WARRANTY AND FIELD SERVICE ACTIONS

3 Months Ended

Mar. 31, 2025

Guarantees and Product Warranties [Abstract]

WARRANTY AND FIELD SERVICE ACTIONS

WARRANTY AND FIELD SERVICE ACTIONS

The Company provides a manufacturer’s warranty on new consumer vehicles. A warranty reserve is recorded at the time of sale and once a specific field service action has been identified. The amount reserved is comprised of an actuarial estimate of the projected costs to repair, replace, or adjust defective component parts under the applicable warranty period and the estimated cost of identified field service actions. These estimates are based on an analysis of actual claims incurred to date and future expectations about the nature, frequency, and cost of future claims by vehicle cohort, which may leverage benchmark data. The Company re-evaluates the adequacy of the warranty reserve on a regular basis and makes revisions when appropriate. Warranty estimates are inherently uncertain, especially given the Company’s limited history of sales, and more historical experience or updates to projections and benchmarks may cause material changes to the warranty reserve in the future.

The following table summarizes the Company’s warranty reserve recorded by line item on the Condensed Consolidated Balance Sheets (in millions):

	December 31, 2024		March 31, 2025
Current portion of deferred revenues, lease liabilities, and other liabilities	$	146	$	164
Other non-current liabilities	327		292
Total warranty reserve	$	473	$	456

Warranty expense is recorded as a component of Automotive cost of revenues in the Company’s Condensed Consolidated Statements of Operations. The following table presents the warranty and field service action activity within the reserve (in millions):

	Three Months Ended March 31,
	2024		2025
Beginning balance	$	275	$	473
Warranties issued in period	49		34
Adjustments to pre-existing warranties	6		(30)
Warranty costs incurred	(13)		(21)
Ending balance	$	317	$	456