In February of this year, what seemed like it would never happen, finally happened. The first unit of the Faraday Future FF91 rolled off the assembly line. This is not a unit for sale, but one of the first to be used For tests. Since 2017, when this electric car was presented, five years of contradictory news have passed about a company that obviously has many financial problems. After what seems like good news comes another that clouds the future: of the 14,000 reservations declared by the company, only 401 are really truethe rest, as the company had already recognized, were false.
The promising future of the electric car means that new manufacturers are constantly emerging with products that are still very precariously developed, seeking investors to make a project a reality that may be real or just smoke. Among them, Faraday Future is one of the most controversial. The company began to have financial difficulties as a result of a dispute with one of its main sources of financing, Evergrande Health. That forced the Californian startup founded by the controversial Chinese billionaire Jia Yueting to stop production plans for the FF91, its first electric car. Ongoing problems with funding led to his resignation until the startup filed for bankruptcy in October 2019.
After being rescued for the first time, Carston Breitfeld, a German engineer, former BMW executive, took charge of her. His intention was that his Hanford factory in California would produce, from September 2020, 10,000 units of the FF91 each year. His IPO in July 2021 allowed him to raise a million dollars with which to finally launch the FF91.
In this scenario, some analysts accused him of have falsified the numbers of their orders to get investors to pay more attention to him. Faraday Future finally recognized his deception by admitting that only a few hundred reservations became effective, while the restuntil 14,000 they were just hints of interest, not consolidated into real capital.
For the purposes of their investors, those 14,000 clients had each left a deposit of $1,500 by the Futurist version of the FF91 or $5,000 for the Futurist Alliance Edition version. Some advances, which although fully repayable, were used to encourage investors to trust the company. The reality was not that they were reimbursable, but that they did not really exist.
In the financial results for the first quarter of 2022 announced by the company highlights a particular figure, and it is not exactly very flattering. In fact, only 401 of those reservations were real. Only a small number of prospective customers had shelled out cold, hard cash for the FF91.
Obviously, after five years, this amount is totally ridiculous, considering that these are not firm orders. This amount explains the enormous problems that this company has been having during these five years. For comparison, Lucid Motors has roughly 30,000 reservations for the Lucid Air, while Rivian has around 90,000 pre-orders for the R1S and R1T.
It’s been five years since Faraday Future introduced the FF 91, and production has yet to start except for test prototypes. Still, the company’s first quarter 2022 report keep the schedule of the previous start of production that set the third quarter of 2022 as deadline. Whether that will happen remains to be seen.
In addition, In February, Faraday announced that it had signed a contract with the South Korean company Myoung Shin for the manufacture of its second electric vehicle, the FF 81. The start of production is planned for 2024. The CEO of Faraday Future noted that the company obtained a distributor’s license from the state of California in the first quarter of 2022, which will allow it to sell its product online nationwide.
Faraday Future Financial Results
Looking at the financial results for the first quarter of 2022, Faraday Future reports an operating loss of approximately $149 million, compared to the $19 million it lost in the first quarter of 2021. The company explains that it is due to engineering, design and testing services for the FF91, which has resulted in a significant increase in headcount and employee-related expenses. As a result, net loss for the first quarter of 2022 also increased to approximately $153 million from $76 million in the first quarter of 2021)
Faraday Future’s total assets as of March 31, 2022 were approximately $706 million, including $276 million in cash. In turn, the liability is 271 million dollars.