The California-based, China-backed Faraday Future raised billions and hired employees from BMW, Lamborghini, Jaguar, Tesla, and even SpaceX in a bid to get its ambitious project off the ground. It unveiled a Batmobile-like concept named FFZero1 at CES 2016 — a sporty coupe that wouldn’t look out of place on the 24 Hours of Le Mans starting line — and brought out a more realistic prototype called the FF 91 a year later. It’s a real looker, but all’s not well under the hood; the company’s struggles are as interesting as the car itself, and they could ultimately bring Faraday down.
Here’s everything we know so far about the FF 91 — and the cryptic company working overtime to become Tesla’s biggest nightmare.
Who’s behind Faraday Future?
Chinese billionaire Jia Yueting recently announced that he was stepping back in as CEO of Faraday Future and will reorganize the firm. He is bringing some baggage along, as Business Insider reports that he has more than $1 billion in unpaid debts.
Jia founded Leshi Internet Information and Technology in 2004, and he resigned as chairman and CEO in 2017, but he still owned a nearly 26 percent stake in the company. This, Reuter reported, makes him the largest shareholder. Comments made during an investor meeting reveal that Leshi maintains that Jia and his LeEco tech firm owe $1.7 billion. LeEco countered, saying the total is closer to $941 million.
Faraday Future could take a hit here, as Leshi is seeking payment in equity from the electric car compan,y as well as others owned by Jia, including LeSEE and Lucid Motors.
Faraday Future was initially backed by Jia and his LeEco tech company, though that source of funding is far less stable than it seemed when the company revealed itself in January 2016. In a letter to employees 11 months later, Jia wrote that the company had overextended itself and was running out of cash, due not only to automotive projects but also LeEco’s efforts to launch televisions and smartphones in the U.S. LeEco has also mulled building cars under its own brand name in China. It briefly entered into a partnership with Aston Martin to build an all-electric Rapide, but it abruptly put an end to the project in a bid to save cash.
Since Jia stepped down from his position as LeEco chairman, the company has seen a mass exodus of employees from the bottom to the top. Chief Financial Officer Stefan Krause was apparently fired in early November, though he had reportedly quit a month earlier. Pontus Fontaeus, director of interior design and brand, quit in early October; Tom Wessner, head of Faraday’s supply chain management, reportedly left as well; and new Chief Technical Officer Ulrich Kranz was fired, while Bill Strickland, head of manufacturing, quit. It’s all playing out like a bad soap opera.
So this company is really building a car?
The short answer is “yes.” Development work continues, and Faraday Future expects to begin deliveries by the end of next year. The company released a video of the FF 91 prototype driving on public roads earlier this year, where it’s rubbing elbows with cars like the Model S.
— Faraday Future (@FaradayFuture) May 8, 2017
How much will it cost?
Despite years of publicity, the cost of the FF 91 is still an unknown quantity, but Faraday Future aims high. Early rumors pegged the car between $150,000 and $200,000 — figures that will make it considerably more expensive than even the range-topping variant of the Model S. The information has not been confirmed by the company, but in one interview from January 2017, the company said that the FF 91 will cost “less than 2 million Chinese Yuan.” That’s about $290,000 U.S. dollars — a wide range of estimates indeed.
A second, more affordable model called simply Project 81 will purportedly debut about a year later, and it will be followed by an entry-level car in about 2020. That’s what Faraday claims, anyway.
More financial issues
It’s no secret that Faraday Future is in dire financial straits. The automaker is allegedly being sued by a supplier over unpaid invoices, and by a real estate company over unpaid rent. The unstable financial situation has led more than a few employees to leave the company, according to the same report. The company’s fiscal picture changed at the tail end of 2017, with the announcement of a $1 billion investment — though details on it remain sketchy.
Reports throughout the year from China suggested parent company LeEco hasn’t fared much better. Analyst Dr. Richard Windsor points out that the tech giant recently closed most of its American operations to stop bleeding cash, and it has asked investors for billions to stay afloat. Jia admitted to spending too much, and pointed out that LeEco’s financial issues can be traced to its automotive ambitious.
Anonymous former employees told The Verge in early December that Faraday Future only had enough money left to pay its workers through the end of 2017. That’s probably why so many high-level employees left the company recently; Jia’s announcement may turn things around, but sentiment within a business doesn’t always shift that quickly.
Faraday Future had been looking to raise $500 million, according to a November Bloomberg report. Its unpaid bills amounted to roughly $100 million, and a $400 million convertible note would have become payable immediately, plus interest, if the carmaker hadn’t raised money before the end of the year. Insiders say the company has persistently ruled out the possibility of filing for bankruptcy. Recent rumors indicated Jaguar Land Rover parent company Tata was about to make a $900 million investment in the startup, but the Indian conglomerate quickly said they weren’t true.
Faraday Future declines to respond to most requests for information on its financial picture. But the firm posted several messages on its official Twitter account that essentially portray it as the victim of a biased, unfair smear campaign. The company explains that “skepticism and negativity only strengthen our conviction to redefine sustainable mobility.” A second tweet points out “media pessimism is standard fare for disruptors. Deliberate negative info from press and competitors is the welcomed risk of innovation.”
That sounds like trouble. They at least have a factory, right?
Faraday Future was in the process of building a 3-million-square-foot, $1.3 billion factory in North Las Vegas. The brand chose to set up shop in the Silver State after local government officials awarded it $335 million in various incentives. In exchange, Faraday promised to give Nevada’s economy a major boost by employing 4,500 workers.
Construction work started in April 2016, but the project was put on hold the following November because AECOM, the contractor in charge of the project, was waiting for $58 million in late payments. While AECOM was confident construction would resume in a timely manner, Faraday Future has put its factory plans on an indefinite hiatus in a bid to save money, according to the Las Vegas Review-Journal. Luckily for taxpayers, the bulk of the promised incentives haven’t been awarded yet.
“While I am disappointed in [the] announcement, I can say with certainty that Nevada’s citizens were held harmless financially,” Nevada Governor Brian Sandoval affirmed.
Instead of starting from scratch, Faraday Future has leased a former Pirelli factory situated about 200 miles north of Los Angeles, where the company’s headquarters are located. Refurbishing an existing factory is quicker and more cost-efficient than starting from scratch — at least on paper. The company previously wanted to hang on to its site in Las Vegas’ Apex Industrial Park, but state officials have confirmed the project is “basically dissolved.”
Faraday Future sent Nevada a check for $16,200, which corresponds to the incentives it has received since it tried moving into North Las Vegas. The $620,000 it was keeping in a trust fund was returned to the government, where it will be allocated to other projects.
State officials aren’t worried about the future of the plot of land Faraday picked out as its future home. The Nevada Independent reports at least four well-known companies want to set up shop in Sin City, and adds that the state is confident one of them will commit to the project “in the very near future.”
So tell me a little about the FF 91
After months of teasing, Faraday Future revealed its first production car at CES 2017. Dubbed the FF 91, the electric vehicle boasts some of the most impressive performance specs we’ve ever seen, with a massive 130kW battery pack generating a whopping 1,050 horsepower. Faraday says the FF 91 will sprint to 60 mph in just 2.39 seconds, while also offering 378 miles of total driving range. It’s one of the fastest cars in the world, right up there with the Dodge Challenger Demon and, of course, the Tesla Model S.
Tech is the name of the game in this segment, and it’s in that regard that the vehicle is meant to shine. The car is fitted with the full array of autonomous and semi-autonomous goodies, including 10 cameras, 13 radar sensors, one 3D lidar sensor, and 12 ultrasonic sensors. Faraday says the FF 91 will be able to drive itself, park itself, and seamlessly connect with all of your mobile devices.
There were hiccups during the live reveal (watch the full event right here), so clearly, the company has kinks to work out before the car’s planned release in 2018. It’s been making improvements, and the FF91 set a new record for electric cars at the 2017 Pikes Peak International Hill Climb.
For more details, as well as photos and videos, check out our full story and first impressions.
And consumers are interested, right?
Faraday Future had a lot riding on the 2017 CES event, which saw not only the reveal of the first real vehicle but also marked opening day for pre-orders. Tesla has famously netted hundreds of thousands of orders for its hotly anticipated Model 3; Faraday assumed the dazzling looks of its vehicle coupled with a demonstration of its capabilities would lead to similar numbers. The automaker’s financial struggles have been well-documented, even before the event, so Faraday needed a big jolt of energy to give its investors and fans confidence. Did it happen? Not so much.
According to a report by Business Insider, just 60 people plunked down $5,000 to reserve an FF 91. It’s important to note that you can technically reserve an FF 91 without committing any cash, but either way, the company couldn’t have been thrilled with that figure. Faraday has since denied the report’s claims, telling Digital Trends it has “far exceeded” the number of available reservations for the FF 91 Alliance Edition. For reference, the Alliance Edition is limited to 300 units. Since then, Faraday has kept mum about pre-order volume and consumer demand for its vehicles.
That’s a lot of red flags. Are there other issues I should know about?
Finding the silver lining to the Faraday story isn’t easy. In January 2017, Jalopnik reported that the EV startup was been sued once again. A video effects company claims FF paid just $20,000 of a $1.8 million invoice for a 3D-car presentation that would display a concept vehicle to “bigwigs or celebrity-type people.” The Mill Group reportedly produced this virtual tour on the assumption that FF would pay for its services in three installments.
After “repeated requests for payment and promises by Faraday to pay,” The Mill Group said ts that it has yet to receive a completed initial payment of $455,000. Neither Faraday Future nor The Mill Group have commented further on this lawsuit.
And the hits keep coming: In April 2017, Faraday Future was sued over its name. An electric bicycle manufacturer named Faraday Bicycles claims it trademarked the Faraday name in October 2013, about two years before Faraday Future even existed. Faraday Bicycles asked a judge to prevent another company from using the name Faraday, according to Jalopnik. It also asked for unspecified legal fees. Faraday Bicycles points out the United States Patent and Trademark Office has already rejected Faraday Future’s request to trademark its own name. Executives have not commented on this ongoing lawsuit.
More recently, a catering company named Oloroso sued Faraday Future over a balance of $100,000 it allegedly never received. Oloroso catered the launch of the FF 91 at CES. Beim Maple Properties is seeking $15 million in damages for breach of contract, while the law firm that helped place the FF 91 in Transformers 5 is also taking Faraday to court.
Update: Added information about CEO Jia Yueting’s previous debts possibly affecting Faraday.
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