With a $335 million incentive package approved by Nevada’s governor last Saturday for its planned $1 billion factory, and a first production electric car projected by 2017, Faraday Future’s shorthand – FF – might be interpreted as fast-forward.
That is, it could assuming the California-based company realizes bold aspirations leaving more questions than answers – but which are backed by a Chinese multi-billionaire as it hires all-star talent for an automotive dream team.
What does Faraday Future want to do? Practically reinvent the automobile, and if it does change the paradigm to the degree promised, it will have come out of seemingly nowhere this summer to do what no other established carmaker, not even Tesla, has yet done.
“We plan to revolutionize the automobile industry by creating an integrated, intelligent mobility system that protects the earth and improves the living environment of mankind,” said Jia Yueting, founder and CEO of Leshi TV, a Chinese video site, in his letter to Nevada officials.
Think: electric, autonomous, connected, something a Google or an Apple might admire, but by a startup that has received considerable attention for its deep-pocketed vision.
On Saturday, Nevada Governor Brian Sandoval signed a deal overwhelmingly approved by legislators to give $215 million in tax credits and abatements, and to finance $120 million in infrastructure improvements for an industrial park in North Las Vegas.
Some Answers, More Questions
The company was in stealth mode until July when it began making strong statements to a few media including one – paraphrased with expletive deleted – to the effect it was not Tesla, and is not fooling around.
In a couple weeks the still-secretive company is due to show one prototype at CES 2016 in Las Vegas, but reportedly Faraday has multiple vehicles in mind.
An Oct. 28 article on four talented designers hired by Faraday written by Dujour – and liked so much by Faraday that it features it on its yet-sparse website – said at the company’s Gardena headquarters a few vehicles were concealed under cover.
“In the midst of the bustle, several tantalizing, car-shaped forms sit draped in black cloth emblazened with the ‘FF’ logo,” it said.
The car business is famous however for consuming cash, even for one car’s development. Witness Tesla which has had scant few truly profitable quarters by generally accepted accounting principles and which delayed its second all-Tesla vehicle, Model X, by two years.
A key question is how Faraday Future intends to launch grand plans so quickly.
To do so, it will have to prove itself exceedingly smart.
Not Capital Light
The trials of Tesla have been part of its saga – and popularity – as has its charismatic Elon Musk ostensibly willing to risk all. It’s worked through yet-limited profit/loss statements and its cash burn has been high even as it’s come out of a “capital light” model, but Faraday looks like a recipe to spend more intensively.
Even if it produces just one salable car by 2017 as it said to Motor Trend and repeated since, it will have cut the normal seven-year development time by half as an industry rookie. This it’s doing in part with artificial intelligence design tools and advanced computer-aided prototyping – so that may answer part of the cost question.
But, it wants to make cars new from the ground up, whereas Tesla saved money by starting with Lotus-chassis Roadsters, sparse on the inside, with its main focus getting the powertrain right.
If that were not enough – and again contrasting to Tesla which acquired post-bankruptcy GM’s former NUMMI plant at fire sale prices – Faraday plans to do it in a $1 billion factory which it aims to fill ASAP with 4,500 employees, around nine-times as many as it now has.
“After we get this manufacturing plant up and running, we will be directly staffing it with 4,500 new jobs,” says Faraday. “These positions will include a wide variety of professional and manufacturing employment opportunities, offering competitive pay and benefits.”
This it will do in the same state as Tesla’s Gigafactory. Tesla at last count has over 12,000 employees, the Gigafactory will hire 6,000 more, but Tesla has had a dozen-year head start and has been on the financial rocks more than once.
What Faraday’s planned insta-factory implies is a large business ready to sprout out of thin air in record time. How much production volume this implies is in question.
Michigan-based analyst Alan Baum notes further that Faraday is a unique case next to other automakers.
“It is likely that they will be doing more of the vehicle in-house than most because they aren’t as well known by the supply base meaning they will have to do much of the work in-house,” said Baum. “This results in a higher employee count than one would expect given their volume and limited product line. In another entirely different situation, VW employs more per vehicle produced than most because they are heavily vertically integrated. This is of course a different situation, but that at least explains some of the numbers.”
In any event, nothing appears as if it’s being done on the cheap. Looking further at implications of its hiring practices, the tech industry is known to have high average salaries. Google has reportedly topped the list with a per employee average of $141,000 annually.
If Faraday pays, hypothetically, just $100,000 on average and assuming its plans come to pass, it will be in for close to $0.5 billion annually just in payroll with 4,500 employees, and it is promising lavish treatment as evidenced by its employment page on its website.
“Besides the usual (competitive salaries, generous healthcare benefits), you can look forward to catered lunches, social events, Q&A sessions over cocktails with the executive team, and the chance to unleash all your great ideas in an open and collaborative environment,” says the start-up. “We offer significant equity packages which means we are all owners in the company, and we approach it that way.”
If it plans such a large assembly plant and employment, one would not think it is aiming for limited-market boutique cars at extravagant prices as some have suggested, but add this to the to-be-determined list.
First hires meanwhile have been veterans including those who’ve headed up manufacturing, interior design and engineering for the BMW i3 and i8, Tesla Model S, and others have led in development of the Chevy Volt’s powertrain.
Nevada officials – which last year offered Tesla $1.3 billion – have rejoiced for a compromised economy weighted toward businesses like casinos and tourism. And, the state again edged out other states including California for what is hoped will be a tech giant and budding tech industry hub.
“This is a watershed moment,” said Democratic state Sen. Pat Spearman, whose district includes part of recession-struck North Las Vegas where Faraday will set up shop. “I will be happy to go back to my constituents and say the darkness that has overshadowed us has lifted.”
Critics saying Las Vegas is known for gambling have meanwhile cynically offered Nevada is supporting another wagering business.
The electric car industry over the past half decade has taken off slower than projected, but as long as regulations push it, it is due to grow – and better late than never.
Is Faraday Building Regular Cars?
While some have postulated Faraday may not be making cars at all, it appears in the works are highway legal enclosed vehicles with four wheels – cars – but the tech firm may have other things up its sleeve.
Also in process is it’s analyzing potentially getting away from the individual ownership model, modifying lessons learned from ride sharing and Uber.
What if instead of buying a car, it proposes a plan like telecom companies do with a smartphone? That is, you lease the use of the vehicle, but instead of one car, you have access to cars but without normal costs associated with ownership?
In looking at this, as Business Insider has observed, Faraday is actually contemplating two business models merged into one – as if auto manufacturing were not enough in itself.
Also of course will be autonomous tech, artificial intelligence inside the car to welcome and comfort occupants as well as anticipate their traveling needs, and more.
“The automobile has gone through a hundred years of iterative design. It’s become baroque, very frilly and overstated,” said Faraday’s head of exterior design and former creative director at BMW design, Page Beermann to Dujour. “We want to back off from that to simplify things and really look at what the pure experience is.”
“We want this to be the first car where you actually feel better after sitting in traffic for two hours.”
And so echoes Faraday’s website promising a vehicle of a futurist’s dreams.
“At Faraday Future, we aim to deliver a new form of transportation, better suited to the way we interact today,” said the company. “At Faraday Future, we believe that today’s cars do not meet today’s needs. Technological innovations, energy constraints, urban crowding and demanding lifestyles have each contributed to a fundamental shift in our relationships with our cars.
Vaporware Or Credible?
To date the company has talked more about connectivity and convenience than 0-to-60 times, slalom results – or even EV range – though hinted is it will be Tesla competitive.
The allegation that it might be “vaporware” is not ours, but has been suggested by readers left wondering what’s missing in this picture.
No doubt lots of details are omitted, but this may be a tactic by the company which operates behind cover like Apple. In fact one rumor that’s floated was it is a front company for Apple, and whether that’s a myth or not, only a VP, Nick Sampson, still speaks for it, and a CEO has not been announced.
It’s so secretive that some have been tempted to dismiss it. Even Tesla which normally plays its hand close to its chest in many ways has made its intentions known to a far greater degree than has Faraday Future.
Clear however is the governor of Nevada and its lawmakers all fell over themselves welcoming it to the state. And while a chief executive hasn’t presented himself, a billionaire has, and is vouching for it. Undoubtedly also he wants to remain a billionaire.
Anyway, next step is CES, Jan. 4. There Faraday will show a better indicator of whether its all-star dream team is assembling a car for you to dream about as well.