Fara­day Fu­ture’s dreams of mass pro­duc­tion hit a bump in the road

China Daily (Hong Kong) - - MOTORING - HAO YAN haoyan@chi­nadaily.com.cn

One Chi­nese in­ter­net ty­coon who has vowed to make lux­ury elec­tric ve­hi­cles faces a bumpy road to sur­vive the race for in­vest­ment, as Jia Yuet­ing, founder of Chi­nese tech­nol­ogy com­pany LeEco, is seek­ing to re­boot his cur­rently fail­ing Fara­day Fu­ture project.

Elec­tric ve­hi­cle startup Fara­day Fu­ture has pub­licly ad­mit­ted its $1 bil­lion plant con­struc­tion plan has been dropped af­ter work halted on its site out­side Las Ve­gas in Novem­ber, de­spite its founder Jia pre­vi­ously say­ing the plant work had been re­lo­cated to ful­fill the plan to pro­duce the elec­tric FF91 model in 2018, ac­cord­ing to a let­ter through his WeChat pub­lic ac­count.

In d u s t r i a l i n s i d e r s s a i d Jia was caught in a dilemma of whether he should burn through more cash to fi­nally get the vol­ume prod­uct on the road, or quit the game by sell­ing his eq­uity at a much lower price than his ini­tial, huge in­vest­ment.

“Jia made a large eq­uity in­vest­ment in Fara­day Fu­ture. He needs this vol­ume pro­duc­tion in a brick and mor­tar plant, so as to get a higher val­u­a­tion in the way a con­ven­tional car­maker does,” said Shu Chang, a part­ner of Roland Berger Strat­egy Con­sul­tants.

“With­out mass pro­duc­tion, a com­pany with­out a his­tory, but only his story, won’t get a high val­u­a­tion, so his eq­uity in Fara­day Fu­ture would be worth very lit­tle. Jia may even strug­gle to find a buyer.”

Shu said he fore­sees the best sce­nario as the FF91 rolling off the pro­duc­tion on time in the United States.

Then Jia would share the brand’s halo ef­fect, re­sources, ex­pe­ri­ence and ad­van­tages with his LeSEE project, and fi­nally boost the mar­ket per­for­mance of the LeSEE Pro model.

Jia is also op­er­at­ing a LeSEE elec­tric su­per­car project in China.

The com­pany’s pub­lic rela- tion­ship depart­ment said that an an­nounce­ment is “com­ing soon”.

But sim­i­larly, the LeSEE Pro ve­hi­cles have not been put into mass pro­duc­tion, de­spite the com­pany an­nounc­ing last Au­gust it had bought 2.87 square kilo­me­ters of land for an auto park, with plans to in­vest 20 bil­lion yuan ($2.95 bil­lion).

“But it’s a tough job to es­tab­lish a pos­i­tive cy­cle among ven­dors and sup­pli­ers, and to re­al­ize tech­nol­ogy break­throughs in the United States,” Shu added.

There were es­ti­mates that Fara­day Fu­ture’s failed Ne­vada plant plan has cost more than $120 mil­lion. Those sources, who de­clined to be named, said that Fara­day Fu­ture is op­er­ated by the same team of peo­ple who launched Tesla, so both the FF91 and LeSEE Pro are go­ing to be built on a sim­i­lar elec­tric ve­hi­cle chas­sis.

The sources said Jia’s op­por­tu­ni­ties de­pend on whether he has a con­stant sup­ply of cash to put into the full-elec­tric su­per­car projects.

The rea­son is that de­vel­op­ing an au­to­mo­bile propul­sion sys­tem re­quires a huge amount of in­vest­ment, much larger than an in­ter­net player’s imag­i­na­tion. The ex­ist­ing ex­am­ple is Qoros Auto, which burned money for about six years from its es­tab­lish­ment in 2007 to its first prod­uct, the Qoros 3 sedan, launched on the mar­ket in 2013. In­dus­try in­sid­ers es­ti­mate in­vest­ment to­taled about 20 bil­lion yuan for the Sino-Is­raeli com­pany, but the emerg­ing brand is still los­ing money.

Shu Chang, a part­ner of Roland Berger Strat­egy Con­sul­tants

PRO­VIDED TO CHINA DAILY

The US-based Fara­day Fu­ture un­veils its pro­to­type EV FF91 at the Con­sumer Elec­tron­ics Show in Las Ve­gas in Jan­uary.

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