Faraday Future is in the news once again, and once again it’s for less than ideal reasons. This time FF is in hot water with a Chinese financial backer, Evergrande Health Industry Group, but that’s not its only problem.
So, word around the campfire (and by the campfire, I mean Reuters) is that Faraday Future has entered into arbitration in Hong Kong with Evergrande after the latter missed a $700 million payment that was supposed to occur in July.
Per Reuters, Faraday CEO Jia Yueting now wants to block Evergrande’s decision-making rights as a stakeholder where future funding acquisition is concerned as a result of the missed payment. This payment was part of a complicated financial deal involving Evergrande’s $800 million acquisition of financial services company Season Smart, that owned said stake, in addition to another $1.2 billion in cash payable to FF over the next two years, of which the $700 million was to be a part.
Faraday Future CEO Jia Yueting just filed for arbitration with major Faraday investor Evergrande Health in Hong Kong.
VCG/Getty ImagesAs the story gained speed, Faraday Future dispatched a lengthy statement (which it also shared via Twitter) explaining its take on the situation. “Evergrande held the payments back to try to gain control and ownership over FF China and all of FF’s IP,” the statement said. “At the same time, Evergrande is preventing FF from accepting any immediate financing from other sources.”
Confused yet? You’re not alone. Suffice to say yet another barrier lies between Faraday Future and actually building and selling cars. Reuters mentions that FF wants to be producing upward of 5 million vehicles per year in 10 years, a number that seems increasingly optimistic, particularly when you take into account that the lone FF91 pre-production prototype caught fire last month after a demonstration for employees at its Hanford, Calif. factory.
“We are aware of a recent minor incident in one of our pre-production vehicles while it was undergoing testing at our Hanford manufacturing facility,” said a Faraday Future representative in a statement to Roadshow via email. “No injuries or damage to the facility occurred. The vehicle’s high voltage battery pack was intact and not involved in the incident. This was an unfortunate occurrence but not extraordinary in the business of vehicle development and testing. We are investigating the incident including using third-party investigators to better understand what happened. We will not release any further details until this investigation is completed.”
But it gets worse! A report by The Verge alleges that many of Faraday Future’s suppliers haven’t been paid in weeks. According to the report, FF CEO Jia Yueting has spent the $800 million that the company received at the outset of the Evergrande investment. Emails show FF representatives using stall tactics that are allegedly quite similar to those used in 2017 when the company was on the verge of collapse.
And yet the rabbit hole goes deeper. The Verge’s piece also points out that Faraday’s CEO has a history of financial problems that saw Jia’s assets frozen in China, forcing him to relocate to the US. Even his success in getting Evergrande to invest in the flailing startup came with serious strings attached, including signing over Faraday’s intellectual property rights to Evergrande.
What it all boils down to is this: The future is again looking somewhat dark for Faraday Future despite showing progress earlier this year.