Fara­day raises fund­ing, rents plant near Fresno

Los Angeles Times - - BUSINESS BEAT - By Russ Mitchell russ.mitchell@la­times.com Twit­ter: @russ1mitchell

SAN FRAN­CISCO — Fara­day Fu­ture is run­ning on fumes. But it’s still run­ning.

The Gar­dena-based luxury elec­tric car start-up raised $14 mil­lion in emer­gency fund­ing and will lease an old fac­tory near Fresno that will en­able it to turn out 10,000 cars a year.

The com­pany has dra­mat­i­cally low­ered its am­bi­tions. Its goal now is to try to re­main sol­vent enough to start man­u­fac­tur­ing and sell­ing the FF 91, a pow­er­ful, tech­nol­ogy-packed luxury elec­tric sedan with a base price ex­pected to top $100,000.

As re­cently as last year, the com­pany had plans to turn out 150,000 cars a year from a mas­sive new $5-bil­lion assem­bly plant near Las Ve­gas.

Those plans were dashed when the com­pany’s pri­mary in­vestor, Chi­nese en­trepreneur and LeEco Chief Ex­ec­u­tive Jia Yuet­ing, ran into se­vere fi­nan­cial dif­fi­culty in his home coun­try, in­clud­ing a govern­ment-de­creed freeze on as­sets. Fara­day fi­nanc­ing dried up, and the Las Ve­gas fac­tory never got off the ground.

Last week, a two-year-old in­vest­ment firm called In­no­va­tus Cap­i­tal Part­ners handed Fara­day $13.75 mil­lion on a one-year loan, but not be­fore lay­ing claims to Fara­day’s Gar­dena head­quar­ters as col­lat­eral. The cost of the loan was not made pub­lic.

Fara­day’s new fac­tory sits along a two-lane road in Han­ford, a town of 55,000, and a rail­road cross­roads. Arm­strong Rub­ber Co. first opened the build­ing in 1962 to make tires. Ital­ian tire maker Pirelli bought the fac­tory in 1985 but shut it down in 2001, cit­ing for­eign com­pe­ti­tion and lower wages in Brazil and Venezuela.

The build­ing has been mostly empty since, though late last year a med­i­cal mar­i­juana sup­plier sought city per­mis­sion to use it as a grow farm and pro­cess­ing plant, pro­vok­ing a de­bate over mo­rals ver­sus eco­nomic de­vel­op­ment in the con­ser­va­tive com­mu­nity. The com­pany bowed out in March af­ter the city said it would wait un­til af­ter the Nov. 18 elec­tion to de­cide.

Then Fara­day stepped in. About 400 of Fara­day’s 1,000 Gar­dena work­ers vol­un­teered to drive to the Han­ford site on Satur­day to “see it, touch it, work on it, paint an FF sign on it,” said Ste­fan Krause, the com­pany’s chief op­er­at­ing of­fi­cer, who joined Fara­day in March.

A Deutsche Bank and BMW vet­eran, Krause is on the hunt for cap­i­tal to keep Fara­day alive. The re­cently bor­rowed $14 mil­lion is peanuts against the tens to hun­dreds of mil­lions of dol­lars Krause must raise.

An assem­bly plant and a sched­ule for pro­duc­tion will help, he said: “For in­vestors, it makes it more real.” The Han­ford plant cov­ers a mil­lion square feet with a sec­tion more than 300 yards long once used for tire mak­ing, the right shape and length for an auto assem­bly line.

When Krause came in last March, he saw how much time and money a brand-new plant would re­quire, and steered the com­pany in a new di­rec­tion. The need for speed is ur­gent, he said. “It’s strate­gi­cally im­por­tant to be the sec­ond [luxury elec­tric car] af­ter Tesla.”

A luxury elec­tric car start-up based in Sil­i­con Val­ley, Lu­cid Mo­tors, is also seek­ing new cap­i­tal as it races against Fara­day and oth­ers, in­clud­ing Lynk & Co., a new luxury elec­tric car maker in China that plans to sell in the U.S. through Volvo deal­er­ships.

If Fara­day’s plans are met, the first pro­duc­tion cars will come off the line headed for cus­tomers by the end of next year.

Jae C. Hong As­so­ci­ated Press

FARA­DAY FU­TURE’S goal is to re­main sol­vent enough to start man­u­fac­tur­ing and sell­ing the FF 91, a luxury elec­tric sedan with a base price ex­pected to top $100,000. Above, the FF 91 is un­veiled in Jan­uary.

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