company does not believe its total amount of unrecognized tax benefits will significantly increase or decrease within 12 months of the balance sheet date.
A reconciliation of the beginning and ending balance to total unrecognized tax position is as follows (in thousands):
 Years Ended December 31,
 201920202021
Unrecognized tax benefit, beginning of year
$2,850 $4,029 $4,766 
Increases related to current year tax positions
1,179 737 2,134 
Unrecognized tax benefit, end of year
$4,029 $4,766 $6,900 
The Company classifies interest expense and penalties related to the underpayment of income taxes in the consolidated financial statements as income tax expense. As of December 31, 2019, 2020, and 2021 the Company recorded no accrued interest or penalties related to unrecognized tax benefits.
The Company is subject to tax examination in U.S. federal and state and other local country jurisdictions for tax years 2016 to the present.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
 Years Ended December 31,
 201920202021
Deferred tax assets:
Net operating loss carryforwards
$39,489 $74,417 $155,088 
Tax credit carryforwards
4,879 9,833 18,769 
Lease liability
1,320 1,116 797 
Other
225 631 2,479 
Stock-based compensation
— 264 8,887 
Gross deferred tax assets
45,913 86,261 186,020 
Valuation allowance
(43,985)(84,852)(184,892)
Net deferred tax assets
1,928 1,409 1,128 
Deferred tax liabilities:
Property, plant and equipment
438 352 395 
Intangible assets
10 — — 
Capital lease assets
1,480 1,057 733 
Net deferred tax liabilities
1,928 1,409 1,128 
Net deferred tax asset/(liability)
$— $— $— 
As of December 31, 2021, the Company had net operating loss (“NOL”) carryforwards of $971.5 million. Of these NOL carryforwards, $445.9 million expire at various times between 2022 and 2041 and $525.6 million does not expire. Additionally, as of December 31, 2021, $40.3 million of California state net operating losses are not more-likely-than-not to be sustained upon examination by the relevant taxing authority.
As of December 31, 2021, the Company had a U.S. federal and state research and development tax credit carryforward resulting in a deferred tax asset of $23.7 million, of which $16.2 million will expire between 2035 and 2041 and $7.5 million does not expire.
The Company’s ability to utilize the net operating losses and tax credit carryforwards is subject to limitations in the event of an ownership change as defined in Section 382 of the Internal Revenue Code (“IRC”) of 1986, as amended, and similar state law. In general, an ownership change occurs if the aggregate share ownership of certain stockholders increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period. While the Company incurred multiple ownership changes and its NOL and tax credit carryforwards are subject to Section 382 limitations, the Company does not expect resulting limitations on its ability to utilize NOLs or other tax attributes once it achieves profitability. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, related to the Company’s operations in the United States will not impact the Company’s effective tax rate.
The Company recorded a valuation allowance to reflect the estimated amount of certain U.S. federal and state and other local jurisdictions deferred tax assets that, more likely than not, will not be realized. In making such a determination, the Company evaluates a variety of factors including the Company’s operating history, accumulated deficit, and the existence of taxable or deductible temporary differences and reversal periods. The net change in total valuation allowance for the years ended December 31, 2019, 2020, and 2021 was an increase of $25.8 million, an increase of $40.9 million, and an increase of $100.0 million, respectively. The valuation allowance increases were driven primarily by U.S. federal and state and other local jurisdictions NOL carryforwards that are not expected on a more likely than not basis to be realized. Under the Corporate Income Tax Law (“CIT Law”) in the PRC, Foreign Investment Enterprises and domestic companies are subject to corporate income tax at a uniform rate of 25%. The Company also has subsidiaries that qualify for the High and New-Technology Enterprise program, which has a preferential CIT rate of 15%.