Faraday Future May Be Shutting Down

 

The automobile business is cruel. It shows mercy to none. It is a giant hole that can swallow billions of dollars without a trace. Such seems to be the story of Faraday Future, the electric car company backed by Chinese billionaire Jia Yueting, who promised the moon but wound up delivering nothing but unpaid bills.

Faraday Future

Faraday Future started by whispering catchy phrases like,  “What if the back seat was the new front seat?” and “What if all those cars parked in driveways had more interesting lives?” As intriguing as all that was, the company got off on the wrong foot when it debuted its outrageously ridiculous FFZero1 single seat hypercar at the Consumer Electronics show in January, 2016.

It was a show car only, not a runner. And even though Faraday claimed it could leap tall buildings in a single bound, was faster than a speeding bullet, and more powerful than a locomotive, the world laughed at such a preposterous vehicle. The company tried to regain momentum. It jumped into Formula E racing with the Dragon Racing Team. It trumpeted its patent for a new power inverter that was smaller and lighter.

It brought high priced talent like Marco Matiacci, a former executive at Ferrari, into its management team with great fanfare. It held a splashy “virtual ground breaking” for its proposed factory in North Las Vegas. And it told the world how it was going to disrupt the automobile business by using an innovative new chassis that could be made wider, longer, or lower to meet the changing needs of the marketplace.

And then the wheels came off. It soon became apparent that Faraday Future was writing checks it couldn’t cash — literally. AECOM, the world’s largest industrial contractor, stopped work on the Nevada factory last September, claiming it was owed millions in back payments. Nevada state treasurer Dan Schwartz, flew to China to find out what was going on and came back saying that Jia had no money.

Apparently that was correct. In November, Jia Yueting sent and almost tearful letter to investors admitting that the company had let its finances get out of control. “No company has had such an experience, a simultaneous time in ice and fire,” he said. “We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited.” Soon all those high priced executives started fleeing what was clearly a sinking ship.

Since then, Jia has secured new financing totaling $2.2 billion from Sunac China Holdings, but that money is earmarked for Yeuting’s core electronics business, not for developing electric automobiles. Last week, Reuters reported that a parcel of land Faraday Future bought last year in Silicon Valley for its US headquarters has been sold off to raise money.

Faraday Future also had plans for a mini-factory and customer experience center on Mare Island, a former Navy base in San Francisco  Bay. It spent $400,000 for an option on the property, then extended the option last fall. Today, the San Francisco Business Journal reports the extension has expired and there will be no second factory.

Business failures are nothing new. But the Faraday Future implosion should remind us all that making boastful claims is easy, building cars is hard. Elon Musk found that out a few years ago when Tesla Motors was close to bankruptcy and he was thinking of asking Apple to step in and rescue it. Is this RIP for Faraday Future? It sure seems that way.





About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.
  • Kieran Delaney

    If this is true about Jia’s business then I take back what I said about him. He may not be avaricious; just over-ambitious. Sad but that hypercar was a joke. It will be interesting to see if any more of these startups go anywhere. There are a lot of ugly EV concepts out there to compete with Elon’s belles…

  • Jim Smith

    the window for a new EV startup is closed. Tesla hit it at the exactly the right moment. All the majors are joining the game now leaving no room for a startup in this capital intensive industry.

    • Steve Hanley

      Interesting observation, Jim. You could be right. Timing IS everything.

    • WebUserAtLarge

      Respectfully, I disagree. I believe there will be a push back by some consumers against Big Auto building and selling the compliance EVs. I believe there is room for new startups, as long as the product is valid – those folks will eat them up. Lucid Air and Rivian Automotive were interesting enough to get investors on board recently. Not to mention the numerous Chines makes queuing up to sell their EVs worldwide. I bet many EV bus companies will get into EV car manufacturing as well given half a chance, like BYD is doing. IMHO.

      • Rick Danger

        ElectraMeccanica will reveal a new EV roadster, the Tofino, at 6 PM PDT today (Tue, 3/28). Looks hot in the 1 pic I’ve seen of it.

        They are the people making the single seat Solo EV.

    • Joe Viocoe

      Agree and disagree. The window is MUCH smaller. So much so, there needs to be a company that does something even more unexpected and innovative.
      Faraday Future isn’t that company. They literally are just copycats of Tesla’s innovation.

  • J_JamesM

    Hopefully this embarrassing episode will go away silently. There are a lot more deserving projects out there that need cash, for example Tesla and Lucid.

  • Antony Berretti

    Strange news, but no surprise….! I refer to past comments…