Things are far worse at Faraday Future than anyone could have imagined.
Faraday Future's financial woes have been widely reported. Yet another founding executive recently resigned from the company, and morale is reportedly so low that employees aren't even showing up for work. The situation is far worse than anyone could have imagined, however. A new detailed report by The Verge paints a picture of a company that's on the brink of bankruptcy based on information gathered from ten former employees and one person close to the company.
Four high-level ex-employees knowledgeable about Faraday's finances claim the company only has enough payroll to keep it running until the end of the year. One of these employees also claims that Faraday Future's chief investor, Jia Yueting, has been meeting with potential new investors and has possibly secured future funding. But even if Faraday Future does secure enough capital to keep it afloat in 2018, The Verge reports that many current employees are planning to leave or have already left. Many aren't even showing up for work, which led to an internal email being sent to staff by Faraday Future's head of go-to market strategy that reinforced the company's work hours.
Other sources claim that Yueting was trying to "shadow manage" Faraday Future, despite referring to himself as "just an investor and strategic partner of FF." His strategy for the EV startup would constantly change. Originally, the goal was to build one car at a small factory and sell 50,000 units a year, which is a relatively reasonable target for a startup company. However, sources say that Yueting insisted that Faraday Future should build four models and sell 150,000 units per year to compete with Tesla. "Once he saw that plan, he was like, 'Well if four models and 150,000 is good, then we ought to be able to go to 5 million cars. What's it going to take to go to 5 million cars?'" one former employee said.
"That's the kind of guy that he was, it was like, 'OK, but let's even think bigger. I need to be at 5 million cars by the end of 2025. In 10 years.'" Instead of retooling an existing factory, the plan was to build a brand new $1 billion plant in Nevada. Hundreds of employees were hired before they even had enough work to do. Yueting would also reassure employees that more money is coming, but has failed to deliver on that promise. "It was always 'Don't worry, the money's coming next month, the money's coming next month, keep going, keep going, keep going," a former employee said. Any money that did come in would be spent immediately, so there was often "no money in the bank."
Of course, we now know where some of this money went following the revelation that YT used the company's money to set up a $75 million trust for his children. "During my time at Faraday, the company lacked an empowered CEO and COO," one of Farday Future's former finance directors told The Verge. "This, combined with a lack of understanding of Western business practices, fact based decision making, and compliance issues exacerbated the problems. The automotive business is highly capital intensive with low margins and without a lack of effective leadership, success in this arena is not possible." There's also the fact that everyone seems to have forgotten about the FF91 EV.
When it debuted at CES earlier this year, it was hailed as the world's fastest EV designed to take on Tesla withthe a 0–60 mph time of 2.4 seconds. But Tesla Roadster has already beaten the FF91's performance achieving the same sprint time in 1.9 seconds. Judging from the report, next year could be make or break for Faraday Future.