Faraday’s Future on the line?
Something is going wrong with Faraday Future, the California-based electric vehicle manufacturer (that hasn’t produced any vehicle so far).
Amongst the many troubles that have been reported in the press over the last 18 months, most notable were the failed FF91 EV demo at CES 2017, the continuous lack of funding and what seems to be a profound disagreement between the car manufacturer and LeEco (China’s YouTube). Both FF and LeEco were founded by Jia Yueting, a (former?) Chinese billionaire often compared to Tesla’s Musk.
The FF91’s production process has encountered many difficulties. Faraday’s initial plan was to invest in a huge production facility, but, again due to lack of funding, the plan was tuned down and FF settled for a former Pirelli tire plant in Hanford, California. FF has now spent a full year gearing up this facility for the production of the FF91, but, was unable to produce a single car. Even worse, the only pre-production unit has caught fire in September.
In the meanwhile, LeEco had started to suffer in China. CEO Yueting has been piling up debts, has failed to reimburse loans and, when asked to come back to China and explain himself, refused to do so, placing him on the nations debtor blacklist.
Faraday Future finally found funding in its December 2017 investment round, when Hong-Kong based Evergrande Health Industry Group promised US$ 2 billion to pay off the debts and invest in production. A first US$ 800 million was quickly spent, but unfortunately not on paying suppliers and vendors.
Evergrande acquired, through its investment in a heavy loss-making Faraday, FF’s intellectual property as well as many of its assets. The HK-based company has been, in parallel, investing in R&D facilities in China as well as a US$ 2 billion stake in a major Chinese car dealership company. Evergrande’s plans were transparent: acquire the FF knowledge and move it to China.
The relationship between Faraday and Evergrande today is very bad. Evergrande accuses Yueting of mismanagement whilst FF has been seeking arbitration to terminate the deal with Evergrande.
Faraday has announced layoffs and furloughs, and the company’s co-founder Nick Sampson has decided to step down. Things are not looking bright and it might be fair to Elon to stop calling Faraday Future the “Tesla-killer”.