Tuesday, December 12, 2017

Electric Vehicles: "Inside Faraday Future’s financial house of cards"

A deep dive from The Verge:

Burn Out
When Faraday Future emerged from stealth mode in 2015, it promised to transform the car industry with an American-made luxury electric vehicle that would someday be fully autonomous, maybe even sold through a subscription service. As we learned at CES 2017, the company was taking aim at Tesla with a car — the FF91 — that was designed to dazzle, with a 0–60 time of 2.4 seconds as jaw-dropping as the proposed $180,000 price tag. 

Since then, though, Faraday Future has been more focused on survival than speed. The Verge has learned from multiple sources about the nature of the company’s financial plight. While Faraday Future posed as the newest California electric car startup that attracted top auto industry talent, 10 former employees and one person close to the company say the behavior and business practices of its chief investor have brought business to a halt. The former employees, most of whom left Faraday Future at different points within the last 15 months, requested anonymity due to nondisclosure agreements with the company. The other requested anonymity out of fear of litigation.

Their accounts support and build on previous reports, and paint a more comprehensive picture of unusual financial management by the two people most directly in charge of the company’s finances: Jia Yueting, the main investor and shareholder, and Chaoying Deng, who has held many different titles at the company, but lists herself as the company’s vice president of administration on LinkedIn.

Where the company stands financially is unclear. Four high-level former employees with knowledge of the company’s finances told The Verge as recently as early December that, barring a new cash infusion, Faraday Future only has enough funds to keep its payroll afloat through the end of the year. But Yueting, who is known as YT, is still meeting with potential investors to keep the company alive, and may have secured a new round of funding, according to one of these people. 

Either way, according to multiple sources, many remaining employees are planning their exits, or have left. Others are simply no longer showing up for work; when YT arrived at the company’s Gardena, California, headquarters on the morning of Monday, November 20th to meet a group of potential investors, he found so few employees on site that an email, which was obtained by The Verge, was sent to staff by Faraday Future’s head of go-to market strategy that reinforced the company’s work hours.

The majority of these sources say YT inflated financial promises to the company, and they believe his ambitions overmatched the company’s waning cash flow. Their accounts suggest he insisted on keeping money, intellectual property, and employees fluid between Faraday Future and the electric car effort of LeEco, a tech conglomerate he founded in China. And many sources say that he left Deng, who had little experience running the accounting of a company this large, in charge of the money. 

Reached for comment on the issues brought up in this report, a spokesperson for the company issued a singular response: “As a private company, Faraday Future will not discuss its finances, nor will we discuss the finances of our investors.”

Representatives for Faraday Future admit that YT is the main financial backer of the company, but have maintained that the company was independent from his Chinese conglomerate LeEco, which is currently mired in controversy. YT himself once said on Twitter that he is “just an investor and strategic partner of FF.”

His involvement runs deeper than that of a typical investor, according to these former employees. And his influence started at the company’s inception, when he came together with Lotus and Tesla executives Tony Nie and Nick Sampson in 2014 to help start Faraday Future, these people say. The company was incorporated in the spring as “LeTV ENV Inc.,” according to documents filed with the California secretary of state, and later that summer, the name was changed to Faraday&Future Inc.
That same year, Los Angeles County property records show, a company called Ocean View Drive, Inc. bought a six-bedroom, eight-bath mansion in the tony Los Angeles County neighborhood of Rancho Palos Verdes for $7 million. One year later, the company bought two additional homes on the same street for just over $7 million each. In documents filed with the California secretary of state in 2016, YT was listed as the CEO of Ocean View Drive, Inc. (News of Ocean View Drive, Inc. and the first mansion were first reported by Jalopnik in November.)....


"Faraday Future issues bombastic statement accusing former CFO of ‘malfeasance and dereliction of duty’"
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