Beleaguered electric car startup Faraday Future will open a plant near Fresno, Calif., shelving plans to build its own Nevada facility from scratch following the withdrawal of its Chinese billionaire backer. But the company still needs $1 billion to put its $160,000 self-driving supercar, the FF 91, on the road.
The company said on Monday it signed a lease on a 1-million square-foot plant in Hanford, Calif., located between Los Angeles and Silicon Valley. Moving into the turnkey facility, owned by tire maker Pirelli, is crucial to helping Faraday meet its goal to begin building the FF 91 by the end of next year.
“Despite significant head winds on the path ahead of us, we are laser-focused on that one key milestone,” Dag Reckhorn, the company’s vice president of global manufacturing, said in a statement. The 1,050-horsepower car, unveiled with fanfare at the Consumer Electronics Show in January, features a radical take on the future of driving: a flashy SUV loaded with screens, cameras, and modems that’s able to park itself and identify occupants using iris recognition.
The plans diverge from Faraday’s original goal: a $1 billion, 3-million square-foot factory in North Las Vegas. But the change in strategy suggests that Faraday, which has attracted unfavorable comparisons to another electric car startup, Tesla Inc., is paring its vision in order to stay afloat amid difficulties raising money and retaining executives. The company said that it still owns the 900-acre site in Nevada and plans to develop it eventually.
“Faraday has admitted its Nevada site was a mistake and secured a facility that will be more cost-effective and allow better speed to market,” said Akshay Anand, executive analyst for Kelley Blue Book. “Given the rapid industry advances in electric vehicles, these are critical aspects for success. Faraday still has an uphill road given that producing a vehicle is a daunting task, and other electric vehicles are dominating the headlines, but at the very least, there is now some potential in a situation that was starting to look bleak.”
The company plans to move into the factory in late November. More than 300 workers from Faraday’s Gardena, Calif., headquarters visited the site on Saturday to help prepare the building and mingle with economic development officials. Faraday plans to ramp up production to 10,000 cars annually and add 1,300 jobs by 2019.
But even without the burden of financing a custom-built factory in Nevada, Faraday faces a significant cash flow crunch. Jia Yueting, chief executive of Chinese online video company LeEco and Faraday’s main investor, resigned from several of his companies after Chinese authorities froze around $180 million in assets due to missed payments, including to Faraday. LeEco, which is run separately from Faraday, cut 70 percent of its U.S. workforce in the spring. As Faraday seeks $1 billion from new investors to develop and build the FF 91, the company put up its headquarters as collateral for a $13.75 million emergency loan from a New York investment firm.
But the new measures might not be enough to keep Faraday on track, said Dave Sullivan, manger of product analysis at Tustin, Calif.-based consulting firm AutoPacific. Though moving into a pre-existing factory is “a far more realistic approach,” launching with a vehicle as expensive as the FF 91 will likely pigeonhole Faraday as a niche automaker like Karma Automotive or Lucid Motors, he said. “A billion dollars for a new plant is OK for a company that already has money coming in, but the market for the FF 91 is so small that I don’t think they’d ever generate the revenue they’ll need to get off the ground.”