Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Note 8. Stockholders’ Equity

As of March 31, 2023 and December 31, 2022, 1,350,000,000 shares, $0.0001 par value per share are authorized, of which, 1,000,000,000 shares are designated as Class A Common Stock, 250,000,000 shares are designated as Class B Common Stock, and 100,000,000 shares are designated as Preferred Stock.

Common Stock

Holders of common stock are entitled to dividends when, as, and if, declared by the Company’s Board of Directors (the “Board”), subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of March 31, 2023, the Company had not declared any dividends. The holder of each share of Class A Common Stock is entitled to one vote, and the holder of each share of Class B Common Stock is entitled to ten votes.

In March 2021, the Company completed an underwritten public offering of shares of its Class A Common Stock and issued 11,960,000 shares for an aggregate purchase price of $462.9 million, net of issuance costs of $15.5 million (the “March 2021 Public Offering”).

Equity Incentive Plans

Prior to the Business Combination, the Company maintained its 2010 Equity Incentive Plan (the “2010 Plan”), under which the Company granted options and restricted stock units to purchase or directly issue shares of common stock to employees, directors, and non-employees.

Upon the closing of the Business Combination, awards under the 2010 Plan were converted at the exchange ratio of 4.02175014920, and assumed into the 2020 Equity Incentive Award Plan (the “2020 Plan”, and together with the 2010 Plan, the “Plans”). The 2020 Plan permits the granting of awards in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted shares, restricted stock units and performance awards to employees, directors, and non-employees.

As of March 31, 2023, 84,813,924 shares of Class A Common Stock are authorized for issuance pursuant to awards under the 2020 Plan, plus any shares of Class A Common Stock subject to stock options, restricted stock units or other awards that were assumed in the Business Combination and terminate as a result of being unexercised or are forfeited or repurchased by the Company, with the maximum number of shares to be added to the 2020 Plan equal to 69,846,580 shares of Class A Common Stock.

Stock Options

Stock option activity under the Plans, including the EPA Program discussed below is as follows:

	Number of Shares Outstanding (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Intrinsic value (in thousands)
Balance as of December 31, 2022(1)		50,124		$	8.65		6.05
Cancelled and forfeited(2)		(864	)		22.50		—
Exercised		(4,081	)		0.99		—
Balance as of March 31, 2023		45,179		$	9.08		6.12	$	184,098
Vested and expected to vest as of March 31, 2023(3)		36,109		$	5.57		5.47	$	184,098
Vested and exercisable as of March 31, 2023		27,752		$	1.88		4.64	$	174,970

(1) This includes 16.0 million options granted and outstanding as of December 31, 2022 pursuant to the EPA Program.

(2) This includes 0.8 million options under the EPA Program.

(3) This includes 6.0 million options granted pursuant to the EPA Program that are currently expected to vest. None of the options granted pursuant to the EPA Program were vested and exercisable as of March 31, 2023.
 

There were no options granted during the three months ended March 31, 2023 or March 31, 2022. The aggregate intrinsic value of options exercised during the three months ended March 31, 2023 and 2022 was $31.2 million and $12.8 million, respectively.

Stock-based compensation expense is based on the grant-date fair value. The Company recognizes compensation expense for all awards with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the option vesting term of four years. Excluding options granted pursuant to the EPA Program, as of March 31, 2023, the Company had stock-based compensation of $5.0 million related to unvested stock options not yet recognized that are expected to be recognized over an estimated weighted average period of 1.7 years.

EPA Program

In December 2021, the Company granted stock options for the purchase of an aggregate of approximately 14.7 million shares of the Company's Class A Common Stock to the Company's Chief Executive Officer and other members of the Company’s management team pursuant to the EPA Program that was approved by the Company's stockholders in December 2021. In December 2022, the remaining 2.1 million stock options under the EPA Program were granted to members of the Company's management team under the same terms as those in the initial grant in 2021, representing the final grant pursuant to the EPA Program approved in December 2021. The EPA Program consists of five equal tranches (each a “Tranche”) that vest if the Company meets certain business milestones (performance conditions) and stock price targets (market conditions).

Business Milestones

The compensation committee of the Board selected the following eleven business milestones for the EPA Program, of which one milestone must be achieved for each Tranche.

•Delivery of an A-sample battery cell that meets specifications agreed upon with an automaker

•The validation by an auto maker of a completed B-sample battery cell (a B-sample battery cell is a functional, complete battery cell prototype produced from our pre-pilot or sample production line)

•Delivery of at least 1-gigawatt hour (GWh) of battery cells to a single customer

•Delivery of at least 3-gigawatt hour (GWh) of battery cells to each of three or more customers, with at least one of such customer being an auto maker

•$5 billion in GAAP revenue over a period of trailing four quarters

•$10 billion in GAAP revenue over a period of trailing four quarters

•Total cumulative battery cell production of 500 GWh

•Total cumulative battery cell production of 1,000 GWh

•Adjusted EBITDA margin of at least 25% over four consecutive quarters

•10% of worldwide market share in automotive battery cells (excluding China)

•20% of worldwide market share in automotive battery cells (excluding China)

Once a business milestone has been achieved, that business milestone will be considered achieved, even if later the Company does not maintain performance at that level.

Stock Price Targets

The stock price targets of the five Tranches of the EPA Program are $60, $120, $180, $240 and $300.

To meet the stock price targets, the stock price must be sustained and not merely momentarily achieved. Except in the case of a change in control, the Company’s stock price for the purposes of assessing the stock price target will be the 120-day trailing average closing price (based on trading days), but a stock price target will not be achieved unless the trailing average closing price of the last 30 trading days of such 120-trading day period also meets or exceeds the applicable stock price target. For a stock price target for any given Tranche to be achieved, the last day of the 120-day measurement period must occur on or after the date that the requisite number of business milestones have been achieved for such Tranche.

Vesting Tranches

Each of the five Tranches vest only if the Company achieves one of the business milestones (in addition to the business milestones already achieved in a prior Tranche) and achieves the applicable stock price target on or after the business milestone is achieved, within 10 years of the initial grants. Additionally, in order to vest in any Tranche, Participants generally must continue to provide service through the date of vesting in the same position, or a similar or higher role, as when the EPA Program awards are granted.

Tranche	Business Milestone Requirement	Stock Price Target
1	Achievement of 1 business milestone	$60
2	Achievement of 2 business milestones (inclusive of the business milestone applicable to Tranche 1)	$120
3	Achievement of 3 business milestones (inclusive of the business milestone applicable to Tranche 2)	$180
4	Achievement of 4 business milestones (inclusive of the business milestone applicable to Tranche 3)	$240
5	Achievement of 5 business milestones (inclusive of the business milestone applicable to Tranche 4)	$300

Change in Control

In the event of a change in control of the Company, a portion of the EPA Program awards may also be eligible to vest; in such event, the business milestone requirement will not be applicable and the Company’s stock price for the purposes of the stock price targets will be the price per share paid in such change in control. In the event that the Company’s stock price by this measure falls between two stock price targets, linear interpolation between the two applicable stock price targets will be used to determine an additional portion of the EPA Program awards that will vest. Any portion of an EPA Program award that is not vested upon and after giving effect to a change in control will terminate.

The Company accounts for the compensation expense associated with each Tranche when it determines that achievement of a related business milestone is considered probable. As of March 31, 2023, the business milestone for one Tranche had been achieved; however, the related stock price target has not yet been achieved; hence, no shares have vested to date. As of March 31, 2023, one other Tranche was considered probable.

For the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $7.7 million and $13.6 million, respectively related to the EPA Program. As of March 31, 2023, the Company had approximately $50.8 million of total unrecognized stock-based compensation expense for the business milestones currently achieved or considered probable of achievement, which will be recognized over an estimated weighted-average period of 3.1 years. As of March 31, 2023, the Company had approximately $168.0 million of total unrecognized stock-based compensation expense for the business milestones currently considered not probable of achievement.
 

Restricted Stock Units Activities

During the three months ended March 31, 2023, the Company granted 3.3 million shares of restricted stock units with service and performance conditions (“PSU”) to members of the Company’s management team and certain other employees under the Company's 2020 Plan. The performance conditions for these PSUs are related to the Company’s product development milestones through May 2026. These PSUs will expire in May 2026 if performance conditions are not met. For the three months ended March 31, 2023, the Company recorded stock-based compensation expense of $2.9 million related to these PSUs, upon determination that the product development milestones are currently considered probable of achievement.

The Company established the 2023 Bonus Plan to be settled in the form of restricted stock units to employees upon the achievement of certain service and performance conditions. These performance conditions are related to the Company’s product development, operational, and business milestones in the current year. For the three months ended March 31, 2023, the Company recorded stock-based compensation expense of $3.8 million related to the 2023 Bonus Plan for the performance conditions currently considered probable of achievement. The stock-based compensation expense related to the 2023 Bonus Plan are recorded as liabilities under Accrued compensation and benefits in the Condensed Consolidated Balance Sheets as of March 31, 2023, and will be reclassified to additional paid-in capital upon issuance of the restricted stock units. No shares have been granted under the 2023 Bonus Plan as of March 31, 2023.

Restricted stock units with service conditions only (“RSU”) and PSU activities under the Plans are as follows:

	RSUs Outstanding					PSUs Outstanding
	Number of Units (in thousands)			Weighted Average Grant Date Fair Value		Number of Units (in thousands)		Weighted Average Grant Date Fair Value
Balance as of December 31, 2022		16,563		$	13.79		—	$	—
Granted		5,432			7.97		3,283		7.87
Vested		(1,590	)		12.30		—		—
Forfeited		(965	)		15.18		—		—
Balance as of March 31, 2023		19,440		$	12.22		3,283	$	7.87

The fair value of RSUs which vested during the three months ended March 31, 2023 and March 31, 2022 was $18.8 million and $20.9 million, respectively. No PSUs vested during the three months ended March 31, 2023.

As of March 31, 2023, unrecognized compensation costs related to RSUs and PSUs granted were $214.7 million and $23.0 million, respectively, and are expected to be recognized over a weighted average period of 2.8 years and 1.5 years, respectively.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for all awards is as follows (amounts in thousands):

	Three Months Ended March 31,
	2023		2022
Research and development	$	19,236	$	13,237
General and administrative		18,754		15,244
Total stock-based compensation expense	$	37,990	$	28,481

The stock-based compensation expense in the three months ended March 31, 2023 includes $3.8 million recorded as a liability under Accrued compensation and benefits related to the Company’s 2023 Bonus Plan.