EV maker Faraday Future says it procured an additional $225 million in financing
Apr 30, 2019
Embattled electric vehicle (EV) maker Faraday Future has received another lifeline in the wake of a dispute with Chinese real estate giant Evergrande—one of the startup’s major investors.
Faraday announced on Monday that it had received $225 million in bridge financing ahead of the company completing a $1.25 billion capital raise, which it expects to close this year. The latest financing, led by US-based asset management firm Birch Lake Associates, is aimed at helping to bring Faraday’s flagship FF91 SUV to market.
Part of the financing seeks to reassure Faraday’s suppliers after the financial turmoil the company has seen since late last year, and to “obtain their commitments” to make sure the FF91 enters mass production. To secure the financing, Faraday had its intellectual property and technology valued, which the company said are worth $1.25 billion.
The financing comes after Faraday set up a joint venture (JV) with once-popular Chinese gaming company The9 to launch Faraday’s V9 EV in China, a vehicle based on the FF91. Both companies will own 50% of the JV, for which The9 pledged $600 million. Faraday expects the JV to reach an annual production capacity of 300,000 vehicles and begin selling cars by 2020.
Faraday was also said to be in talks with EVAIO Blockchain over a possible $900 million in funding last November. The company has subsequently made no mention of the deal.
Faraday said on Monday it has a “growing fleet” of pre-production vehicles to test features for its FF91. The company has yet to enter mass production five years after its launch, mainly as a result of a series of financial issues that have ended in layoffs, unpaid wages, furloughs, and property selloffs. Faraday had previously planned to begin production of the FF91 at the end of 2018.
The company’s troubles began in 2017 but culminated after a fallout with Evergrande. The Chinese real estate giant backed out of a $2 billion investment deal with Faraday at the end of 2018 following an extended dispute over terms. Faraday had requested an advance on a future payment from Evergrande, a plea the Chinese company refused. Faraday then sought arbitration in Hong Kong.
The companies eventually settled the dispute, with Evergrande taking control over Faraday’s operations in China.
Faraday has since sought alternative investment. The EV maker has had to sell its headquarters in Los Angeles for around $10 million to stay above water. Faraday has also put its 900-acre, $40 million property in Las Vegas up for sale.
In the midst of Faraday’s financial issues, the company also lost a number of its senior executives as a result of the “devastating impact” its troubles were having on company employees and the “ripple effect” on its suppliers and the industry.