Faraday Future Facing Vulnerable Future, Former Executives Say

Faraday Future has been building intrigue over its electric production car reveal planned next month at CES, but questions are coming up over the future of the company.

The startup electric carmaker appears to be getting hit by financial crises and internal conflict with owner-company, and electric car competitor, LeEco. More is being revealed, including comments by former FF executives.

FF is reportedly well behind on unpaid bills to vendors, and has been hit by lawsuits from some of them. Several high-level executives have left the carmaker.

Light started being shed on the company’s potential future last month when its North Las Vegas, Nevada plant construction came to a screeching halt. More was revealed when LeEco founder and FF investor Jia Yueting admitted the parent company had some big financial problems to solve, including what to do about the $1 billion FF factory. The company did break ground on the Nevada plant later that month.

The future of the startup company appears to be quite vulnerable, and it will need more financial backing to survive, according to extensive media reports.

SEE ALSO: Faraday Future Parent LeEco Lands $600 Million; Construction to Resume on Nevada Factory?

One of these features, from The Verge, probed deeper into what’s been going on behind the scenes. A headquarters office visit in Gardena, Calif., resulted in FF executives shedding more light on the company, mostly with glowing terms about LeEco. Interviews by The Verge with a half-dozen former employees produced differing findings, acknowledging the company being mismanaged. One ex-employee called the relationship with Jia Yueting and LeEco more like “indentured servitude.”

One major problem management has faced is that FF doesn’t own its intellectual property. Former executives said FF consists of two separate companies, with the second based in the Cayman Islands. That company, FF Cayman Global, was set up just to hold FF’s intellectual property. That raises more questions about FF’s relations with investors and suppliers, and could be a major roadblock to the company getting through it.

If someone is an investor in FF, they are out of luck, an ex-executive said in more colorful language.

“The company doesn’t own the IP,” the investor said.

SEE ALSO:  Work Halted on Faraday Future’s Billion-Dollar Nevada Factory

The Cayman Islands entity may be worse for suppliers than investors, according to another former FF executive. If a bankruptcy were to take place, suppliers may not be able to file claims against assets in an offshore company.

Suppliers have been pressing FF to settle claims on breached contracts. Seat supplier Futuris recently settled with FF over a $10 million lawsuit. In the settlement, FF agreed to find a new seat supplier, which The Verge said could take up to two years.

FF and LeEco both face serious challenges to rolling out electric supercars that can compete with Tesla. FF faces an even larger question about its very survival.

The Verge


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