Yet Another Bailout for Faraday Future

Matt Posky
by Matt Posky

Faraday Future, the contentious automotive startup that always seems to find (and then lose) sizable amounts of cash, has announced it has once again managed to secure new funding. According to its press release, Faraday says will receive $225 million in bridge financing via a funding round led by Birch Lake Associates.

While the bulk of the cash will go towards paying off vendors, some of which have filed lawsuits, around 40 percent will be left over to help get the FF91 to market and prove the company can actually build a car. The strategy seems risky, but it may be Faraday’s best bet at this point.

“As part of the vendor program, Birch Lake has also provided financing to FF for the company to pay all past due amounts for approximately 60 percent of FF’s vendor base, including smaller vendors who are owed less than $20,000,” the company explained. “FF’s larger suppliers and vendors have the opportunity to benefit in the vendor trust program by exchanging unsecured trade claims for trust interests that will hold a secured claim equal to all vendor claims in the trust and will include a repayment schedule to be completed during 2019.”

Faraday is valuing its intellectual property, which is easily its biggest asset, at $1.25 billion. It’s also planning a separate vehicle run in China with the V9, after The9 decided it was willing to contribute up to $600 million in a joint venture. The duo claim they’ll be able to build 300,000 cars per year. Some of that initial cash is supposed to go into the FF91, too.

“Having worked closely with the Faraday team to accomplish a complex restructuring, we are more confident than ever that FF is well positioned to embark on the next stage of its success. We are excited to establish this bridge financing facility and move quickly to raise the additional capital to help Faraday redefine mobility,” said Jim Nappo, managing director of Stifel Nicolaus & Co. — the company in charge of its its equity capital-raising program.

We’re not sure what to say. Faraday’s ability to find funding is downright miraculous, but everything always seems to go sideways in the end. While FF has made real progress on its flagship SUV, we’ve only seen prototypes and incomplete production models/testbeds thus far. The company has also lost key staff members over the last few years and its technology, while still impressive, isn’t quite as cutting edge as when the FF91 first saw the light of day.

[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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  • OE Supplier Veteran OE Supplier Veteran on Apr 30, 2019

    "Faraday is valuing its intellectual property, which is easily its biggest asset, at $1.25 billion" Can anyone articulate what technology they have that could possibly be this valuable? I'll wait here...

  • EGSE EGSE on May 01, 2019

    "to help Faraday redefine mobility" So far their definition of mobility has been "walking", and I'm not expecting that to change anytime soon, if at all. Though like SlowMyke stated, they may be "perp-walking" before it's over.

  • Lorenzo It's an election year, and Biden will drag down enough democrats without the state going deeper in the budget hole than it is now. Newsom isn't the smartest guy, but he has smart guys to tell him the state is running out of other people's money.
  • MaintenanceCosts The symbol is the standard international sign for "controlled access highway." Presumably they are trying to evoke the Autobahn.
  • MaintenanceCosts Absolutely. Most old classics are not Boss 429s or Busso Alfas. Most of them have powertrains that are just crap by modern standards. I'd love to have a classic without the pre-emissions stinky exhaust or the need to futz around constantly with points and jets to maintain drivability.
  • Ravenuer No, I wouldn't be interested in doing this at all. Seems like it would be quite expensive.
  • Tassos Why buy either when you have two matching 2007 diesel e-classes with combined over 950k km. NO ONE SHOULD WANT MORE THAN I HAVE SETTLED FOR.
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