SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2025 | |
| Accounting Policies [Abstract] | |
| Basis of presentation and use of estimates | Basis of presentation and use of estimates The accompanying unaudited condensed consolidated financial statements include the accounts of Microvast Holdings, Inc. and its consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. Accordingly, certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024, included in the Annual Report on Form 10-K filed with the SEC on March 31, 2025, which contains a more complete discussion of the Company’s accounting policies and other relevant information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of results to be expected for any future interim period or the full fiscal year ending December 31, 2025. The December 31, 2024 condensed consolidated balance sheet data included herein was derived from the Company’s audited financial statements. There have been no material changes to the Company’s significant accounting policies as disclosed in Note 2 to the audited consolidated financial statements for the year ended December 31, 2024. Significant accounting estimates include, but are not limited to, allowances for credit losses, write-down of obsolete inventories, impairment of long-lived assets, product warranties, fair value measurement of convertible loan and share based compensation. Actual results could differ materially from those estimates.
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| Revenue recognition | Revenue recognition Nature of Goods and Services The Group’s revenue consists primarily of sales of lithium-ion batteries. The obligation of the Group is to provide the battery products. Revenue is recognized at the point of time when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Group expects to be entitled to in exchange for the goods or services. Contract balances Contract balances include accounts receivable and advances from customers. Accounts receivable represent cash not received from customers and are recorded when the rights to consideration are unconditional. The allowance for credit losses reflects the best estimate of probable losses inherent to the accounts receivable balance. Contract liabilities, recorded in advance from customers in the consolidated balance sheets, represent payment received in advance or payment received related to a material right provided to a customer to acquire additional goods or services at a discount in a future period. During the three months ended June 30, 2025 and 2024, the Group recognized $2,862 and $1,425 of revenue previously included in advance from customers as of April 1, 2025 and April 1, 2024, respectively. During the six months ended June 30, 2025 and 2024, the Group recognized $5,186 and $4,206 of revenue previously included in advance from customers as of January 1, 2025 and January 1, 2024, respectively.
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| Operating leases | Operating leases The Company determines whether an arrangement is or contains a lease at inception. Operating leases are recognized in the condensed consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities, initially measured at the present value of lease payments over the lease term. As the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on information available at the commencement date. The rate is estimated using a portfolio approach that approximates the interest rate on a collateralized basis over similar terms and in a similar economic environment. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected the package of practical expedients permitted under ASC 842, which allows entities not to reassess: •Whether existing or expired contracts contain a lease; •Lease classification; and •Initial direct costs for any leases existing at the adoption date. Operating leases - continued Additionally, the Company elected the practical expedient not to separate lease and non-lease components, and for leases other than real estate (e.g., printing machines and electronic appliances) with terms of 12 months or less, elected the short-term lease exemption. As of June 30, 2025, the Company recorded ROU assets of $18,967 and operating lease liabilities of $18,934, including current portion in the amount of $3,278, which was recorded under accrued expenses and other current liabilities on the balance sheet.
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| Lessor accounting | Lessor accounting The Company also acts as a lessor, primarily through leasing arrangements with customers related to the sale of vehicles. These arrangements are classified as sales-type leases. Revenue from the sale of leased products is recognized at lease inception, and interest income is recognized over the lease term using the effective interest method. For the three months period ended June 30, 2025 and 2024, the Company recognized sales-type lease revenue $264 and $195 separately, and for the six months period ended June 30, 2025 and 2024, the Company recognized sales-type lease revenue $4,395 and $1,266 separately,which are included in products sales in the accompanying consolidated statements of operations. As of June 30, 2025, the Company recorded net investment in sales-type leases of $7,142 including current portion in the amount of $3,747, which was recorded under accounts receivables on the balance sheet.
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| Assets held for sale | Assets held for sale Assets to be disposed of by sale are reported at the lower of the carrying value or fair value less cost to sell when the Company has committed to a sale agreement and such assets would be reported separately as assets held for sale in the unaudited condensed consolidated balance sheets. During the three months ended June 30, 2025, the Company reclassified its Lake Mary, Florida facility from assets held for sale to property, plant and equipment, reflecting the Company's shift to retain the facility for long-term operational use rather than pursue its disposal. The Company plans to have the Lake Mary facility, originally acquired in 2021, serve as a core hub for next generation strategic technology research & development. The Company continues to pursue the sale of its Timnath, Colorado property and has recognized an impairment loss of $1,316 for this property based on the latest market-quoted price received.
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| Debt restructuring | Debt restructuring A debt restructuring is the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include an extension of the maturity date, a reduction of the face amount or maturity amount of the debt or a reduction of accrued interest.
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| Convertible Loan measured at fair value | Convertible Loan measured at fair value The Company has elected the fair value option to account for the Convertible Loan (as defined below) described in Note 14 – Convertible Loan measured at fair value herein, and records changes in fair value in the unaudited condensed consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk which, if present, will be recorded as a component of other comprehensive income. Interest expense related to the Convertible Loan is included in the changes in fair value. As a result of applying the fair value option, direct costs and fees related to the Convertible Loan were expensed as incurred. The Company recorded unrealized losses of $121,151 and $78,217 for the three and six months ended June 30, 2025, respectively, in other income and expenses. The fair value of the Convertible Loan was determined by using a discounted cash flow model for the bond component and the Black-Scholes-Merton model for the conversion option, which is considered a Level 3 fair value measurement.
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| Warrant | Warrant The Company accounts for warrants in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. As the Private Warrants (as defined below in Note 10) meet the definition of a derivative as contemplated in ASC 815, the Company classifies the Private Warrants as liabilities. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statements of operations. The Private Warrants are valued using a Monte Carlo simulation model on the basis of the quoted market price of the Company’s publicly-traded warrants.
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| Foreign currencies | Foreign currencies The functional currency of the Company and all subsidiaries located in the U.S. is the United States dollar (“U.S. Dollar”). For the Company’s subsidiaries located in the PRC, the functional currency is the Chinese Renminbi (“RMB”); the Company’s UK subsidiary, Microvast Power System UK Ltd., the functional currency is the Great British Pound; and the Company’s Germany subsidiary, Microvast GmbH, the functional currency is the Euro. In preparing the consolidated financial statements of each individual group subsidiary, transactions in currencies other than the subsidiary’s functional currency (foreign currencies) are converted into the functional currency at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on the monetary items are recognized in the consolidated statements of operations in the period in which they arise. For the three months ended June 30, 2025 and 2024, the Company recorded exchange gain of $7,187 and $482 in general and administrative expenses, respectively. For the six months ended June 30, 2025 and 2024, the Company recorded exchange gain/(loss) of $10,855 and $(554) in general and administrative expenses, respectively. For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the reporting currency of the Group (i.e. U.S. Dollars) at the prevailing exchange rate at the end of the reporting period, and their income and expenses are translated at the average exchange rates for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a component of other comprehensive loss.
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| Recent accounting pronouncements not yet adopted | Recent accounting pronouncements not yet adopted In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company is currently assessing the impact of this guidance, however, the Company do not expect a material impact to the consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, the guidance requires disclosure of selling expenses and its definition. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied either prospectively or retrospectively. The Company is currently assessing the impact of this guidance, however, the Company does not expect a material impact to the consolidated financial statements.
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| Debt instrument term, description | The original terms of these loans are with a maximum maturity of 12 months and the interest rates range from 2.90% to 4.85% per annum |
| Public Warrants | Once the Public Warrants became exercisable, the Company may redeem the Public Warrants: •in whole and not in part; •at a price of $0.01 per warrant; •upon not less than 30 days’ prior written notice of redemption; •if, and only if, the reported last sale price of the Company’s Common Stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the warrant holders; and •if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying the warrants.
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