Faraday Future Wraps Up Dispute With Main Investor Without Incident - What Now?

Matt Posky
by Matt Posky
faraday future wraps up dispute with main investor without incident what now

Faraday Future, the Chino-American EV developer that’s always in dutch, said Monday it has established and signed a new restructuring agreement with its main investor, Evergrande Health Industry Group Ltd. The deal concludes a rather ugly legal dispute between the two — one which placed Faraday’s intellectual property and finances in serious jeopardy.

Following the departure of co-founder Nick Sampson in November, the automaker found itself seeking new financing opportunities. Evergrande, which purchased a majority take in the EV firm via its summer acquisition of Season Smart, attempted to block new investments while Faraday accused the company of attempting a forcible takeover of the automaker by withholding funds earmarked for outstanding debts. Those funds were essential in helping it reach agreed-upon production targets.

Evergrande had agreed to take a 45-percent stake in the company for $2 billion in funding starting with “initial payments totaling $800 [million]” through early 2018, with the remaining $1.2 billion being issued over time. But those additional payments never came.

The new agreement effectively nullifies their earlier contract. Faraday notified the world on Monday:

“Today, FF (Faraday Future Inc.) and its investor Season Smart have announced that they have entered into a newly agreed upon restructuring agreement. Both parties agreed to terminate the previous investment contract, withdraw and waive all current litigation and arbitration proceedings, and release all security including the asset preservation pledge and equity financing rights.”

While this officially ends the dispute, it doesn’t guarantee the automaker another dime — and we know it needs every penny it can find to get its factory up and running. Whether you blame Faraday’s repeated mismanagement of funds or Evergrande’s withholding of promised capital, the carmaker endured mass layoffs just months before it was scheduled to commence mass assembly of its first model, the FF91.

Faraday Future claims it will be able to solve its cash problem “quickly” now that a new deal is in place, though this statement contains a familiar ring. In truth, this is another setback in a seemingly endless chain of disappointments. The company needs fresh funding, and fast, if it intends to build vehicles at its leased Californian factory. But there are other problems to contend with.

In addition to Sampson, FF has lost several essential members of its engineering team who will need to be replaced. In fact, there’s been a mass exodus of upper-level employees over the last twelve months, resulting in a shallower talent pool than we would be comfortable with.

Still, we should tempter our general negativity with a tiny nugget of hope. While Faraday has one of the worst track records of any automotive startup in recent memory, it continues to linger despite the deck always being stacked against it. We’re not presuming anything that would resemble a comeback, but we’d be shocked if FF fades into the history books at this juncture.

[Image: Faraday Future]

Join the conversation
3 of 5 comments
  • Inside Looking Out Inside Looking Out on Jan 02, 2019

    Is FF Chinese company or American company? It cannot be both like GM. BTW what's going on with Karma? I see commercials all over the place but do not see anyone talking about it. Beautiful car but not as practical as Camry.

  • SCE to AUX SCE to AUX on Jan 02, 2019

    "In truth, this is another setback in a seemingly endless chain of disappointments." Just like Tesla, which only sold 139,782 Model 3s in 2018, and they keep missing production targets. At $60k a pop, these guys are such losers.

    • Inside Looking Out Inside Looking Out on Jan 03, 2019

      It is almost the same number of sales as Cadillac, Acura, Infiniti, Lincoln. Only Buick sells twice as much as Model 3.

  • Lou_BC ERay? A southern model will be the BillyRay.
  • Lou_BC I've never used a car buying plan service. My Costco membership did get me 1,000 cash back on my last truck.
  • Jeff S I can understand 8 cars is a bit much unless you are a serious collector. I always loved the Challenger when it first came out and now. I don't need a car like this but I am glad it exists at least for 1 more year. If I had a choice between a Mustang, a Camaro, and a Challenger I would opt for a Challenger but probably with a V-6 since it has more than enough power for most and I don't need to be burning rubber. Challenger has the classic muscle car looks, more cabin room, and a decent size trunk which makes it very livable for day to day driving and for traveling. The base models of the Dodge Challenger has a 3.6-liter V6 engine that gives you 305 horsepower with 268 lb-ft torque. The car attains 60 mph from a standstill within just 6 seconds, which is quite fast. Even with their base engines, the Challenger and Camaro are lightning-fast. The Camaro reaches 165 mph, while the Challenger can go up to 11 mph faster!
  • Inside Looking Out I would avoid American cities if I can. European cities are created for humans and Americans for cars.
  • Inside Looking Out I used True car once in 2014 and got a great deal. The difference is that you do nothing but dealers call you. No haggling but you can get the same deal browsing inventories on dealers websites. It just matter of convenience, Rich people delegate job to someone else because time costs more.