After a string of good news, Faraday Future’s luck may be running low after reports surfaced of several setbacks for the startup electric car manufacturer.
According to reports from The Verge, a technology news website, not only did the company’s first pre-production vehicle catch fire in September, but financing seems to be in jeopardy.
Faraday still maintains its goal to deliver its flagship vehicle, a luxury electric car called the FF 91, to market by the end of 2018, with first deliveries scheduled to begin early next year through the middle of 2019.
However that plan had a hiccup late last month, The Verge reports, when the first pre-production vehicle allegedly caught fire during an event for the company’s employees and their families.
Why the car allegedly caught fire and the extent of the damage is not known and officials for the company are not commenting on the matter.
The Verge also reports that Faraday secured a major investment from the health care division of Chinese real estate group Evergrande at the end of 2017, but now Evergrande is accusing Faraday Future founder and CEO YT Jia of trying to back out of the deal.
Evergrande accused Jia of using “manipulative tactics” to persuade the conglomerate’s board of directors to advance even more money after having spent the initial investment, The Verge reports.
According to Faraday officials, in exchange for a 45 percent stake in the company, Evergrande committed $2 billion in funding toward Faraday’s efforts, including initial payments totaling $800 million through early 2018 and the remaining $1.2 billion over time.
After its initial $800 million investment, Faraday said Evergrande agreed in July to make further payments earlier than originally agreed, including $500 million of the $1.2 billion, in 2018.
“Contrary to what Evergrande has told the press and its shareholders, neither [Faraday Future’s] CEO YT Jia nor anyone else ‘manipulated’ the board of Evergrande in reaching these agreements,” said a press release from the company. “In agreeing to bring a portion of its payments forward to 2018, Evergrande had a full understanding of why the funds were needed, and when they were needed, in order to achieve production and delivery of FF 91 in 2019.”
Faraday officials said contrary to what has been reported, Evergrande failed to make any of the promised additional payments beyond the original $800 million investment, despite the company and its CEO complying with obligations and meeting all required conditions for funding under the July agreement.
Faraday alleges that Evergrande held the payments back to try to gain control and ownership over Faraday Future China and all of the company’s intellectual property and is trying to prevent Faraday from accepting any immediate financing from other sources.
“Accordingly, the only reason ‘[Faraday Future] is trying to get out of the deal with Evergrande,’ is because Evergrande has failed to live up to its end of the bargain and make the payments it agreed to make,” the press release continued. “This is a matter of basic, common-sense fairness – Evergrande shouldn’t be permitted to withhold the funding and simultaneously prevent FF from accepting alternative financing or investments.”
The Verge also reports that some of Faraday Future’s suppliers and vendors have not been paid for weeks.
John Schilling, a spokesman for Faraday Future, said suppliers are a key to the successful delivery of the FF 91 and the company prioritizes its strategic relationships with suppliers.
“They are a critical part of bringing our vision of future mobility to life,” Schilling said in an email Thursday. “We are committed to fulfilling our financial obligations in a timely manner with all vendors, and by the same measure, we will work to protect our business interests and company growth.”
While Faraday Future officials admit the company’s journey has had “twists and turns,” they said they have never given up on their vision and remain focused on delivering a revolutionary vehicle in 2019 by pursuing all funding opportunities.