FARADAY FUTURE INTELLIGENT ELECTRIC INC.FFAI

FARADAY FUTURE INTELLIGENT ELECTRIC INC. Leases Disclosure

10-KFiled Mar 31, 20254 min read
Leases
The Company determines if an arrangement is a lease at its commencement if the Company is both able to identify an asset and conclude the Company has the right to control the identified asset. Leases are classified as finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. An ROU asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments related to the lease. The Company recognizes operating and finance lease ROU assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. The Company’s leases do not provide an implicit rate therefore, the Company uses its incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate used is estimated based on what the Company would be required to pay for a collateralized loan for a similar asset over a similar term. The Company’s leases do not include any material residual value guarantees, or bargain purchase options.
To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate in the measurement and classification of a lease and exclude those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recorded in operating expenses in the Consolidated Statements of Operations and Comprehensive Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within operating expenses in the Consolidated Statements of Operations and Comprehensive Loss. Interest expense incurred on finance lease liabilities is recorded in Interest expense in the Consolidated Statements of Operations and Comprehensive Loss. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Additionally, the Company does not separate lease and non-lease components. Operating leases are included in Operating lease right-of-use assets, net, Operating lease liabilities, current portion and Operating lease liabilities, long term portion in the Company's Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, net, Other financing liabilities, current portion, and Other financing liabilities, long term portion in the Company's Consolidated Balance Sheets.
The Company’s lease arrangements primarily consist of corporate office, store, and vehicle lease agreements. The leases expire on various dates through 2032, some of which include options to extend the lease term for additional five-year periods.
ASC 842 Disclosures
During 2024, the Company moved out of its leased facilities and office spaces, resulting in a write-down of right-of-use assets and lease liabilities in an aggregate amount of $8.8 million and $7.0 million, respectively. The Company also recognized less than $0.1 million in lease termination costs during 2024. The net impact of the right-of-use asset write down and lease termination costs of $1.8 million is reported in Lease impairment, net on the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2024. There were no lease impairments for the year ended December 31, 2023.
Lease cost includes both the fixed and variable expenses recorded for leases. The components of lease cost for the were as follows:
Years Ended December 31,
(in thousands)
20242023
Finance lease cost
Amortization of ROU assets$— $273 
Interest on lease liabilities— 275 
Total finance lease cost— 548 
Operating lease cost4,389 5,915 
Variable lease cost398 257 
Total lease cost$4,787 $6,720 
The following table summarizes future lease payments:
(in thousands)
Years Ending December 31,Operating Leases
2025$2,243 
202612 
20272 
Total2,257 
Less: Imputed Interest115 
Present value of net lease payments$2,142 
Lease liability, current portion$2,128 
Lease liability, net of current portion14 
Total lease liability$2,142 
Supplemental information and non-cash activities related to operating and finance leases are as follows:
Years Ended December 31,
(in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$3,230 $5,709 
Operating cash flows from finance leases— 275
 Financing cash flows from finance leases— 1,016
$3,230 $7,000 
Lease assets obtained in exchange for operating lease liabilities$30 $— 
Years Ended December 31,
20242023
Weighted average remaining lease term (in years)
Operating leases0.705.70
Finance leases0.005.00
Weighted average discount rate
Operating leases16.4 %15.6 %
Finance leases— %9.2 %
Free Sentinel

Want the next FARADAY FUTURE INTELLIGENT ELECTRIC INC. leases disclosure the moment it drops?

Set a Sentinel and we'll alert you the moment FARADAY FUTURE INTELLIGENT ELECTRIC INC.'s next filing hits EDGAR. No credit card, your email never gets sold.

Track for free

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

Income TaxesEarnings Per ShareFair ValuePP&EDebtCommitmentsStock CompensationNew Standards