There will be repercussions.
Faraday Future, the California-based EV startup, has announced some troubling internal news that could have long-term repercussions. Per Reuters, the automaker confirmed several of its employees made inaccurate statements to investors and a leadership change is now necessary. This potentially illegal ordeal began last November when the company decided to delay filing its quarterly report following allegations of inaccurate disclosures. A short-seller firm called J Capital initially made the claims and specifically called the company "a new EV scam in town."
Faraday Future has since completed that internal review, admitting that several employees misled investors regarding the involvement of company founder Jia Yueting following its SPAC merger with a blank-check firm.
This will result in CEO Carsten Breitfeld and Yueting each getting a 25 percent pay cut from their annual base salaries, which won't matter at all to billionaire Yueting. Both will now report to Susan Swenson, formerly an independent board member and now the executive chairperson, a newly created role. Despite the internal changes, Faraday Future continues to maintain that several allegations made in the short-seller report lack sufficient evidence following the review.
This isn't the first time a startup automaker who went public via the SPAC route has come under scrutiny. Lordstown Motors and Nikola both saw their CEOs step down following separate reports from Hindenburg Research.
There was a time when Faraday Future hoped to become the next Tesla. Its FF 91 aims to be a Tesla Model S and Lucid Air rival but, so far, a production version has yet to debut. It's too early to speculate whether this is the end of the road for Faraday Future, but we can understand investor frustration. EVs are no longer limited to startups as legacy automakers like GM, Ford, and VW are all gearing up for battery-electric futures.
If Faraday Future doesn't produce something competitive soon along with a concrete game plan for bringing it to market and a reasonable timeframe, then it's hard to see how it can survive. Misleading investors in any way is simply bad for business.
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