Faraday Future FF91 prototype
Like a prizefighter listening to counts of “eight” and “nine,” Chinese electric-car startup Faraday Future, has started groaning, sputtering, and trying to stand.
The company, which sputtered to a start building prototype electric luxury cars last year, then was abruptly knocked out when its new Chinese financial backer withheld funds in a contract dispute, has reached a new agreement with its benefactor, with each side agreeing to retire lawsuits against each other, and Faraday receiving the green light to seek new investment.
The company controls a leased factory in California and has several prototype vehicles, but furloughed most of its staff last year after it ran out of money in a power-control plot that looked cut from the script of a cheesy wrestling show.
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Along with that staff went all five of the company’s founding executives, including Peter Savagian, a member of the original GM EV1 team, and Dag Reckhorn, the former head of Model S manufacturing at Tesla. The only founder left is the company’s original financial backer, Jia Yueting, a collegial fellow known with affection within the company’s ranks, but who sits at the center of many of its controversies.
In November, Faraday received permission from a Hong Kong court to seek up to $500 million in new investment as it worked to settle its differences with its primary backer, Evergrande Health group, a health insurance company in Hong Kong.
Evergrande agreed last June to invest up to $2 billion in Faraday Future, and the company went on a hiring spree and produced several prototypes at its new factory. In October, Evergrande announced it would withhold future payments on the funds after Faraday failed to meet certain contractual milestones.
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Faraday Future accused Evergrande of trying to bankrupt the company to steal its patents.
In the latest settlement, Evergrande and Faraday Future have agreed to drop those lawsuits and stop fighting for now, while Faraday seeks new funding.
What is less clear is where any new funding might come from for a company with a few roughly assembled prototypes and a leased factory, but no experienced executives to run it. Many of the furloughed factory workers may well still wish to come back to Faraday, but many others will have to be replaced by new workers who would have to be trained from scratch.