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Faraday Future Had the Worst Year Possible For an EV Startup (engadget.com)
Stop me if you've heard this one before: Faraday Future is almost out of cash. From a report: At the tail end of 2017, the much-hyped EV startup was sliding toward financial oblivion. But then a crucial round of funding from a then-mysterious benefactor gave the team a lifeline. Faraday planned to finish its first car, the FF 91, and start production before 2019. Like Tesla, the company wanted to usher in a new wave of electric, autonomous and "seamlessly connected" vehicles. But unlike its closest rival, Faraday hasn't spent the past year building and shipping transformative cars. Instead, it's been fighting the investor that decided to bail it out.
The beleaguered EV maker was originally saved by a company called Season Smart, which agreed to invest $2 billion, starting with an $800 million payment, in exchange for a 45 percent stake in the company. In June 2018, Season Smart was acquired by Evergrande Health, a subsidiary of a giant property developer in China, for roughly $853 million. Evergrande took control of Season Smart's stake and agreed to pay the remaining $1.2 billion, split into two $600 million chunks, in 2019 and 2020. As part of the updated deal, it took control of Faraday's assets and intellectual property.
For a while, everything seemed OK. Faraday began constructing a long-overdue factory in Hanford, California, where a Pirelli tire factory once stood. The company hoped it could eventually match Tesla's enormous Gigafactory in splendor and efficiency. But there was a problem. By July Faraday had already burned through its initial $800 million payment. To survive, the startup needed more money -- and it couldn't wait until 2019 for another cash injection.
The beleaguered EV maker was originally saved by a company called Season Smart, which agreed to invest $2 billion, starting with an $800 million payment, in exchange for a 45 percent stake in the company. In June 2018, Season Smart was acquired by Evergrande Health, a subsidiary of a giant property developer in China, for roughly $853 million. Evergrande took control of Season Smart's stake and agreed to pay the remaining $1.2 billion, split into two $600 million chunks, in 2019 and 2020. As part of the updated deal, it took control of Faraday's assets and intellectual property.
For a while, everything seemed OK. Faraday began constructing a long-overdue factory in Hanford, California, where a Pirelli tire factory once stood. The company hoped it could eventually match Tesla's enormous Gigafactory in splendor and efficiency. But there was a problem. By July Faraday had already burned through its initial $800 million payment. To survive, the startup needed more money -- and it couldn't wait until 2019 for another cash injection.
This is not news. This is a sob story with a poor headline and a bad summary.
And an editor who just won't edit. All of you, back to editor school. Off you go.
Financed by the Chinese who have set electric vehicles as one of the industry's to dominate in the future (they have these 25 year plans and EV's are part of it) - Faraday hired a bunch of folks from U.S. car companies (Tesla mostly), siphoned off whatever knowledge they wanted and then pulled the money out and left the U.S. company to die. The Chinese manufacturers vehicles look really good actually - SUV's that look like SUV's (the G3 especially).
https://www.theverge.com/2018/...
The problem is that the founder made a habit of borrowing tons of money to start new companies, and is now unlawfully dodging his creditors. The new investors are (rightfully) concerned that his creditors will come after his Faraday Futures stock, which would have given them near control of the company. The creditors want their money, they don't want to run an electric car start-up (that can't makes cars). Therefore they might well decide to liquidate the company's assets.
SUV's that look like SUV's (the G3 especially).
You're kidding right? Is there supposed to be a /s there? I clicked that linked, those tiny things do not look like SUVs. They look like sedans that had an awkward growth spurt.
Hav you been car shopping recently? The G3 looks like every other manufacturers soft SUV/cross-over.
I am Slashdot. Are you Slashdot as well?
An investor drops out? That's the worst possible thing that can happen?
There was no meteor strike on the main office, releasing a strain of bacteria that turned their hair blue and caused impotence? Termites didn't evolve a taste for flesh and start drilling into their feet? Global warming didn't atmospherically create a lens that concentrated all the warming right over their office, roasting them like ants? Giant birds of prey didn't swoop and steal parts from their cars in the middle of the night?
(reads the article). Oh, they switched to an open office plan. I guess that is the worst possible year.
"First they came for the slanderers and i said nothing."
This is why you need to read your contracts carefully or have a lawyer go over them before you sign. It sounds like the original agreement didn't specify a timeframe for the money to be sent from Season Smart to Faraday Future. And Evergrade Health took advantage of that to push some of the payment into the future, then took steps to guarantee Faraday would die before those payments would become due. Meanwhile, Faraday probably naively handed over control of its assets and IP immediately, before receiving full payment (this is something even prostitutes know not to do).
Never underestimate the ability of investors to take more than they bargained for. When a venture capitalist firm agrees to invest money in your company, do not make the mistake of thinking of them as your savior. From that moment, they are and always will be locked into a power struggle with you for control of your company.
That's okay, Trump will probably announce financing for coal-powered cars companies pretty soon.
#DeleteFacebook
The Gigafactory is where Tesla makes batteries is it not?
Tesla makes cars in the former NUMMI plant in Fremont.
Can someone explain why FF would want their car factory to match the splendor of Tesla's battery factory?
Simple answer: to scam more investors. The pitch from YT was “look we can match Tesla, don’t you want to be part of the next Tesla?”. It was an easy way to get people excited and hopefully invest into the company.
Let's be honest... there was dysfunction long before that.
- They named themselves Faraday.
Instead of being original, they started from the very beginning as a "me too" company. Everything they did was to simply copy Tesla. And they intended to reach a point of competitive product with a version 1 vehicle while racing the clock against an established company like Tesla who has a rain-maker CEO.
- Car that seems to completely lack design
Honestly, the FF vehicle is an absolute mess. Look at it. It's an end-to-end disaster.
- Tech that's not there
A huge amount of what Tesla is selling is the gadgets and gizmos. Most of the Tesla drivers I know were sold on the bling instead of practical items.
- They started by building it themselves.
Tesla started by building their tech into someone else's design. In fact, in order to establish Tesla as a real player, Tesla's initial vehicles were based on Lotus gliders. In other words, Lotus was delivering cars without drive trains and Tesla was simply fitting tech. This allowed Tesla to avoid being just another unicorn startup. They actually managed to deliver a real product that would allow investors to have something to touch and feel. Faraday fails on every front here. In fact, Lotus was always special since they're kind of a budget sports car. So Elon probably got a great deal on the gliders.
Faraday should have paid someone else to manufacture the majority of it. It was a total waste of money to tool a factory to produce a version 1 vehicle.
Companies like Ford, GM and BMW for example should be desperately looking for partners these days. Their entire business is eroding. I own a BMW i3 and I expect this vehicle to be road worthy for 20-30 years with minimal additional cost. When the car is paid off sometime in 20 months or so, i'll take a loan to upgrade to the newest battery pack and add Airplay to the car... if these options prove too expensive, I'll dump it for a smaller Chinese EV. Ford, GM and BMW are now making almost entirely plastic, non-corrosive, minimal vibration vehicles. In fact, I'm trying to convince local tree-hugger political groups to mandate that all new cars sold in Norway should have "20 year plans" as a requirement. Meaning that all car companies should be required to offer plans to keep cars road worthy with a predictable TCO for a minimum of 20 years. This would be a huge positive environmental improvement... but it will destroy many legacy car companies if this becomes a thing.
So Ford, GM, BMW, etc... companies who have proven they simply "don't get" the next phase of cars and will lose their asses to newcomers who will focus more on long term capitalization on existing vehicles (apps, features, upgrades, etc...) than on sales of replacement vehicles. As such, Faraday should have easily found someone willing to help produce for them.
If nothing else, they could have simply had a Chinese company build them.