FF91 image via Faraday Future
Written by David Castellon
In recent days, Faraday Future has made national news for its apparent financial troubles and the announcement that its plans to build a $1 billion electric car manufacturing plant in Nevada were put on hold.
So it was no small surprise that late last week word spread that the startup company — which some news reports described as “troubled” and “cash strapped” — had leased a former tire factory in a rural stretch of south Hanford with plans to start making cars there.
Stefan Krause, Faraday Future’s chief financial and operating officer, acknowledged that the Gardena-based company’s sole investor, Jia Yueting, is in the midst of financial problems, and that’s a big part of the reason behind the abrupt decision to scrap plans for a factory in North Las Vegas — at least for now.
Officials said the site they purchased there is 940 acres, and plans were to eventually build up to 3 million square feet of manufacturing space, three times the size of the plant the company is leasing in Hanford.
“In Las Vegas, we had originally planned [to build] a small plant and then expand to a big plant, but we didn’t want to wait for the construction time. And this is much cheaper for us to get going,” Krause said Saturday while he and hundreds of his employees and their families were in Hanford cleaning out and painting portions of the plant there.
“We wanted to really move faster because of his money situation,” Krause said of Yueting, founder and CEO of LeEco, dubbed the “Netflix of China.”
Last year, Yueting reportedly wrote a letter to employees stating that the company had grown too fast and was strapped for cash after investing in several new ventures, The South China Morning Post reported.
“At one point, LeEco even launched a smart bicycle that came complete with GPS, smart lock and laser beams,” but much of the attention on the company stemmed from its investment in the development of Faraday Future’s electric car, seen as a direct challenge to Elon Musk’s Tesla Motors, according to the online news report.
Though he referred to Yueting as the “owner” of Faraday Future, Krause said, “He has agreed for us to find other investors who will come with him into the company, and when you go to other investors, they want to make sure that you invest their money wisely.
“That’s why we looked at all of our alternatives, and chose to move faster to production, which is what investors care (about).”
Krause added that “The discussions we’ve had with investors is we need to be the second after Tesla out with an electric car. So we wanted to shorten our time to market,” which might not be possible because of the time it would take to build a factory from the ground up.
“We wanted to avoid the delays Tesla’s Model 3 has had,” he said, adding that “There is risk in building that you may not make your timeline.”
Dan Zhu, a Faraday spokesperson, added that company officials also wanted to fulfill the promise company officials made at this year’s Consumer Electronics Show in Las Vegas that they would have an electric car on the market in 2018.
That’s why the company went looking for a turnkey-ready option, which turned out to be the former Pirelli tire plant in Hanford, officials said.
And bringing in the manufacturing factory equipment – including painting booths manufactured in Germany – will not begin until the start of next year and could take months, officials said.
Add to that the air permits to use the paint booth could take three to six months to obtain, so Faraday plans to seek help from Hanford and state officials to ensure no delays in that process, Krause said.
As for the site of the originally-planned factory, into which Faraday already has invested $120-$160 million, Zhu said there are no plans to abandon it, despite reports to the contrary.
“North Las Vegas will be the long-term plan,” she said, explaining that the company still owns the land and could build a plant there in the future if sales of its electric cars pick up as hoped, and more plants in other parts of the country could come after that.
Krause added that “Because our owner is Chinese, we have good access to the China market,” and a future plant is likely to be built there if the brand takes off.