Faraday Future Cuts Salaries, Lays Off Workers in Attempt To Stay Afloat

OCT 22 2018 BY DOMENICK YONEY 48

The Future might not happen

Faraday Future is again in a funk. The electric vehicle company has seen its fortunes rise and fall like an elevator in the Empire State Building. Last December it had run out of cash, but then raised $1 billion. It announced in June it had found an additional $2 billion investment from the Evergrande Health Industry Group Limited (Evergrande Health), but earlier this month revealed a problem securing some of those funds. Now comes word from The Verge of layoffs and salary cuts as it struggles to stay afloat.

According to the website, the measures are a direct result of that latest funding snag and were announced to employees last night in an email. The missive states that company CEO Jia Yueting will effectively eliminate his salary, reducing it to a single symbolic dollar. Hourly workers, meanwhile, will see their pay hacked back 20 percent. For executives, it may be even worse, with some supposedly accepting an even larger, though unspecified, cut.

In exchange for a 45-percent share in the company, Evergrande Health had promised $2 billion, and indeed had already fronted $800 million of that amount. Unfortunately, the cash has already been used up and the Hong Kong exchange-listed outfit has balked over sending the next $500-million tranche.

The aforementioned email explains the company is now “pursuing funding opportunities with those who share our vision,” after putting the blame for the current cash crisis at the feet of Evergrande Health, saying, “Faraday Future is facing issues with its current funding because of Evergrande’s failure to live up to its end of the bargain and make the payments it agreed to.”

While we here at InsideEVs don’t see ourselves as highly-knowledgable business people, we have to believe it’s going to be very difficult to find a Future funding partner after the latest fiasco. Still, CEO Jia Yueting hasn’t thrown in the towel, so while there’s still life, there’s hope. We guess.

Source: The Verge

Categories: Faraday Future

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48 Comments on "Faraday Future Cuts Salaries, Lays Off Workers in Attempt To Stay Afloat"

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wavelet

It was always clear they were much too large an operation (>1K people in California), so this isn’t exactly surprising.
I’m curious: What is the photo above? AFAIK, FF doesn’t have any plants at this point, and it looks like an automotive assembly plant, not an R&D facility.

robus

Didn’t they take over some old tire factory in the middle of nowhere?

Bunny

The old tire plant in Hanford, that building was like 60 years old. Curious how far they have gotten on the renovations and transformation.

antrik

They took over an existing building and started constructing a production line earlier this year. Presumably this is a photo showing progress on that effort…

Pushmi-Pullyu

Since the photo has no caption, my guess was that it’s just a stock photo that has nothing to do with Faraday Future.

But I was wrong. A Google photo search points to a Motor Trend article: “Faraday Future Completes First Body-in-White for FF 91”

https://www.motortrend.com/news/faraday-future-completes-first-body-white-ff-91/

However, this isn’t proof that FF actually has an operational assembly line somewhere. That body-in-white may have been made for FF by some other company.

antrik

Maybe it’s just imagination — but I feel the body piece shown in the picture is kinda recognisable as a part of the FF91…

Will

Just stop reporting thier failed business practices or them entirely

antrik

Just stop reading articles you are not interested in.

Will

It’s not into them it’s that they are horrible business with insight of surviving. Just let it die already

Empire State

It’s still a newsworthy event. The auto business is fairly well insulated from new entrants, and it’s useful to reinforce that understanding with current evidence.

Shaun

Wait, they burned through 800 million in a few months, even with no vehicles in production?

DAVID

Paying outstanding debts,

Will

No you don’t pay your debts. Bad money management. Didn’t build up your assets and produce the commodity

antrik

Building a production line from scratch is expensive, when someone has crazy big ambitions as they do…

Pushmi-Pullyu

It’s pretty common for investment scams to spend most of their money on inflated salaries and lavish perks for executives with little or nothing to do. After all, the objective of an investment scam isn’t to actually produce anything of value; it’s just to get investors to keep feeding money to the scammers. From the scammers’ viewpoint, any money actually spend on R&D is wasted, so they try to limit that to nothing more than window dressing for the scam.

We have not seen evidence which actually proves FF is an investment scam. But from the outside, it certainly looks like one!

I must say, I’m constantly surprised that FF is still around. I would have expected it to have failed years ago. It’s astounding to me that they can find deep pockets investors willing to keep throwing money at this repeatedly failed startup. If it’s not actually a scam, then it’s one of the worst managed startups of all times! Their business plan was shockingly clueless and impractical from the start.

P.T. Barnum was right!

William

YT Jia was Not so right!

My far away future plans, on getting my hands on a “technology-packed super-luxe FF91 sedan”(LA Times), that was planned to start selling for only $180,000 next year, are now seemingly on perma hold.

Like many Faraday Future Fans, my Grey Poupon and I, will now have to settle for some intolerably lesser brand of EV.🤡

https://cheezburger.com/1526798592

antrik

The founders being delusional doesn’t make it a scam… Just a poor investment.

wavelet

That was one of the major red flags, following others: Spending tons of money on a concept racecar they had no intent of producing (FFZERO) then lots of PR long before there was any prototype to show,including all-sizzle-no-steak ” and spending a lot on expensive showy stuff, like any long con). They’ve been spending $5.5M/month on salaries for long over a year, long before having any prototype which is crazy money for a startup.

antrik

I don’t think using a race car as a test mule for developing the technology is necessarily a bad idea… And having a large developer team is not necessarily a bad idea either. IMHO the biggest problem is that they were planning for unrealistic sales numbers.

robus

Why the frack was “JT” taking a salary in the first place? He’s the money man!

antrik

I think you mean YT?…

He *used* to be the “money man”. Then he got in financial trouble, and his venture along with him…

Lee Ramer

Not surprised in the least.

Jim Whitehead

What was Faraday Future’s “value proposition?” It never offered us anything unique, except styling. It seemed to be just another “me-too” EV startup. They should have picked a new market segment, like buses or electric boats or motorcycles. Startups in all these segments are doing fine for now, for example, Zero Motorcycles.

antrik

Well, their vehicle is significantly larger than any other EV on the market; so in a way, they do have their own niche… A very narrow one, though. Likely not nearly sufficient to support their ambitious production goals.

(I wouldn’t call them “just another me-too EV startup”… I’d call them the *prototypical* me-too EV startup! 😉 )

Windbourne

Its odd.
Musk got fully funded for several years worth of development and little to no profits. I recall everybody ripping on him.
Now, he is doing fine and yet, so many ppl are missing the fact that companies like faraday are a joke.

arne-nl

I believe that in the same phase (before the launch of the first model) Tesla was running the show on millions instead of billions.

Robb Stark

Musk got Model S to Job1 with $350M.

james

A BIG difference is Tesla didn’t start building GF 1 with their startup money. They started with the existing building to start production. FF while cool, they started the big spending first and not production of something they could sell first. I’m sure the departing executives are well paid first and are so sad it didn’t work out as they get their next jobs.

Rolando

It was already reported some weeks ago that ‘Evergrande Health’ is not paying the next trance of $500M due only next year April, already now in Sep/Oct 2018.

So FF has burned through the first billion US$ funding of Jia Yueting some years back, then the next $1B funding from end of 2017, then the first tranche of ‘Evergrande Health’ of $800M which should have lasted until Q1-2019 — and is now cash strapped for the third time without having produced anything beside 1 or 2 prototype vehicles.

Pushmi-Pullyu

FF has also “produced” a lot of wildly over-the-top press releases… PRs full of claims which make it painfully clear they are utterly clueless about the automotive industry!

Mister G

All the Tesla haters wish Tesla became FF LOL not gonna happen

antrik

They have produced at least half a dozen prototype vehicles! Haven’t you seen the group photos? 😉

james

Absolutely, ask Tesla about the fun of the first 50 Model 3 and the jump in cost to produce the next 50,000. FF was oddly spending so much up front without actually getting ready to produce.

Roy LeMeur

Perhaps we need to bring back the moniker “Faraway Future” for these folks. It’s getting further and further away.

Tom

‘drunken sailor’ immediately popped in my head to describe this fiasco.

Vexar

Short FF (if that were their stock ticker).

Rav4 or 5

Faraway Future reminds me of Coda, Better Place, Fisker and other EV disasters. Billions of dollars pissed away by charismatic leaders lacking engineering and operational competence.

wavelet

Better Place was badly managed at the strategic level (they tried to do too many things too early and in too many places, instead of getting a decent pilot going in one country first), but was not a scam. FF clearly was.

james

Fisker at least was slowly producing, then they got hit by the hurricane wiping out uninsured cars on a dock.

Rav4 or 5

Weather I’m moving $5K in cargo or $25M (my personal business record in 2002 dollars) it is fully insured during transit and storage…buffoons.

Chris Hansen

Somebody CPR Faraday Future!
https://www.youtube.com/watch?v=tD2qTmDsiHk

Kosh

Caption on that picture should read:

“Thee wild robots fight over the carcass of an automobile”

leafowner

Reminds me of what is going on at Sears at this time….

john Doe

I find it a bit strange that a normal car company that has not started on the road to EVs just don’t buy this company.
Then they could transfer technology to their own brand, and run this brand as well.

antrik

If the rumours regarding earlier funding failures are true, YT probably won’t agree to any deal that would make him lose full control of the company…

leafowner

RIP – FF – it was nice to know you.

ffbj

Well, no post on FF would be complete without their trademarked “Bobcats in the Desetr” photo:
https://insideevs.com/faraday-future-pulls-north-las-vegas-factory-plans/