Murky Automotive Startup Faraday Future Just Became an Automotive Shutdown
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]
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.
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- JLGOLDEN In order for this total newcomer to grab and hold attention in the US market, the products MUST be an exceptional value. Not many people will pay name-brand money for the pretty mystery. I can appreciate the ambition of selling $50K+ crossovers, but I think they will go farther with their $30K-$40K offerings.
- Dukeisduke They're where Tesla was when it started - a complete unknown. I haven't heard anything about a dealer network. How are they going to sell these? Direct like Tesla? Franchises picked up by existing new car dealers?
- Master Baiter As I approach retirement, and watch my IRA and 401K account balances dwindle, I have less and less interest in $150K vehicles.
- Azfelix With a name that sounds like a bad Google translation, problems appear to permeate every aspect of the company. I suggest a more aggressive advertising campaign during The Super Terrific Happy Hour show to turn things around.
- Buickman GoneFast.