In the midst of financial trouble, Faraday Future has received a possible lifeline from a Chinese-based internet company.
The electric car startup announced recently that it has signed a joint venture agreement with The9 Limited, a Chinese online video game company, to form a joint venture to make and sell a new luxury electric vehicle in China.
Faraday Future’s new car model will be called the V9, designed and developed by the company.
Under the joint venture agreement, The9 will make capital contributions of up to $600 million to the joint venture, and Faraday Future will make in-kind contributions to the joint venture, including the company’s use rights to a piece of land located in China for electric vehicle manufacturing and an exclusive license to manufacture, market, distribute and sell the V9 model.
In a press release, officials said the expected annual production capacity of the joint venture is 300,000 cars, and the first pre-production car is expected to roll off the production line in 2020.
According to technology news website The Verge, the $600 million will go to the joint venture in three $200 million installments. All of the installments will be tied to milestones: the first is a properly set-up agreement in Hong Kong, the second is Faraday securing land and funding for a factory in China and the last milestone is Faraday providing a concept design of the V9.
In a press release, officials from both Faraday Future and The9 said the companies were pleased to partner up to bring luxury electric vehicles to the Chinese marketplace.
“Leveraging the technology capabilities of FF, we believe our alliance with FF provides us with a great opportunity to pursue the fast-growing market of electric vehicles in China,” said Jun Zhu, CEO of The9.
“We are committed to be part of the future of the growing Chinese EV mobility market,” said YT Jia, founder and CEO of Faraday Future.
Officials said this is only the beginning of a series of strategic actions for Faraday, all designed to support the completion and launch of the FF91, its flagship luxury electric vehicle, in 2019.
With The9’s first installment of capital into the joint venture, its establishment will help Faraday overcome its short-term cash flow difficulties and support its ongoing equity financing efforts, officials said.
Those cash flow difficulties — which resulted in layoffs, salary cuts, furloughs, lawsuits and executive departures at the company — stem from Faraday’s strife with its main investor, Chinese real estate group Evergrande. Both sides had accused the other of failing to live up to the end of their respective bargains and the dispute led to arbitration in Hong Kong courts.
Both sides came to a restructuring agreement in December that allowed Faraday to seek other investors.
In addition to selling its Los Angeles headquarters — which was first reported by The Verge in March — Faraday Future recently announced it is seeking the sale of its 900-acre parcel located in North Las Vegas, Nevada.
Company officials said the sale is the result of the ongoing optimization of business strategies at Faraday Future, including global reorganization, research and development resource integration and a reduction of its non-core assets.
They are asking for $40 million for the parcel.
Faraday purchased the land in 2015 to build a large manufacturing facility, but those plans fell through and the company instead decided to shift the production location of the FF91 to a manufacturing facility in Hanford.
The company’s first FF 91 pre-production car was delivered last August at the Hanford facility.
“Currently, multiple pre-production vehicles are undergoing vigorous testing and validation processes, with the goal of final delivery later this year,” said a press release, adding the company seeks to raise substantial capital in 2019 and bring the FF91 to market as soon as possible.