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Faraday Future saved in nick of time

Faraday Future, the much publicized but troubled American EV project of former LeEco promoter Jia Yueting, has been thrown a lifeline by a fresh investment from one of China's largest real estate companies, Evergrande.

See Wiki articles for an overview:
https://en.wikipedia.org/wiki/Faraday_Future
https://en.wikipedia.org/wiki/Jia_Yueting
https://en.wikipedia.org/wiki/Evergrande_Group

There were reports earlier this year that FF has received some funding from an unknown Hong Kong investor. This benefactor, later revealed to be Season Smart Ltd., has entered into a JV agreement with FF to establish a new company "Smart King Ltd." in the Cayman Islands. Season Smart will provide $2 billion and hold 45% of this JV whereas FF owners will hold 33% by way of contribution through intellectual, technical and physical assets they have already acquired or created. Moreover, these assets will be remain vested in Season Smart as a sort of collateral. Effectively, FF's operations will be directed by Smart King Ltd. Although it was being suspected for a while, now it has been confirmed that it is Evergrande that has invested this amount (through its arm Evergrande Health) by acquiring 100% of Season Smart Ltd. Key personnel and directors are being appointed by Evergrande (link).

Forced to give up its ambitious Nevada project due to problems with suppliers and state authorities, Faraday Future has settled on an old Pirelli site in Hanford, California, for its new plant. Reconstruction has begun recently at this site.

A few months ago, Ruichi Smart Car (Guangzhou) Co., Ltd., owned by an affiliate company Smart Mobility (HK) Holdings Ltd., bid for and acquired a plot of land for $57 million in Nansha District, Guangzhou, to set up a future car plant and R&D center. This generated controversy, as Jia Yueting had been declared a defaulter with his Chinese assets frozen by the courts.
 

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Ff

Two more things have emerged after yesterday's revelation.

Smart King had been set up as far back as November 30, 2017. So, negotiations between FF and Season Smart had begun even before then, likely about a year ago.

Jia Yueting, with his core team, has been given almost unrestricted powers in running the company (Smart King) for the time being. Jia Yueting has received 10 voting rights per share, whereas Season Smart has 1 voting right per share. Also, Jia Yueting needs to appoint 5 out of 7 directors to the Smart King board and Season Smart has appointed two. So, even with a smaller shareholding, Jia Yueting can operate the company his own way; however, this concession is valid only till the end of this year. The precondition is that Jia Yueting and his team should begin mass production by the end of 2018. If this performance criterion is not achieved, these special rights shall lapse and control will revert to Season Smart from 2019.

Analysts suspect that Evergrande is playing the waiting game and is almost certain the FF team cannot start mass production by end-2018 (one only needs to look at Tesla's long history of production start-up debacles as a precedent), so is confident of regaining control by next year. In 2019 and 2020, Evergrande will have to pay out two tranches of $600 million to Smart King, and it is evident that Evergrande would like to see the project proceed and flourish under its guidance as its own money would be on the line.
 

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Re: LeEco LeSEE EV

https://www.reuters.com/article/eve...e-sets-up-headquarters-in-china-idUSL4N1V54L0

Evergrande Health says Faraday Future sets up headquarters in China

HONG KONG, Aug 14 (Reuters) - Evergrande Health Industry Group Ltd, which owns a 45 percent stake in U.S.-based Faraday Future (FF), said the new-energy vehicle startup has set up its operating headquarters in China on Tuesday and it plans to build five R&D and production bases across the country in the next decade.

FF aims to reach a planned annual production capacity of 5 million vehicles after 10 years as it will launch various multi-type vehicle series covering high- to low-end products in the global market to establish internet-based smart travelling, the company said in a statement.

Evergrande Health, a subsidiary of property developer China Evergrande Group, bought 45 percent of FF in June as part of the group’s diversification into high-tech sectors.

The new headquarters, called Evergrande FF Intelligent Automotive (China) Co., Ltd, will be responsible for technology research and development, as well as all of the production, operation and management of FF in China.

Evergrande Health said FF’s first high-end vehicle, FF91, has arrived at its production base in the United States and full-vehicle assembly has officially started.

FF was founded by Chinese entrepreneur Jia Yueting, whose conglomerate LeEco is battling a cash crunch after a period of rapid expansion, in a bid to overtake Tesla. (Reporting by Clare Jim; Editing by David Evans)
 

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Re: LeEco LeSEE EV

What?....
A production target of five million???
I think I'm seeing some parallels emerging between Elon Musk and Jia Yueting. Both seem to reach for quite ambitious numbers, both have had embarrassing trouble with roll outs of new models, both seem to get in trouble with the SECs of their respective countries, and both are dealing with stress-related health issues.
What's unquestionably different however is that Elon has an established record of turning out a well respected product in large numbers. That's going to be a challenge for FF, and the other start-ups, to catch up with.
Anyway, it's hard to keep up with the break neck pace of both automakers, and I see now that internet company LeTV wants to further distance itself from the new Evergrande FF development.
What next?
 

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Re: LeEco LeSEE EV

What?....
A production target of five million???
That is at the level of what Honda or FCA currently produces annually, and here we are talking of new energy vehicles, where R&D itself devours billions even for modest-sized startups (Xiaopeng, WM, etc), leave alone the manufacturing and marketing aspects of the business.

JLR committed about $18 bn recently, and that is only for moving most of their vehicles in the pipeline to new energy platforms over the next five or so years. They are not even talking of any huge increase in capacity (apart from the opening of their Slovakia plant for which ~$1.8 bn has already been sunk, and some upgradation of their Brazil plant, not part of the above spend)

VAG recently approved a $40 bn expenditure plan, part of an $82 bn war chest earmarked for investments in electric vehicle capacity and projects, and this is a manufacturer that already builds 10 million vehicles per year.
 

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Jia Yueting and Evergrande ructions

I didn't quite get the full import of the article (maybe because of translation), but it seems that trouble is already brewing between Jia and his white knight savior Evergrande group, with the former trying to pull off some underhanded tactics to undermine the latter out of a fear of losing control over FF.

I will be happy to be proven wrong.

http://news.bitauto.com/zonghexinwen/20181007/2108467711.html
 

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Faraday Future

Although FF received some breathing space by virtue of an interim award from the Hong Kong International Arbitration Centre, wherein FF could raise some emergency funds from outside financiers to stave off an impending crisis (Jia is spinning this as a "decisive victory" for his side) the award comes with a host of conditions. Evergrande, as largest shareholder, has first rights of refusal on any shares issued in lieu of this new financing. A floor has also been set on the valuation of shares issued or pledged to third-party financiers, and no more than $500 million can be raised for now (which FF's operations are likely eat up within a few weeks!). There have also been pay cuts, arrears, and layoffs. Moreover, going forward, FF cannot escape the oversight/consent of Evergrande in financing matters.

Things will be getting messier as Evergrande is gearing up for more legal battles against the FF core management. Also, Jia has only till the end of Q1/2019 (03-31-19) to demonstrably accomplish certain milestones in production ramp-up (start of trial production, trial batches, tooling calibration, process and spec validation, SOP/line-off, pilot batches, etc.).

https://www.yicaiglobal.com/news/faraday-future-evergrande-both-claim-win-hong-kong-arbitration
 

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Faraday will present three vehicles in the next four years

Faraday Future to List on NASDAQ Through Merger With Property Solutions Acquisition Corp. With Estimated $1 Billion in Proceeds Merger to provide an estimated $1.0 billion of gross proceeds to Faraday Future (“FF”), including $230 million in cash held by PSAC in trust assuming no redemptions and an upsized $775 million fully committed common stock PIPE at $10.00 per share. Transaction is expected to fully fund the production of class defining ultimate-performance luxury electric FF 91 within 12 months of transaction close. This transaction also supports the future development of the company’s unique I.A.I system (Internet, Autonomous Driving, Intelligence). FF has adopted a global hybrid manufacturing strategy consisting of its manufacturing facility in Hanford, California and a contract manufacturing partner in South Korea. FF 91 brings to market class-leading luxury and ultimate performance supported by nearly 900 filed or issued patents globally for its Variable Platform Architecture, Propulsion system, and Advanced Internet, Autonomous Driving and Intelligence (I.A.I.) technology. Estimated post transaction equity value of approximately $3.4 billion; combined company to be named Faraday Future Inc. and will trade under the new ticker symbol “FFIE” with transaction close expected in Q2 2021. PIPE anchor investors include leading institutional shareholders from the U.S. and Europe, a Top 3 Chinese OEM, and a Tier-1 city in China. Noted SPAC Sponsor, Riverside Management Group (RMG), is serving as financial partner and advisor to PSAC. All existing Faraday Future shareholders, including management, are rolling all of their equity. Los Angeles, CA (January 28, 2021) – Faraday Future (“FF”, “the company” or “Faraday Future”), a California-based global shared intelligent mobility ecosystem company and Property Solutions Acquisition Corp. (“PSAC”) (NASDAQ: PSAC), a special purpose acquisition company (“SPAC”), today announced they have entered into a definitive agreement for a business combination. Following the closing, the combined company will be listed on the Nasdaq Stock Market under the ticker symbol “FFIE”. The common stock PIPE includes over 30 leading long-term institutional shareholders from the U.S., Europe, and China. Anchor investors in the PIPE include a Top 3 Chinese OEM and long-only institutional shareholders. Including the $230 million in cash held by PSAC in trust, assuming no redemptions, and an upsized, $775 million fully-committed common stock PIPE at $10.00 per share, the transaction will provide $1.0 billion of gross proceeds to the combined company, providing sufficient funds to support the FF 91 scaled production and delivery. PIPE investors include partners that will help support FF 91's production and the development and delivery of future vehicle models. FF’s strategic partners include one of China's top three OEMs and a key
2 Chinese city, which the company believes will help establish FF’s presence in the Chinese vehicle market, further solidifying FF's unique US-China dual home market advantage. Since its inception, FF has been committed to promoting the transformation of the automotive industry through product and innovations in technology, business models, user ecosystems and governance. With I.A.I as the core driving force, FF has created a smart driving platform and a third Internet living space. The FF 91 will be offered with unique technologies including software, Internet, and artificial intelligence, which sets FF apart from its competitors. This transaction validates FF's vision to create a mobility ecosystem built upon innovations in technology and products. FF’s flagship product offering will be the FF 91, featuring industry leading 1,050 HP, 0-60 mph in less than 2.4 seconds, zero gravity seats with the largest 60-degree reclining angles and a revolutionary user experience designed to create a mobile, connected, and luxurious third Internet living space. FF 91 is targeted to launch within twelve months after closing of the merger. Commenting on today’s significant milestones, Faraday Future’s Global Chief Executive Officer, Dr. Carsten Breitfeld said, “We are excited to enter into this partnership with PSAC. This is an important milestone in our company’s transformation, one that we achieved with strong commitment from our employees, suppliers, and partners in the U.S. and China, as well as the city of Hanford, California. I am excited that this business combination will allow us to launch the class defining FF 91, building upon the founder’s original vision to help our users and shareholders take part in shaping the future of mobility.“ "Faraday Future is a unique and differentiated electric vehicle company with significant growth prospects for the future,” said Property Solutions Co-CEO and Chairman Jordan Vogel. “We believe the excellent management team, led by Dr. Breitfeld, and industry-leading technology will allow Faraday Future to reach its true growth potential." FF has invested over $2 billion dollars since its inception. In addition to the development of its first model FF 91, the product definition of the second model FF 81 has been completed, and the R&D work is progressing. FF has built a strong portfolio for disruptive valuable technologies protected by nearly 900 filed or issued patents globally for its Variable Platform Architecture (“VPA”), Propulsion system, and Advanced I.A.I technology. According to a report by Randolph Square IP (“RSIP”), a patent data analysis firm, FF's patent portfolio far exceeds that of incumbent OEMs. The VPA is a modular skateboard-like platform which can be sized to accommodate various motor and powertrain configurations. This flexible modular design supports range of consumer and commercial vehicles and facilitates rapid development of multiple vehicle programs to reduce cost and time to market. FF’s propulsion system includes industry-leading inverter design, battery pack gravimetric energy density and propulsion system gravimetric power density. I.A.I. technology offers high-performance computing, high-speed Internet connectivity, Over-The-Air updates, an open ecosystem for third party application integration, in addition to several other proprietary innovations that enable the company to build advanced highly personalized experiences for users.“Becoming a public company is an important milestone for Faraday Future and provides further access to capital via the public markets over time,” added Aaron Feldman, Co-Chief Executive Officer of Property
3 Solutions. “We are extremely excited to share this compelling story and have great confidence that Faraday Future can deliver significant value for shareholders in the years ahead." “RMG is pleased to have advised PSAC in this transaction and to be partnering with PSAC and FF in connection with the business combination,” said Bob Mancini, an RMG representative. FF’s B2C passenger vehicle launch pipeline over the next five years includes FF 91 series, FF 81 series, and FF 71 series. FF 91 will define the FF brand DNA. This DNA will carry over to subsequent premium mass market vehicles in the portfolio – the FF 81, and FF 71. With such brand DNA, FF products are expected to be ahead of the competition in their respective segments in terms of their design, driving experience, interior comfort, connectivity, and user experience. FF 81 is expected to launch in 2023, and FF 71 in 2024. In addition to passenger vehicles, FF plans to launch a Smart Last Mile Delivery (“SLMD”) vehicle in 2023 leveraging its proprietary VPA. To implement a capital light business model, FF has adopted a global hybrid manufacturing strategy consisting of its refurbished manufacturing facility in Hanford, California and collaboration with a leading contract manufacturing partner in South Korea. The company is exploring the possibility of additional manufacturing capacity in China through a joint venture. As the world's only tech-luxury intelligent Internet electric vehicle brand, FF expects to sell more than 400,000 units cumulatively over the next five years, and its first flagship model, the FF 91, has received over 14,000 reservations.
https://www.autohome.com.cn/news/202101/1107427.html?pvareaid=3311318
https://genesis-cdn.ff.com/Investors/FF-Press-Release-01-28-21.pdf
 
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