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Pre-production work on the FF 91 has stalled in Hanford, though a spokesman is optimistic the plant could be fired up again this summer. Photo contributed by Faraday Future.

published on May 30, 2019 - 1:27 PM
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Months after work to launch the Valley’s first car factory came to a grinding halt, electric vehicle startup Faraday Future (FF) recently announced it had obtained a $225 million bridge loan.

That news came weeks after the would-be electric carmaker landed a separate deal worth up to $600 million with The9, a Chinese maker of mobile game apps.

But even with these deals in place, it doesn’t necessarily mean FF is ready to restart work on its factory in north Hanford, nor does it mean that about 700 employees who were laid off or furloughed starting in October 2018 should expect to return to work right away.

 

China plans

For one thing, the $600 million from The9 isn’t an investment in FF overall, as most of that money will back a joint venture in which the game maker and FF would launch a new manufacturing plant in China where the FF V9 — different from the FF 91, the flagship, all-electric sports utility vehicle the carmaker plans to build in Hanford — would be built and sold exclusively in China.

“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,” FF states on its website.

John Schilling, a spokesperson for the Gardena-based startup, said the V9 is a model FF considered making the flagship car in the U.S., but opted instead for the higher-end FF 91.

Faraday hasn’t released much information about the V9 other than it would be less expensive than the 91, and the only picture released is a partial silhouette image FF CEO YT Jia posted online.

Schilling said Chinese consumers generally favor vans over SUVs, and the V9 will be “a higher-end, SUV- van-type” vehicle.

 

Hanford waits

Only a small amount of the money for that venture would support Faraday’s U.S. operations — mostly on the planning and design side — which largely occurs in one of the company’s two Southern California facilities, not in Hanford, Schilling said.

As for the bridge loan, plans are to earmark $150 million for paying off debts, some going back to even before work began last year to convert the million-square-foot former Pirelli Tire plant in Hanford into an electric car factory. News reports have cited those debts as ranging from unpaid construction work to fees not paid to personnel recruiters to unpaid bills to a company supplying vending machines.

That $150 million would be about $10 million short of meeting the entire debt Faraday has accumulated, according to data provided by Schilling.

 

On the lookout

As such, FF still is seeking additional financing in the form investments rather than loans, said Schilling, adding that he didn’t know how much FF needs or how much equity executives are willing to part with.

“That’s what we’re focused on getting, and then any new investment coming in would go into completing the FF 91,” Schilling said.

While he declined to say where FF is at in acquiring new investors, the company is expressing enough optimism that Schilling said of the Hanford plant, “Our hope is to go back in there and get it up and running this summer, with the hope of the car going to market — going on sale — early next year.

“Production would begin in the fall.”

 

Big valuation

FF posted on its website April 29, “The company has begun engaging with other investors who have expressed interest in the company and expects its current capital-raising programs to be completed early in the third quarter of this year.

“The company, working in conjunction with Houlihan Lokey, its independent valuation advisor, has determined the value of its technology inclusive of its intellectual property at up to $1.25 billion.”

While all this sounds good, any expectations for FF have to be tempered with the fact that its finances have, in the past, ebbed and flowed considerably.

If the company can get one or more major investors onboard, it would be the second bailout for FF in less than two years.

Over that time, FF has lost many key executives, among them its founders, with the exception of Jia, who remains as CEO. But Schilling noted the company has a “deep dugout” of executives and manufacturing experts.

“We’ve lost some key talent, yes, but we still have a lot of good talent that can see this through.”

 

On the ground

As for the local business community in in and around Hanford, which has largely embraced FF’s plans, many are waiting optimistically to see whether the carmaker can regroup, said Jay Salyer, economic development manager for Kings County.

“We feel it’s a viable facility that they have invested a lot in,” Salyer said of the Hanford plant. “We hope they have the wherewithal to finish it and finally get to making cars.”


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