The Faraday Future is cloudy.
Faraday Future has been a really interesting start-up to follow. With a wealthy Chinese backer, Jia Yueting, the company has been full of unbridled ambition since day 1. They appeared to be trying to mirror the success of Tesla but lacked the huge financial backing and investment support that Tesla has due to years of solid execution.
Initial talks of billion dollar plus investment in land and manufacturing facilities were viewed with skepticism. Then things started to actually happen. Announcement of their 1,000th employee on September 19th, 2016. Then they kicked off testing on June 5, 2017 by participating in the Pikes Peak International Hill Climb. Still a lot of skepticism as the plans seemed quite ambitous.
Faraday Future Officially Files for Bankruptcy
Bankruptcy & Restructuring
Faraday Future has officially filed for bankruptcy protection. This Chapter 11 filing is meant to reduce creditor debt while still maintaining operations. Apparently, a large reasoning for this filing is due to the personal debt of founder Jia Yueting. Starting a new EV brand requires billions in investment that likely was highly underestimated.
According to the announcement, Faraday Future still believes they will be able to assume normal business operations and bring a vehicle to production. It is clear that they lack the funding to do so and will likely require an IPO or some other major investment to continue. There is no mention of whether funds are available for refunds for Priority reservation holders. Courts would likely prioritize customer refunds ahead of other creditors.
This has been a tough week for new EV brands with Dyson pulling the plug and Faraday Future filing bankruptcy. This just highlights the huge investment and complexity of building an EV from scratch.
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