Quarterly report pursuant to Section 13 or 15(d)

Contract Manufacturing Services and Investment in Tropos

v3.22.2.2
Contract Manufacturing Services and Investment in Tropos
9 Months Ended
Sep. 30, 2022
Related Party Transactions [Abstract]  
Contract Manufacturing Services and Investment in Tropos CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS
The Company has a minority ownership in Tropos Technologies, Inc. (“Tropos”) with a value of $10.0 million as of September 30, 2022. The investment was obtained pursuant to the transaction with Tropos as described below.

On August 8, 2022, the Company entered into a three-year Assembly Services Agreement (the “Assembly Agreement”) with Tropos. Under the Assembly Agreement, the Company will provide services required to assemble a minimum annual quantity of 2,000 vehicles in 2023, 2,000 vehicles in 2024, and 250 vehicles in 2025 for a total of 4,250 vehicles during the term of the agreement at our Union City, Indiana manufacturing facility. In exchange for the assembly services, the Company will receive a service fee from Tropos.
On August 23, 2022, the Company entered into a Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with Tropos. Under the Stock Purchase Agreement, the Company received 605,811 shares of Series B Preferred Stock in Tropos with an option to purchase an additional 424,068 shares of Series B Preferred Stock for an exercise price of $16.51 per share in exchange for a cash payment of $5.0 million, and a $5.0 million contribution of non-cash consideration representing a deposit from Tropos for future assembly services. See Note 5, Revenue, of the Condensed Consolidated Financial Statements for treatment of the $5.0 million of non-cash consideration received as of September 30, 2022.
The Company utilized the measurement alternative allowed under GAAP to record the investment of the Series B Preferred Stock at cost, less any impairment, as of September 30, 2022. As of September 30, 2022, the Company recorded the investment at a cost of $10.0 million with no impairment.