$1.18-Billion Lifeline For Faraday Future?

by under News on 14 Nov 2017 02:09:40 PM14 Nov 2017

Report suggests an enormous investment from an unlikely source.

2018 Faraday Future FF91

The electric vehicle industry is amazingly fast-paced, with major players sparring with each other on a regular basis with new technologies and innovations in a consistent game of one-up-manship. And while it’s fun watching Tesla (appear to) lead the way and more established automakers dismissing their ambitious targets, there are others who claim to be even more “disruptive” than the popular Californian automaker. Most notably, Faraday Future.

We will never resist taking potshots at FF, a company that came into the world on the back of ‘Netflix of China’ entrepreneur Jia Yueting and a significant personal investment. At this years’ Consumer Electronics Show in Las Vegas, FF claimed that it would “reset the industry” with its debut model, the FF91 (pronounced ‘nine-one’), a large family saloon/shooting brake aimed squarely at the Tesla Model S portion of the luxury car market.

And after plenty of inconclusive and dubious claims, the launch saw the FF91 fail to park itself in front of the world media, with company VP Nick Sampson later clarifying that the car had malfunctioned due to metal in the building. 

2018 Faraday Future FF91

However, it seems that the widely-covered corporate disarray and financial turmoil could have been of no consequence to the Tata Group, the mammoth Indian conglomerate that’s most notable for its successful and profitable turnaround of British marques Jaguar and Land Rover. According to just one report by a Chinese publication called Gasgoo, Faraday Future may have been thrown a US$900-million (or $1.18-billion) lifeline in the form of a 10% investment stake, which propels FF’s valuation to a dizzying US$9-billion (or $11.8-billion in our money).

We are skeptical of this report and its contents, given that Gasgoo is the only source to be publishing this ‘investment,’ and that nine billion US dollars is one hell of a valuation for a company that doesn’t even have a real car at this point. 

If we were to believe it at face value, such an investment by the Tata Group would be somewhat in line with comments made earlier this year that the company was looking at potential acquisitions to strengthen its portfolio of luxury marques (but it’s worth noting that ‘investment’ and ‘acquisition’ are very different things). It would also match intentions made by Jaguar-Land Rover to further its push towards electric mobility and autonomous driving capability, an area where JLR is only just now making moves towards, most notably with its upcoming Jaguar I-Pace electric SUV.

2018 Faraday Future FF91

However, there are plenty of things working against the beleaguered American start-up as well. Off the bat, the company has suffered from more than a dozen high-level staff departures over the last few months, with CTO Ulrich Kranz (who previously toiled for BMW) and CFO Stefan Krause (who was also employed at BMW and at Deutsche Bank in the past) jumping ship, though FF insists that they were “terminated.”

Making things worse are reports that respected auditors KPMG resigned from their stint as auditors for Faraday future, an unusual move by any reputable firm, signalling that whispers of financial and managerial disarray could be more than just rumours. And if a final nail in Faraday’s coffin had to be pinpointed, we’d suggest it would be the leaked documents that suggested FF had already planned for and considered possibly filing for bankruptcy, though FF themselves have said that the documents suggesting this was a total fabrication by a party outside the company. Sure. 

2018 Faraday Future FF91

Multiple sources have said that while there were companies and well-heeled parties interested in working with Faraday Future, every potential investor that had come to the table had wanted to unseat Jia Yueting from the helm of FF, something that the Chinese entrepreneur refuses to do. This was likely the largest contributing factor to the lack of investment, as the poach of former-CFO Krause from BMW was executed specifically to get more money on board (and Krause is known for delivering on promises). Based on the ‘fabricated’ bankruptcy documents, the company would have only been valued a little over US$200-million, a far cry from the US$9-billion price tag that Tata is claimed to have bought into.

Further devaluing Faraday’s price tag are reports from the Verge, saying that sources revealed valuable patents on the technology developed by the company aren’t actually held by FF themselves, but are instead parked in an separate entity called FF Cayman Global, which reportedly holds all of FF’s intellectual property. Such an arrangement would jeopardise FF’s ability to seek investors, and backs our suspicion that the Tata Group have ploughed in such significant investment into the company. 

While it remains unclear if there is a future for Faraday, you can consider us weary and skeptical of this report for various reasons, if only because FF has shown time and time again that while they are excellent (if albeit repetitive) marketers but terrible executors. Where companies like Volkswagen can roll out new, innovative products by putting new ideas on top of time-tested production practices (something that Tesla is now describing as “hell”), Faraday’s biggest fumble has always been in executing their ambitious dreams, and has only contributed to their present position. If the investment claims are true, we’d like to see how the notoriously-efficient Tata Group reworks the mess that is FF, and how they intend to do so within the tight grasp of its control-freak main investor.

Stay tuned to CarShowroom as we bring you more updates as they come. 

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