Faraday Future Officially Ends Its Relationship With Nevada

Matt Posky
by Matt Posky

The honeymoon is over before it even began. The State of Nevada is ending its relationship with automaker Faraday Future, which once promised to build a vast and glorious manufacturing facility within its borders — in exchange for tax incentives.

Eschewing construction of its $1 billion promise in North Las Vegas due to financial woes, Faraday was insistent that it was going to begin construction on a smaller assembly plant before tackling the rest of the build site. According to the company, a bijou factory was to be the first phase of a multi-stage approach intended to bring the FF 91 swiftly to market.

In July, Faraday Future announced it would be placing that project on hold as well, but remained committed to using the Nevada site for long-term vehicle manufacturing. Until then, it said it would shift its 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.” If anyone knows what that gibberish means, we’d love to know. It’s been several months and we still can’t decipher that sentence into useful information.

Apparently, Nevada wasn’t interested in waiting to see how Faraday progressed through its new identity or if “user-ship personal mobility” leadership has anything to do with building cars. According to The Nevada Independent, the startup sent a letter to the Governor’s Office of Economic Development which indicated it was giving up its status as a “qualified project.” Steve Hill, executive director of the GOED, indicated that Faraday had voluntarily abandoned its eligibility for a state tax abatement and infrastructure building package and issued a check for $16,200 — thus returning all the incentive money that it had received from the state.

Obviously, the state was happy to accept the terms of surrender.

“The Faraday project is basically dissolved at this point at absolutely no cost to the state and local governments,” said Hill.

About $620,000 of taxpayer money is just chilling in a trust fund with nowhere specific to go since the company was unable to uphold its end of the bargain. That money is likely to be routed into various state entities, says the Governor’s Office.

Congratulations are in order to Nevada State Treasurer Dan Schwartz, who as among the very first people to cry foul of his state’s arrangement with the aspiring automaker. He demanded that the GOED conduct an audit of Faraday earlier this year, which it agreed to. That investigation was scheduled to conclude sometime before autumn and may have had something to do with FF’s voluntary withdrawal.

While other outlets may indicate that this may not be the end for Faraday Future, we were willing to pronounce them dead months ago. Whatever it is we are witnessing now amounts to posthumous spasms.

Faraday may have finally secured a manufacturing plant in Hanford, California, and received some important fund-raising capital this summer, but the deck is stacked against it. The brand’s hype-driven existence didn’t mesh particularly well with how the business was actually ran.

The media has frequently outlined the company’s weird corporate connections to China’s LeEco, despite both firms repeated denial that founder Jia Yueting was anything more than a serious investor. However, earlier this week, FF employees confessed to The Verge that they had been designing vehicles for LeEco all along — making the partnerships’ repudiations all the more bewildering.

This Chinese connection has been a major thorn in Faraday’s side. Severe financial mismanagement has forced Jia to abandon projects and sell off assets to keep his core businesses afloat. He has even reduced his stake in LeEco to help support operations of the internet company. He now appears to have stopped funneling personal money into the business and rumors are stirring that he doesn’t even have enough left to pay off his own debts, let alone the debts of his many side projects.

Faraday looks to be left on its own, which is sad because they did provide an interesting prototype. But nobody is going to trust them to deliver on their car commitments when they’ve broken so many promises already. Besides, the amount of money it would take to make good on any one of them would be astronomical.

To quote Stephen King’s Pet Cemetery, “Sometimes, dead is better.”

[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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3 of 14 comments
  • Jacob_coulter Jacob_coulter on Sep 23, 2017

    I'd like to see federal legislation that taxes subsidies like this when states play these games. The small business owner gets screwed because they can't hire the big gun lobbyists to get these tax breaks. So they have to make up the shortfall. Crony Capitalism.

    • Lorenzo Lorenzo on Sep 24, 2017

      How does the federal government tax a state subsidy, which in most cases is reduced state taxes? Reduce federal subsidies to states for water, sewer, roads, unemployment benefits, medicaid?

  • Bpsorrel Bpsorrel on Sep 25, 2017

    So it was a car rental project... I think that's been done...... :)

  • FreedMike Needs MOOAAARRR POWER.
  • Mgh57 I should just buy an old car where everything is analog.
  • FreedMike You mean, the "Hellcat all the things" plan failed?
  • Fred I've only had it for about 7 months and I like it. Mostly because I have a hard time seeing my phone screen. So even tho my Honda's screen is 6" it's a lot easier to see than my phone.
  • Cha65697928 I'm 48. Both our cars have it, I'm never going back. Being able to activate calls, messages, music, nav, opening/closing garage doors all via voice command is awesome. Now if Audi would just allow Google maps to mirror in the middle of the driver's display instead of only allowing the native nav...