RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2021

2021 Convertible Notes

In July 2021, the Company issued the 2021 Convertible Notes to existing investors of the Company, including the following principal owners of the Company: a wholly-owned subsidiary of Amazon.com, Inc. (Amazon.com, Inc. and its affiliates collectively referred to as “Amazon”) with $490 million principal amount, Ford Motor Company (“Ford”) with $415 million

principal amount, and certain funds and accounts advised by T. Rowe Price Associates, Inc. (“T. Rowe Price”) with an aggregate $400 million principal amount (refer to Note 6 "Debt" for more information about the 2021 Convertible Notes).

Preferred Stock Warrants

During 2019, the Company entered into an agreement with Amazon to develop, manufacture, and supply customized all-electric vehicles in future periods. In connection with this agreement, the Company issued preferred stock warrants to Amazon, which represents a share-based sales incentive. The grant date fair value of the warrants was $11 million during 2019 and was reported within “Other assets” and “Additional paid-in capital”, respectively, on the Company’s Condensed Consolidated Balance Sheets. The asset will be amortized as an offset against revenues in future periods.

Operating Expenses

The Company obtains prototyping, engineering, and other R&D services from Troy Design and Manufacturing Co., a related party and wholly owned subsidiary of Ford. The Company recognized $30 million and $16 million of expense for these services during the three months ended September 30, 2020 and 2021, respectively, and $49 million of expense for these services during both the nine months ended September 30, 2020 and 2021, within “Research and development” in the Condensed Consolidated Statements of Operations. As of December 31, 2020 and September 30, 2021 the Company accrued $27 million and $8 million, respectively, related to these services, which are reported within “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

The Company obtains hosting services from Amazon, which is recognized within “Research and development” and “Selling, general, and administrative”, in the Condensed Consolidated Statements of Operations.

The following table summarizes the expenses incurred for the three and nine months ended September 30, 2020 and 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2021		2020		2021
Research and development	$	1	$	1	$	2	$	11
Selling, general, and administrative	1		—		2		1
Total	$	2	$	1	$	4	$	12