Or has it?
Beleaguered electric vehicle manufacturer Faraday Future has, amazingly, managed to secure a US$1-billion investment, following earlier reports that the American company would very soon burn through its entire cash reserves and be forced to shutter. Further, the investment was quickly followed by an announcement that equally-beleaguered lead investor Jia Yueting, the man who’s run the show at FF from behind the scenes, would be stepping into the position of CEO, a role that’s been empty since FF’s formation 4-years ago.
There’s little doubt that with the announcement, Faraday Future employees are heaving a sigh of relief. The company has, due to its financial issues as well as the belligerence of its ‘president,’ suffered a spate of high-level departures from its finance, operations, and design departments. It was also reported that its employees were so demotivated that many of them simply stopped showing up for work, with Jia Yueting left red-faced during a site visit with (then) potential investors when he found most of the offices devoid of staff.
More than 64,000 orders were collected for Faraday’s debut model, the FF91, which will take on cars like the Tesla Model S and the Porsche Mission E in the luxury EV market. The 91 was supposed to roll off a brand-new production line in Nevada, though that was shelved after its appointed contractor claimed that Faraday was late in settling a US$21-million bill. That site has since been scrapped altogether, with FF hard at work refurbishing a plant in California instead.
Despite the various setbacks and scandals, Faraday Future has always maintained that the very first customer-spec FF91 would be delivered by the end of 2018, which with this investment, might very well be true. However, we remain skeptical for one particular reason.
Recently, we published an article detailing a report from a Chinese news outlet that suggested Indian automotive conglomerate TATA had bought into Faraday Future to the tune of US$900-million, securing a 10% stake in the company (and driving its value up to US$9-billion). The report was rubbished by TATA, whom in response to it, said that “the news is not true, and hence we do not have any comment.”
It’s suggested by insiders that the US$1-billion investment that Faraday secured came with the sale of equity, estimated between 20-25%, suggesting that Faraday’s new valuation is at US$4-billion. However, there has been no clarification as to which entity (or indeed, entities) have ploughed the money into the Faraday bandwagon, which further raises our eyebrows.
Previous reports from The Verge suggest that valuable patents on the technology developed by the company aren’t actually held by FF themselves, but are instead parked in an separate entity called FF Cayman Global, which reportedly holds all of FF’s intellectual property. This undermines FF as an ‘investable’ company, and furthers our suspicions as to whether or not Faraday has actually managed to secure such large-scale investment.
However, insiders have said that Faraday is now reaching out to contractors and vendors to whom it owes money, to settled amounts owed. Surely that’s a good sign.
While it remains unclear if there is a future for Faraday, you can consider us weary and skeptical of this development for various reasons, if only because FF has shown time and time again that while they are excellent (if albeit repetitive) marketers but terrible executors. Where companies like Volkswagen can roll out new, innovative products by putting new ideas on top of time-tested production practices (something that Tesla is now describing as “hell”), Faraday’s biggest fumble has always been in executing their ambitious dreams, and has only contributed to their present position. If the investment claims are true, we’d like to see if FF can deliver on its promise to get a car into customers hands by the end of 2018, and whether or not it’ll still then fail to operate as its supposed to.
Stay tuned to CarShowroom for more updates as they come.
