Faraday Future’s spat with investor clouds its launch
The dispute between the luxury electric-car start-up and a Chinese backer threatens plans to begin production.
Faraday Future, a luxury electric-car start-up in Gardena, is embroiled in a dispute with one of its major investors that threatens the company’s initial production of the vehicles.
The company hopes to start manufacturing the FF91, a sedan with a base price expected to top $100,000, at a plant in Hanford, Calif., that the company has said would eventually employ more than 1,000 people.
Key backing came from China’s Evergrande Health Industry Group Ltd., which in November committed $2 billion — including an initial payment of $800 million — in exchange for a 45% stake in Faraday Future, which is led by Chinese entrepreneur Jia Yueting.
The investment originally was made by a firm called Season Smart Ltd., which Evergrande acquired this year.
After Faraday Future burned through that $800 million in about seven months, the parties in July agreed that Evergrande would provide an additional $700 million to the automaker earlier than planned under their arrangement.
But Faraday Future alleges that Evergrande held back the additional payment. In turn, Evergrande alleges that Faraday Future is effectively trying to back
out of the financing agreement.
Evergrande, in a filing with the Hong Kong Stock Exchange, said that Faraday Future has sought arbitration to terminate their agreements and that Evergrande “has engaged a team of international lawyers” to defend its interests.
Faraday Future, in a post on its Twitter account Sunday, said “the only reason ‘FF is trying to get out of the deal with Evergrande’ is because Evergrande has failed to live up to its end of the bargain and make the payments it agreed to make.”
Faraday Future also said Evergrande did so “to try to gain control and ownership over FF China and all of FF’s” intellectual property.
“At the same time, Evergrande is preventing FF from accepting any immediate financing from other sources,” Faraday Future said.
Evergrande Health denied the claims, according to Bloomberg.
All of that raises questions as to whether Faraday Future will have the cash to continue ramping up for production of the FF91. The company has said it hoped to make initial deliveries in the first half of next year.
“We will continue to take decisive action, including pursuing funding opportunities from those who share our vision, to ensure that our vision is realized,” Faraday Future said.
Yueting founded the company in 2014 with ambitious plans to compete with Tesla Inc. and other electriccar makers, and the FF91 is a powerful, fast and technology-packed car that Yueting once called a “new species” of automobile.
But the company has struggled to secure the steady financing needed to bring its car to market, and a planned assembly plant in Nevada did not materialize. That led the company to choose the alternate plant site in Hanford.
“It has been a journey with twists and turns,” Faraday Future said in its Twitter post, “but FF’s belief in that vision and its focus on its mission are unwavering.”