By on July 12, 2017

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Faraday Future, the American electric vehicle startup backed by LeEco founder Jia Yueting, has abandoned plans to construct its now infamous $1 billion factory in Nevada due to severe financial woes. It’s another nail in Faraday’s coffin as the firm was claiming it would resume construction of the plant less than six months ago.

Work at the North Las Vegas site stalled in 2016 after repeated nonpayment to the construction firm and numerous suppliers.

It’s become a bit of a running gag, as Jia has begun pleading with literally anyone who will listen to give his automotive endeavors more time to pay up. Last week on Weibo, China’s biggest social-media site, Jia publicly promised to repay his debts as he committed himself his electric car businesses. He then resigned as chairman.

“Please give LeEco some time, please give LeEco car some time,” Jia wrote, admitting he had made financial errors in the past. “We will pay back creditors, suppliers and any other debts.” 

Meanwhile, Faraday Future is taking a more pragmatic and dignified approach than begging for amnesty on social media.

“We have decided to put a hold on our factory at the Apex site in North Las Vegas. We remain committed to the Apex site in Las Vegas for long-term vehicle manufacturing,” said Stefan Krause, FF’s chief financial officer for the last few months, in a statement to the Nevada Independent. “We at Faraday Future are significantly shifting our business strategy to position the company as the leader in user-ship personal mobility — a vehicle usage model that reimagines the way users access mobility. As a result of this shift in direction, we are in the final stages of confirming a new manufacturing facility that presents a faster path to start-of-production and aligns with future strategic options.”

Faraday already claimed it was scaling back production plans at the Nevada worksite to do exactly that earlier this year. Now it apparently needs an entirely new location to ensure the success of an unspecified business strategy.

It would be refreshing to hear someone at the company just say they’ve finally had enough at this point. Faraday has endured hardships that would have obliterated most startups over twelve months ago. Staffing and retention issues, shadowy Chinese leadership, financial mismanagement, over-zealous marketing campaigns, project delays, legal troubles, scorned business partners, and much more have coalesced to make Faraday Future the absolute disaster we know and love.

Mercifully, the corporation’s death appears imminent. According to Business Insider, the company is scaling back its workforce yet again and inside sources claim it is dangerously close to missing its payroll. While the company has stated it would like to refocus its efforts on fundraising, it’s unlikely to persist long enough to acquire new financial backing without help from Jia Yueting.

Having already spread things thin over at LeEco, Jia has been trying to ensure his Chinese car company (LeSee) survives while also spending capital on Formula E. In the hopes of keeping some positive attention on Faraday, the company’s FF91 recently participated in the Pikes Peak International Hill Climb, where it actually besting a Tesla Model S P90D. However, Shanghai courts froze $183 million in assets due to missed loan payments from LeEco last week. Without a backer, future publicity for the FF91 could be a problem. Currently, CFO Krause is on an extended business trip to find new investors. He’s hoping to scrounge up over a billion dollars in capital.

While Faraday should have been focusing on engineering and production all along, one billion dollars could help it get development back on track. But if it misses payroll, even once, it’s almost unfathomable that anyone would stick around to see the car reach production.

Either way, that doesn’t bring back the nearly 13,000 jobs in Southern Nevada that were promised as part of the factory’s construction. Nevada Governor Brian Sandoval has assured taxpayers they aren’t on the hook for the $335 million incentive package, as it was placed into a trust fund. Faraday only received $398,000 in tax abatements for 2016 and another $206,000 for 2017. Sandoval stated that the remaining funds would be redistributed into the community.

Some lawmakers who opposed the plan from the start used Faraday’s announcement as an opportunity to be heard.

“Go back and watch all the testimony of the proponents of that thing — look at the rosy scenario, how fantastic this is, how minimal the risk is and how this is going to be the greatest thing,” said state assemblyman Ira Hansen. “Those of us who were skeptics, we got treated like pariahs. I’m not gloating. I honestly wish this would have gone forward. I’ve just been in the business long enough and in politics long enough that if something seems too good to be true, it usually is too good to be true.”

[Image: Faraday Future]

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17 Comments on “Faraday Future Abandons Production Plant as Chinese Backer Goes Bust...”


  • avatar
    mason

    “I’ve just been in the business long enough and in politics long enough that if something seems too good to be true, it usually is too good to be true.”

    Unfortunately Hansen’s words ring true in all of the EV world. When you consider the lack of infrastructure and take away the top heavy subsidies, the likes of which we have never seen before in any other form of transportation, EVs would be as successful today as they were in 1940.

    I hate paying for stuff i have no intention of ever using.

    Dear big brother, I’d like to take my $7500 rebate on a clean diesel engine please.

    • 0 avatar
      SCE to AUX

      “I hate paying for stuff i have no intention of ever using.”

      I’m no fan of subsidies, but your statement is overly simplistic.

      The government we elected has chosen to socialize the cost of many things – roads, communication infrastructure, public education, *Social* Security, Medicare, farm subsidies, myriad tax deductions, and so on. No citizen fully utilizes all of these benefits, yet we pay for them all anyway. Our government has also decided to socialize the deployment of EVs up to 200k units per mfr.

      Faraday’s problems are not related to the distortions you’re describing. They’re just run by morons.

      • 0 avatar
        2manycars

        That does not make it legitimate. To have even a pretense of legitimacy the federal government would need to restrict itself to those specific items enumerated in Article 1, Section 8 of the federal constitution. None of the things you mention are authorized. Nor is the judiciary, which was created by the constitution, empowered anywhere in that document to change it by judicial edict.

        What we have in fact are criminal gangs doing whatever the hell the hell they want because they can get away with it. Essentially no different than the Crips and the Bloods.

    • 0 avatar
      JimZ

      “I hate paying for stuff i have no intention of ever using.”

      right. I’ll probably never drive on I-15 in Idaho, so I don’t want a cent of my “hard earned tax dollars” to go towards its maintenance.

    • 0 avatar
      FreedMike

      Well, I sure never supported sinking trillions of dollars into Iraq, mason, but I got stuck paying my share nonetheless.

      Welcome to America.

      (By the way, tax breaks for certain kinds of vehicles are nothing new. Back in the aughts, the government gave them out out for business owners who used luxury SUVs as “work trucks”…LOL…the most “work” these things did was ferrying the business owner and his wife back and forth to Cheesecake Factory.)

  • avatar
    SCE to AUX

    Thankfully, Nevada was wise enough to insulate themselves from Faraday’s obvious shenanigans.

    • 0 avatar
      jpolicke

      Amen. Whoever had the foresight to keep hold of the money until there was a working factory deserves a Rushmore-sized monument. When Bernie Madoff gets let out on parole, he’ll drive home in a Faraday.

  • avatar
    statikboy

    What is that, a fast-back minivan?

  • avatar
    JohnTaurus

    Whaaaaat? Noooooo! Who could have predicted…

    My answer to the QOTD: this farce.

  • avatar
    stingray65

    Obviously the problem here is insufficient subsidies. California is giving EV subsidies to the poor, perhaps they should also give EV subsidies to poorly managed and undercapitalized EV producers as well. No one should ever fail as long as there are taxpayers that can be further fleeced.

    • 0 avatar
      JimZ

      no, the problem here is that everyone who has never manufactured a car before severely under-estimates how much time and money it takes. it takes more than VC to pull it off.

      IOW Tesla is succeeding because Elon Musk is more than just money.

      • 0 avatar
        SCE to AUX

        “Elon Musk is more than just money”

        Exactly. I made a similar comment in criticism of FF’s leadership.

        Foibles aside, Mr Musk has poured his heart and soul into making Tesla succeed (not to mention SpaceX). Mere money does not build a company; you need tireless and contagious passion, lots of help, a great idea, and a few good breaks to make it work. And even then, many fail.

  • avatar
    Detroit-X

    Chinese backers can’t be trusted? OMG. Even for car companies nobody cares about? OMG2.

  • avatar

    Case study material for business students how not to do things. The surprising thing is that all common sense seemed to have been thrown aside, in this day and age.

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