Date
17 January 2017
The FF91 failed to execute an auto parking instruction during a presentation despite claims that it beats all existing electric cars including Tesla in a number of performance metrics. Photo: gatget360
The FF91 failed to execute an auto parking instruction during a presentation despite claims that it beats all existing electric cars including Tesla in a number of performance metrics. Photo: gatget360

Why Faraday Future’s plan to sell electric cars smells fishy

Faraday Future (FF), of which Chinese billionaire Jia Yueting is a key investor, has unveiled its first electric car, saying it will deliver the new vehicle — the FF91 — in 2018.

The firm has opened the book for pre-orders and claims it received orders for 64,000 units within 36 hours of the new model release.

Jia revealed his ambitious US$1 billion investment plan in late 2015 to build an electric car factory in Nevada. He said the plant in the Las Vegas suburb will create 4,500 jobs. The state government has issued a bond to pay for infrastructure at the plant site.

But the Nevada government is hardly excited about the FF91 and the future of Farady Future, and for good reason.

In an e-mailed reply to the Hong Kong Economic Journal, Nevada State Treasurer Dan Schwartz questioned Faraday Future’s ability to deliver without even a factory.

Schwartz listed his doubts, including the fact that FF doesn’t have any revenues; its financial backer, Jia, is out of cash and is seeking a 10 billion yuan “lifeline” from strategic investors; Jia’s listed arm, Leshi Internet Information & Technology Corp. (300104.CN), has halted trading for over a month; many of FF’s senior managers have quit; one of FF’s suppliers is suing the company for unpaid invoices; its construction contractor has stopped work because FF hasn’t paid its bills.

The site of the planned factory in Nevada is “little more than dirt”, and “there’s not much to see at the location”, according to a reporter from PC World, who paid a visit to the area.

A senior official of Faraday Future said at the CES event in Las Vegas that the “second-stage” construction of the factory will start soon.

Last Friday, Dag Reckhorn, head of production for Faraday, told Chinese media that the company may produce the FF91 at a different location rather than in the planned Nevada plant.

Schwartz has once called Faraday Future a “Ponzi Scheme”. Leshi didn’t respond to Schwartz’s comment.

There are other negative signs.

FF already missed a US$75 million collateral payment due in September on the state bond issue.

While Jia claimed the FF91 beats all existing electric cars including Tesla in a number of performance metrics, he had an embarrassing time when he tried to demonstrate an auto parking function.

There are reports that FF has collected US$320 million as down payment for the new car. We have tried to place an order on Faraday Future’s US website and found out we only need to register with e-mail and a US telephone number without any deposit.

Customers are required to provide credit card information only if they choose the “private pre-sale” option. FF has not disclosed how many customers actually chose this option.

This article appeared in the Hong Kong Economic Journal on Jan. 10

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

A reporter at the Hong Kong Economic Journal

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