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Faraday Future Had the Worst Year Possible For an EV Startup (engadget.com)

Posted by ryuzaki0 on from the tough-luck dept.

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.

6 of 52 comments (clear)

  1. STOP by Anonymous Coward · · Score: 5, Insightful

    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.

    1. Re:STOP by Anonymous Coward · · Score: 2, Funny

      Slashdot has a daily quota of stories that fawn over Tesla. This is a story about not Tesla that tells you how wonderful and successful and transformative Tesla Tesla Tesla Tesla is.

    2. Re:STOP by tempo36 · · Score: 4, Interesting

      The article mentions Tesla twice. Once as the maker of a similar EV, and again as a reference to building a factory. I don't think that's "fawning". It's EV news, and I suppose if you consider EV to be just about Tesla then you probably shouldn't ever read anything about EV. Unfortunately, Tesla is a relatively dominant company in the EV space, so they're going to be mentioned in articles about EV.

      FF grabbed a bunch of headlines when they launched making bold, impressive, and pretty hard to swallow claims about how great their EV was going to be. At the time I felt that they were doing a disservice to the EV market because people looked at their vaporware and thought "Why would I buy these shitty EVs on the market when these folks are going to deliver all that 10 times over?". Those who actually knew something about EV were skeptical, but many car buyers don't understand, yet, some of the limits on EV hardware. Turns out, FF really wasn't remotely positioned to deliver on its extensive claims.

      The only reason why I'd say it's not worth a headline is that it's no surprise at all that they're still falling on their face.

    3. Re:STOP by tempo36 · · Score: 3

      That Tesla link is the summary author's work, not the original article. Really you're going to complain about "all the other auto makers that have been developing electric vehicles"? Like who, GM? Or the Leaf? How would that paragraph have read..."Faraday Future, having recently claimed the ability to produce an EV sports car with full autonamous driving, which would occupy an entirely separate marketing niche from Nissan's Leaf, is struggling to produce units or complete their proposed factory. Having hoped to dethrone Nissan as the 2nd best selling EV worldwide, Faraday's hopes seem to be fading."

      Faraday Future wasn't trying to compete with the Leaf, or the Smart Car. Mentioning Tesla in an article about FF is appropriate, not spurious.

  2. It was actually a success - mission accomplished by sasparillascott · · Score: 4, Interesting

    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/...

  3. A story of reckless debt, and dodging creditors by raymorris · · Score: 4, Informative

    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.