Faraday Future Returns, Discusses Going Public With Reverse Merger

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Image: Faraday Future

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Faraday Future is hoping to go public through a reverse merger, proving that the finances associated with electric vehicle startups rarely operate within the confines of reality. Founded by Chinese businessman Jia Yueting in April 2014, the company began making waves the following year when it announced a plan to invest over $1 billion a factory in Nevada (its first) and went on a massive hiring spree. With the help of millions in government tax incentives, the plan was to start building some of the world’s most advanced EVs by 2017.

But people were becoming suspicious as early as 2016, when questions were raised about where the money was coming from and how much was left. By year’s end, work on Faraday’s Nevada facility had been suspended indefinitely. Following a lightly-botched presentation of its future product in early 2017, more outlets began to report the company was quickly running out of money as it backed out of several more projects. Months later, an internal power struggle left founder Jia Yueting as the primary decision-maker. Faraday Future spent the next few years scrambling to repay its debts and scrounging for (mostly Chinese) investors that might get it closer to its ultimate goal of building cars.

Yueting has since declared bankruptcy and handed the corporate reins to Carsten Breitfeld, who ran BMW’s i8 program and worked as CEO for Chinese EV startup Byton (which has suspended operations). He seems extremely excited about the prospect. Probably because rival Nikola managed to spin straw into gold using a reverse merger and special-purchase acquisition company (SPAC) earlier this year.

Your author has compared the two firms on numerous occasions, often suggesting Nikola would become the “next Faraday Future” by using slick presentations and marketing materials to woo investors. That’s roughly what happened, too  with the student eventually becoming the master. Aided by VectoIQ Acquisition Corp., Nikola’s valuation reached $13 billion over the summer and it negotiated a partnership with General Motors. Unfortunately, the company is now under investigation by the Securities and Exchange Commission and the Department of Justice over securities fraud allegations.

Apparently, Faraday Future thinks that’s the perfect recipe for its own business model … presumably without the fraud allegations. “We are working on such a [SPAC] deal … and will be able to announce something hopefully quite soon,” Breitfeld explained to Reuters this week.

From Reuters:

Breitfeld declined to say who Faraday is negotiating with or when a deal would close.

A SPAC is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years.

SPACs have emerged as a quick route to the stock market for companies, particularly auto technology startups, and have proven popular with investors seeking to echo Tesla Inc.’s high stock valuation.

Will it work? Hell, probably. Faraday Future seems incapable of dying. Every time you think you’ve seen the last of it, it resurfaces a few months later to make an announcement that it’s still active. Current goals include raising a minimum of $800 million to launch its flagship FF91 and proving to the world it has evolved as a company, now that management has changed.

“Because of the history and sometimes the bad news of the company, not everyone is really trusting us,” Breitfeld said. “They want to see that we’ve become a stable company.”

Doesn’t seem like a lot to ask but how many other electric startups have actually had to do that to cash in? Despite all of its missteps over the last few years, Faraday Future will probably continue on as if nothing happened.

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Image: Faraday Future

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[Images: Faraday Future]

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