Once on the brink of bankruptcy, Faraday Future might be a non-starter once again after an extra $1.2 billion fails to materialize.
Earlier this year the once dead EV company once again rocked the world with an announcement that they’ve secured more funding to the tune of $2 Billion thanks the Chinese Real Estate Group Evergrande. But as per Reuters in their latest update earlier today (Oct. 10,2018) on the supposed Tesla Killer that has yet to come even close to mass producing its one and only concept, the FF91, not only has its main backer, Evergrande Health, backed out of its deal, it’s all because of its founder Jia Yueting is seeking arbitration against Evergrande.
For a 45 percent stake in the company, Evergrande Healthcare agreed to forward Faraday Future $800 million, money that, as per The Verge, was unwisely spent leaving several vendors and suppliers high and dry without any promise of payment. Also, rumors of layoffs in Faraday Future aren’t boding well for the EV Startup. Presumably, a chunk of that first $800 million was used to retool an empty factory in Hanford, Calif. the backup site for its EV production after initial plans for a Nevada factory fell through.
As for that further $1.2 Billion, an advanced of $700 million under a supplementary agreement was signed earlier this July between Faraday and Evergrande under a new set of conditions, I’m going to assume included in those conditions was promises to actually start producing a car.
With those conditions not met and with Faraday Future far behind in their plans for mass production, so much so that Evergrande doesn’t feel confident enough pouring in the rest of the money as promised, I’m not surprised at FF’s current impasse. Also, with its founder blocking the rights of Season Smart Ltd. to “approve plans by Faraday Future to raise financing in the future.” Evergrande was deprived of the control of its asset, a right they contractually should have.
Evergrande Health does more than invest in risky startups like Faraday Future, their primary business is media, and as the name suggests, healthcare. As per their latest financial statements from last year with over $1.1 Trillion in total assets and about $40 million in profits in 2017 alone, this Ltd. has the muscle to flex on a small startup like Faraday Future.
I expect Faraday Future to go for the nuclear option in a no-holds-bar fight for its own company and survival.
If not, look for Evergrande Health to acquire all rights to Faraday Future in the near…future.