Faraday Future Returns, Discusses Going Public With Reverse Merger

Matt Posky
by Matt Posky

Faraday Future is hoping to go public through a reverse merger, proving that the finances associated with electric vehicle startups rarely operate within the confines of reality. Founded by Chinese businessman Jia Yueting in April 2014, the company began making waves the following year when it announced a plan to invest over $1 billion a factory in Nevada (its first) and went on a massive hiring spree. With the help of millions in government tax incentives, the plan was to start building some of the world’s most advanced EVs by 2017.

But people were becoming suspicious as early as 2016, when questions were raised about where the money was coming from and how much was left. By year’s end, work on Faraday’s Nevada facility had been suspended indefinitely. Following a lightly-botched presentation of its future product in early 2017, more outlets began to report the company was quickly running out of money as it backed out of several more projects. Months later, an internal power struggle left founder Jia Yueting as the primary decision-maker. Faraday Future spent the next few years scrambling to repay its debts and scrounging for (mostly Chinese) investors that might get it closer to its ultimate goal of building cars.

Yueting has since declared bankruptcy and handed the corporate reins to Carsten Breitfeld, who ran BMW’s i8 program and worked as CEO for Chinese EV startup Byton ( which has suspended operations). He seems extremely excited about the prospect. Probably because rival Nikola managed to spin straw into gold using a reverse merger and special-purchase acquisition company (SPAC) earlier this year.

Your author has compared the two firms on numerous occasions, often suggesting Nikola would become the “next Faraday Future” by using slick presentations and marketing materials to woo investors. That’s roughly what happened, too — with the student eventually becoming the master. Aided by VectoIQ Acquisition Corp., Nikola’s valuation reached $13 billion over the summer and it negotiated a partnership with General Motors. Unfortunately, the company is now under investigation by the Securities and Exchange Commission and the Department of Justice over securities fraud allegations.

Apparently, Faraday Future thinks that’s the perfect recipe for its own business model … presumably without the fraud allegations. “We are working on such a [SPAC] deal … and will be able to announce something hopefully quite soon,” Breitfeld explained to Reuters this week.

From Reuters:

Breitfeld declined to say who Faraday is negotiating with or when a deal would close.

A SPAC is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years.

SPACs have emerged as a quick route to the stock market for companies, particularly auto technology startups, and have proven popular with investors seeking to echo Tesla Inc.’s high stock valuation.

Will it work? Hell, probably. Faraday Future seems incapable of dying. Every time you think you’ve seen the last of it, it resurfaces a few months later to make an announcement that it’s still active. Current goals include raising a minimum of $800 million to launch its flagship FF91 and proving to the world it has evolved as a company, now that management has changed.

“Because of the history and sometimes the bad news of the company, not everyone is really trusting us,” Breitfeld said. “They want to see that we’ve become a stable company.”

Doesn’t seem like a lot to ask but how many other electric startups have actually had to do that to cash in? Despite all of its missteps over the last few years, Faraday Future will probably continue on as if nothing happened.

[Images: 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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  • SCE to AUX SCE to AUX on Oct 06, 2020

    "...investors seeking to echo Tesla Inc.’s high stock valuation" Sure, by shortcutting all the hard-work steps that Tesla followed over its 17-year history. That's just stupid, and FF will not live forever. TTAC is that FF isn't even alive now.

    • Art Vandelay Art Vandelay on Oct 06, 2020

      Agreed. If a Carmakers wants to echo Tesla's high stock values then they should echo Tesla's approach and build cars that people want to buy

  • 07NodnarB 07NodnarB on Oct 07, 2020

    So close, yet so far away...I almost feel bad for the company.

  • AZFelix Hilux technical, preferably with a swivel mount.
  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
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