Faraday Future Out Of Money?

8 months ago by Steven Loveday 49

Faraday Future's prototype electric car out doing some testing

Faraday Future’s prototype electric car out doing some testing

We recently reported that Faraday Future is broke. News spread that the company is dealing with work stoppage at its Nevada factory. However, shortly thereafter it was reported that the company would see a $600 million joint investment ($300 million of which the company was slated to get immediately). The company’s chief, Jia Yueting assured that everything was moving forward.

Jia Yeuting with his "other" EV paroject - the LeEco LeSEE that failed to drive down the runway at its premier

Jia Yeuting with his “other” EV project – the LeEco LeSEE that failed to drive down the runway at its premier

Nevada’s state treasurer, Dan Schwarz, has a different story. Although billionaire Jia is reportedly one of the world’s richest people on paper, Faraday’s parent company is barely making ends meet. Schwarz explained (via Car News China):

“The projects Jia invested in, including in China, seem very difficult for him personally to realize. If you look at Leshi (LeEco’s listed arm), it has roughly $6 billion in revenue, but it’s netting about $50 million. That profit margin is less than 1 percent … Grocery stores make 2 percent to 3 percent.”

Jia was clearly not happy with Schwarz’ comments. He retorted:

“The Nevada Treasury accusations are unfounded and totally inconsistent with the facts. We suspect defamation, but our channels of communication are always open.”

This is not the first time that reports show that Faraday and parent company have likely bitten off more than they can chew. The company has its hands in a wealth of projects and markets, which is making a focus on any one of them impossible. Jia has admitted publicly to shareholders that the electric car business, and automaking in general, is not cheap. The company’s (two) automotive pursuits are making it seemingly much more difficult to succeed in the other less expensive, and more profitable ventures.

With Schwarz’ claims that “Mr Jia doesn’t have any money. It’s clear that Leshi isn’t making money”, the Chinese media are reporting that Jia must fix this problem of Nevada’s lack of confidence, or the situation will become dire. The only way for Jia and Faraday (Leshi) to counter the issue is to quickly acquire some much-needed capital. The $600 million (possibly only $300 million and we aren’t even positive that it was delivered as promised) is clearly not enough.

Source:Car News China,via Teslarati

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49 responses to "Faraday Future Out Of Money?"

  1. Ahldor says:

    Seems like Faraday Future was only a way to lure american investors to invest money that ends up in other endevours. LeEco seems to be much closer to Jia’s heart than Faraday Future for example.

    1. Four Electrics says:

      So far, all investments have been Chinese.

      There seems to be nothkng to this story, aside from the usual InsideEVs editorialzing.

      1. Ahldor says:

        Well, maybe that’s why he is closing down Faraday Future – he didn’t get the investors he was hoping for. Plus, a team that pops the idea to unveil a totally useless car that had nothing to do with Faraday Future wouldn’t be that interesting to keep..

        1. ¯\_(ツ)_/¯ sven says:

          Who said Jia is closing down Faraday Future? You’re just making stuff up. 🙁

          1. Ahldor says:

            We will just have to wait and see.

            1. SJC says:

              There was “precrime” in the movies,
              his is “prenews”.

            2. jimijonjack says:

              F F is F 0 S….

      2. Pushmi-Pullyu says:

        Four Electrics said:

        “So far, all investments have been Chinese.”

        You mean, Chinese investments are the only ones which have been publicly reported. Since FF isn’t a public company, they aren’t required to disclose the investor list. According to Business Insider.com (source 1 below):

        Business Insider obtained a letter Jia sent to Nevada lawmakers last week that read in part: “While I am personally backing FF, there is also a diverse funding strategy to help us fully realize our mission and vision.”

        The letter does not specify what that funding strategy is, or who Faraday’s other investors are.

        Joe Paluska, an electric-car industry expert, says this level of secrecy is unusual.

        I always find it surprising when people who are defending a company which looks more and more like a scam claim “Well, the guy is paying for it all himself, nobody else is investing.” I saw this repeatedly from people defending Andrea Rossi’s “E-Cat” scam. Do they really think a scammer would make public a list of the people he’s scamming?

        “There seems to be nothkng to this story, aside from the usual InsideEVs editorialzing.”

        Presumably you’re not talking about the editorializing in InsideEV’s first article about FF, which portrayed the company in a very positive and optimistic light (source 2 below). The much more skeptical later coverage has been the staff’s entirely proper reaction to all the red flags which have popped up from FF, which at best is a startup with an absurdly unworkable, amazingly naive business plan… and at worst is an outright scam.

        source 1:
        http://www.businessinsider.com/who-is-backing-faraday-future-2016-3

        source 2:
        http://insideevs.com/faraday-future-build-1-billion-factory-outside-las-vegas/

        (Re the second link: Note especially the upbeat editor’s comment by Jay Cole in the comments section.)

        1. ¯\_(ツ)_/¯ sven says:

          How the heck is this a scam? How is Jia enriching himself or benefiting financially from this alleged scam? Do you have any proof or even a plausible theory of how investor’s money is or will end up in Jia’s pocket or bank account. If you don’t, then you’re just spreading FUD.

          1. Ahldor says:

            I’m thinking that it may not have been a scam from the beginning. That there actually may have been a plan to start a business to develop and sell electric cars.

            But during this trip I guess Jia’s interest for Faraday Future has been cooling, due to it being a money hole and due to an incompetent working force.

          2. ffbj says:

            It’s simply because he just did not fall off the turnip truck.

            1. ¯\_(ツ)_/¯ sven says:

              I disagree. Pu-Pu must fall off the turnip truck every week.

              I didn’t know that they grew turnips in Kansas. I had always assumed Pu-Pu grew wheat, corn, and hay on his Kansas farm. But he sure is adept at shoveling manure. I’ll give him that. 😀

              1. Ahldor says:

                I think Pu-Pu is mostly right.

                1. ¯\_(ツ)_/¯ sven says:

                  Did you fall off the same turnip truck as Pu-Pu?

                  1. Ahldor says:

                    Why are you always so mean?

          3. AlphaEdge says:

            Don’t you know Sven, slander and defamation is par for the course for internet jockeys these days.

            1. Pushmi-Pullyu says:

              I’ll try to bear up under the terrible burden of groundless accusations from a serial FUDster.

              “Judge a man by the reputation of his enemies.” — Arabian Proverb

          4. Pushmi-Pullyu says:

            Do you have any proof or even a plausible theory of how investor’s money is or will end up in Jia’s pocket or bank account.

            Of course I don’t have proof. If I did, then I wouldn’t be merely saying it looks like a scam; I would be saying it is a scam. Duh!

            How does money from an investment scam wind up in the scammer’s bank account? You mean, with your deep interest in financial matters, something so elementary needs to be explained to you? Nah, you’re just playing dumb here.

            “If you don’t, then you’re just spreading FUD.”

            By the literal definition of FUD: Fear, Uncertainty, Doubt: Yes, absolutely I am spreading FUD on what has all the earmarks of a high-tech investor scam. And unlike you, sven, when I do spread FUD, I only do so because I think it’s a public service, and furthermore I’m honest about doing so.

            But by the more usual definition of FUD, that it is a disinformation strategy, then absolutely not. As often is the case, sven, you accuse others of doing what only people like you do: Post things you know perfectly well are not at all true.

            1. ¯\_(ツ)_/¯ sven says:

              So you don’t even have a plausible theory of how investor’s money is or will end up in Jia’s pocket or bank account or how this alleged scam will work to enrich Jia. ¯\_(ツ)_/¯

              1. ¯\_(ツ)_/¯ sven says:

                Oh, and Jia would have to scam the investors out of more money than he personally invested in this scam for it to be benefit him financially.

                1. Pushmi-Pullyu says:

                  🙄

                  Hey sven! Somebody with a kindergarten level understanding of financial matters has hacked your account.

              2. Pushmi-Pullyu says:

                ROTFL!

                Dude, are you four years old? Try again when you have an actual point to make.

                1. ¯\_(ツ)_/¯ sven says:

                  Do you have a point besides the one on your head? So you have no plausible theory, just baseless accusation of a scam. Got it.

                  Pu-Pu, if brains were made of dynamite, you wouldn’t even be able to blow your nose. 🙁

                2. Mikael says:

                  I would also like to hear a plausible theory of how this could be a scam. What is the gain? What would be the motive?

                  If it is supposed to be as simple as you say then it should not be hard to enlighten us.

                  1. Bone says:

                    +1 To me it looks like Jia is loosing lot of money on FF, if they don’t succeed in bringong viable car to market.

                    1. jimijonjack says:

                      Even If they bring a viable Car to market., It still has to be a Buyable Car….

                  2. ¯\_(ツ)_/¯ sven says:

                    The emperor has no clothes. 🙁

                  3. Pushmi-Pullyu says:

                    I really didn’t think anything so obvious needed an explanation.

                    The most obvious way for a high-tech investment scammer to benefit, is to simply take the money and run. This is of course also the most likely way to get caught, and is unlikely to be the case when the backer is independently wealthy, as this one is.

                    Smarter hi-tech investment scammers go for the long term. They enrich themselves by paying themselves a high salary, and benefit from the money supposedly spent on developing the product in the same way that all high level executives benefit from the perks their company gives them.

                    If you want a perfect example, look at Randell Mills and his BlackLight Power scam. That’s been going on for decades now, and several years ago it was reported he had bilked his marks out of over $60 million!

                    And let us please not suggest here that I’m the only one who thinks FF looks like a scam. See here:

                    “This is a Ponzi scheme,” Nevada State Treasurer Dan Schwartz said in an interview Tuesday. “You have a new company that has never built a car, building a new plant in the middle of the desert, financed by a mysterious Chinese billionaire. At some point, as with Bernie Madoff, the game ends.”

                    full article:
                    http://fortune.com/2016/11/15/faraday-future-factory-electric-car/

  2. Yogurt says:

    Unfortunately Jia Yeuting looks to be like a kid in a candy store rather than a responsible billion dollar CEO…
    He has multilpe EV startups, bought Vizio earlier this year for a couple billion, and has multiple other starups business he is trying to branch out into…
    I dont beleive he is a scammer in anyway as you dont employee 1000 plus people at high wages if that was the case…

    1. Peter says:

      ” I dont beleive he is a scammer in anyway as you dont employee 1000 plus people at high wages if that was the case…”

      Have they actually hired 1000 plus people or it just something they claim they have?

      1. Pushmi-Pullyu says:

        Bingo.

    2. AlphaEdge says:

      > I dont beleive he is a scammer in anyway as you dont employee 1000 plus people at high wages if that was the case…

      He’s scamming himself out of his own money. 😉

  3. jimijonjack says:

    A FOOL & HIS MONEY GO SEPARATE WAYS…THEIR ARE MANY RICH FOOLS OUT THERE….

    1. DJ says:

      Speaking of fools, I believe you mean THERE not THEIR 😉

      Here’s to hoping they can get some $. Their “soon to be released” EV looks interesting.

  4. Kdawg says:

    Reminds me of “Bart to the Future” (same episode that predicted a Trump presidency)
    —————
    [The mood in President Lisa’s meeting room isn’t much less hostile. The creditor nations go from wanting to be repaid to calling for Lisa’s head. Just when things couldn’t get worse, Bart walks in.]

    Bart: You guys should relax; you’ll live longer.
    Lisa: Bart, you’re supposed to be at Camp David.
    Bart: [aside to Lisa] You’re meeting with debt collectors and you don’t want my help? Do you know how crazy that is?
    [to the creditors] Guys, the thing is, we totally have the money, and we tried to wire it to you, but you know how banks screw up.
    Frenchman: I do not understand.
    Bart: We tried to call you all day Saturday.
    German: We were there Saturday.
    Bart: Dude, I know. I left a message with some guy named Hans.
    German: Hans?
    Bart: He might have been a temp. Very surly.
    German: We have had a lot of turnover.
    Chinese Man: You pay now! Now! [pounds fist on table]
    Bart: What happened to you, China? You used to be cool.
    Chinese Man: Hey, China is still cool. You pay later. Later! [pounds fist on table]
    Bart: Solid. The rest of you go on home, and look in your mailboxes, cause I totally remember sending checks out.

  5. ffbj says:

    It’s dead Jim!

    1. Nix says:

      What about Spock, in the third movie? They brought him back from death…

      *grin*

      1. ffbj says:

        True, and for FF too have that occur like Miracle Max and the Royalettes said:
        https://www.youtube.com/watch?v=G7Mxtdg752Q

        1. Pushmi-Pullyu says:

          MIRACLE MAX: It just so happens that your friend here is only mostly dead. There’s a big difference between mostly dead and all dead. Mostly dead is slightly alive.

          1. ffbj says:

            ..and it still took a miracle, to bring him back.

  6. Michael Will says:

    is it ripe for tesla yet, nummi style?

    1. Rob Stark says:

      NUMMI was an empty billion dollar auto plant.

      FF site is a patch of land.

      The “work” that has been done is clearing brush,weeds, and some leveling.

      1. SJC says:

        Tesla bought the Toyota factory at a bargain then the government lent them $500M, so they had an advantage.

  7. Nix says:

    It is the norm for startups to go through funding stress. That is the nature of a startup. It would be shocking if FF somehow managed to go all the way to production without any of these kind of events. This is normal. It isn’t always good to watch the sausage being made.

    What is much more of an issue is whether or not FF actually has a viable product they are working on. If they don’t have a viable product, none of this matters. So far they’ve only shown a silly wanna-be race car with aesthetics designed to appeal to the inner 12 year old.

    Every day that goes by with stories like this, instead of a story showing a viable product, is another day that FF devalues their brand name. I don’t think they understand how badly they are managing their brand reputation.

  8. Pushmi-Pullyu says:

    I don’t think it’s normal for a manufacturing startup to claim it’s going to be mass producing highway-capable, street-legal automobiles within two years of its first press release.

    I don’t think it’s normal for an automotive startup to claim it’s going to make cars in the USA to sell in China.

    I don’t think it’s normal for any company to produce an endless stream of over-the-top, ultra-hyped vaporware claims years before they have a product to sell, unless they are looking very hard for investment money.

    I don’t think it’s normal for an auto company to make a mock-up of a ridiculously impractical car, one which obviously doesn’t even have steerable front wheels, and try to use that to promote sales of a practical mass market car.

    I don’t think it’s normal for a company to hire a lot of high profile executives without having anything for them to actually do. (But this is something scammers have done in the past.)

    I don’t think it’s normal for a company to promote a supposed concept rendering of an auto assembly plant which looks like an escapee from a “Tron” sequel (link below).

    I don’t think it’s normal… heck, I don’t think there is anything normal, or substantial, or sensible, about Faraday Future.

    http://insideevs.com/wp-content/uploads/2016/04/ground_breaking-03-01-e1460568712806.png

    1. Mikael says:

      No one is saying that it’s normal or sensible. Nor are they saying that it’s likely that they will succeed in the auto manufacturing business.

      But the step you are taking and throwing around the word scam without any kind of ground to stand on is not worthy of a normally fairly balanced and enlightened poster.

      1. Pushmi-Pullyu says:

        Lots of people want to continue to believe in a scheme or business plan even when they see red flags suggestive of a scam. This psychological tendency is one of the reasons why scammers are so often so successful for so long.

        But I think it’s fair to assume Nevada State Treasurer Dan Schwartz knows more about Faraday Future than I do, and it’s also fair to assume he knows more about financial matters than I do. If Mr. Schwartz says
        “This is a Ponzi scheme,” as reported by Fortune.com, then he’s not merely suggesting it looks like a scam, as I am; he’s stating that it is a scam.

        So, Mikael, why don’t you call or e-mail Mr. Schwartz and tell him just how wrong he is. I’ll try to stay out of the line of fire. 😉

  9. Anon says:

    The FF logo always looked like a dead fish, to me…

    1. Mikael says:

      I saw a fish too (but not dead). It took me a long time until I saw the two F’s in the logo.