Murky Automotive Startup Faraday Future Just Became an Automotive Shutdown

Matt Posky
by Matt Posky

Faraday Future has stopped construction on its billion-dollar electric vehicle factory in North Las Vegas. This is another blow against a company with intentionally foggy structuring, mysterious revenue sourcing, and an financially overburdened parent company.

The electric vehicle startup had previously missed numerous payment deadlines with building contractor AECOM, but now work has stopped entirely. A spokesperson from Faraday Future told Reuters that the company is working with contractors during an adjustment period and expects work to continue on the factory in 2017.

Nevada State Treasurer Dan Schwartz, and probably anyone else who has been following this story, is a little less optimistic.

“This is a Ponzi scheme,” he said in an interview with Forbes. “You have a new company that has never built a car, building a new plant in the middle of the desert, financed by a mysterious Chinese billionaire. At some point, as with Bernie Madoff, the game ends.”

The state of Nevada had agreed to provide more than $200 million in incentives, as the EV factory was expected to create 4,500 local jobs.

Faraday is part of a network of young EV companies in China and the United States backed by Chinese tech entrepreneur Jia Yueting. Last week, Jia announced that his tech company, LeEco, was running out of money due to having expanded much too rapidly to be sustainable.

Despite claims that LeEco’s businesses are entirely separate from that of Faraday Future, the two companies are very much intertwined. No matter how unofficial or secretive, that relationship likely had everything to do Faraday’s Tuesday announcement that it will be “refocusing its resources” before construction on the plant continues.

Incredibly, Faraday Future says it remains highly committed to having a production vehicle ready for January’s Consumer Electronics Show.

The event will take place in Las Vegas, not far from the unbuilt billion-dollar factory.

[Image: Faraday Future]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Rust-MyEnemy Rust-MyEnemy on Nov 16, 2016

    While their company offices have a strict no-smoking policy; Apparently they're Vape Aware.

  • SlowMyke SlowMyke on Nov 16, 2016

    Precisely NO ONE saw this coming... How much of that $200 million in tax dollars have they gotten already? Also, isn't Volvo tied up with Le Ecco? They probably aren't to thrilled with this. I suppose it was the Chinese connection that brought the two companies together? I can't imagine a recovering company like Volvo really would want to jump head first in with a mystery company like Faraday to produce their important electric vehicles.

    • See 2 previous
    • SlowMyke SlowMyke on Nov 17, 2016

      @voyager Thanks for the correction. That makes even less sense than Volvo though... I would think Mercedes would be a better option, unless MB was asking for too much to share their tech and Le Ecco have them a screaming deal. But then you get what you pay for, right?

  • CoastieLenn No idea why, but nothing about a 4Runner excites me post-2004. To me, they're peak "try-hard", even above the Wrangler and Gladiator.
  • AZFelix A well earned anniversary.Can they also attend to the Mach-E?
  • Jalop1991 The intermediate shaft and right front driveshaft may not be fully engaged due to suspected improper assembly by the supplier. Over time, partial engagement can cause damage to the intermediate shaft splines. Damaged shaft splines may result in unintended vehicle movement while in Park if the parking brake is not engagedGee, my Chrysler van automatically engages the parking brake when we put it in Park. Do you mean to tell me that the idjits at Kia, and the idjit buyers, couldn't figure out wanting this in THEIR MOST EXPENSIVE VEHICLE????
  • Dukeisduke I've been waiting to see if they were going to do something special for the 60th Anniversary. I was four years old when the Mustang was introduced. I can remember that one of our neighbors bought a '65 coupe (they were all titled as '65 models, even the '64-1/2 cars), and it's the first one I can remember seeing. In the '90s I knew an older gentleman that owned a '64-1/2 model coupe with the 260 V8.
  • SCE to AUX "...the complete Mustang model lineup to peruse"Will the fake Mustang show up, too?
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