Saving the future: Chinese billionaire invests in Tesla competitorBusiness
Faraday Future plans to displace Tesla in the premium market segment. The startup will change owners and receive $1.2 billion in investment in 2019-2020
One year after the financial crisis of American premium electric car maker Faraday Future, the project has received another savior and a new major shareholder. Hong Kong-based investment holding company Evergrande Health Industry Group will buy a 45% stake in Faraday Future owned by Season Smart Limited for $860 million.
The Season Smart Limited partnership was formed last year. To help the electric car maker start production, it bought a 45% stake for $2 billion, but after investing $800 million, the financing was terminated due to the company’s problems. Over the next two years, Faraday Future will receive another $1.2 billion from investment holding company Evergrande Health Industry Group: two $600 million tranches of investment in 2019 and 2020. Time will tell if Faraday Future can become a true competitor to Tesla thanks to its new major shareholder and the funding it has raised.
Faraday Future’s new shareholder is a subsidiary of Chinese real estate leader Evergrande Group, owned by billionaire Hu Jiaying. Evergrande Health Industry Group expects to help the automaker overcome financial difficulties. Evergrande Health Industry Group said so in documents filed with the Hong Kong Stock Exchange on June 25. Faraday Future’s original investors will retain 33% of the shares. The remaining 22% of the shares will be distributed to the company’s employees as part of an incentive program. “This is an important milestone in Faraday Future’s history. With this funding, Faraday Future will be able to present the world with its version of a green and smart global mobile ecosystem,” the company stressed. In addition, Faraday Future founder Jia Yueting has been named CEO of the company.
The headquarters of the Los Angeles-based Faraday Future is located on the West Coast of the United States in the building, where the branch of the Japanese automaker Nissan used to be located. Faraday Future executives said the $2 billion financing deal it signed in November got the green light from the U.S. Treasury Department’s Foreign Investment Committee.
After the sensational debut of the company’s flagship FF 91 electric crossover at the 2017 CES International Consumer Electronics Show in Las Vegas, Faraday Future executives had to delay construction of a 279,000-square-foot, $1 billion assembly plant in Nevada (cash shortages and financing issues). But this month, Faraday Future officials announced that electric car assembly will take place at a smaller plant in Hanford, California. By the end of the year, the FF 91 will be produced there.
In January, Faraday Future sued the former CEO and CTOs. It accused them of stealing intellectual property and of poaching at least 20 former Faraday Future employees into an electric car startup they created in December that competes with Faraday Future.
At the same time, company founder Jia Yueting is trying to deal with his own legal problems. His technology conglomerate LeEco is going through a financial crisis. Chinese stock market regulators have even set a date by which Jia Yueting was to return to the country. But according to Hong Kong’s South China Morning Post newspaper, he never came home. Instead, Jia Yueting stayed in the U.S. to concentrate on producing the FF 91 electric car. Recently, the Chinese media reported that Jia Yueting was on a list of people with huge debts and tax problems. He is now banned from flying private jets and riding luxury trains.
If the production launch of the FF 91 goes well, the new electric car will be a true competitor to the Tesla Model X and Jaguar I-Pace crossovers. The launch of the FF 91 on the world market will attract a lot of attention. The creators of the car claim that the electric car can accelerate from 0 to 96 km/h in 2.39 seconds. Cruising range on a single charge will be up to 608 km. The car will be equipped with a driver face recognition system, as well as a set of modern sensors, including lidar (laser scanner) for autonomous driving and parking.
In the high-tech electric car market, Faraday Future has many competitors other than Tesla. These are the Chinese companies Byton and NIO, as well as almost every major European premium car brand: all of these automakers are working to create the next generation of cars. But for a company that seemed to be “hooked on artificial life support” and struggling to recover from the financial crisis just a short while ago, the investment from Evergrande Health Industry Group is seen as a miraculous cure.