Faraday Future is one step closer to the deadpool
Faraday Future might as well pack it up and call it a day. The company has reportedly abandoned plans to build a massive factory in the Nevada desert. This facility was going to cost $1 billion to build and employ 13,000 people. The state of Nevada awarded the company massive tax breaks to get the project done. The Nevada state governor even has a ceremonial shovel for the project hanging in his office. According to The Nevada Independent, he’s going to take down the shovel because the factory is not going to happen.
Instead of building this sprawling factory of the future, the company will now reportedly build a much smaller facility. This is the second factory the company has announced that would not be built.
To bring you up to speed, Faraday Future came out of nowhere several years ago and unveiled a wild concept at CES 2016. When I say wild, I really mean dumb. Because that’s what it was. This year at CES the company unveiled the FF 91, a near-production concept car that was closer to its production plans and claimed it was faster than a Tesla Model S and packed with more gizmos and gadgets. The company also said the car would go into production in 2018.
Between unveiling the two concept vehicles, the company fought lawsuits and losing executives.
“We have decided to put a hold on our factory at the Apex site in North Las Vegas. We remain committed to the Apex site in Las Vegas for long-term vehicle manufacturing,” Stefan Krause, Faraday Future’s chief financial officer told the Independent in a statement. “We at Faraday Future are significantly shifting our business strategy to position the company as the leader in user-ship personal mobility — a vehicle usage model that reimagines the way users access mobility. As a result of this shift in direction, we are in the final stages of confirming a new manufacturing facility that presents a faster path to start-of-production and aligns with future strategic options.”
Faraday Future is reliant on LeEco for financial backing, a Chinese tech giant that can’t stop losing money. The company that was once considered the Netflix of China seemingly expanded too fast away from its core competencies to automobiles, TVs and electric bikes. LeEco tried to raise cash and eventually found a large investment from Sunac, but that apparently wasn’t enough to maintain the growth. CEO Jia Yueting said last month that the cash problem was “far worse than expected.”
Even without LeEco’s financial woes, Faraday Future would have struggled on its own. The company never passed the smell test. There was also something funny about Faraday Future. The company’s executives seemingly spent most of their time on marketing concept vehicles. It was a hype machine that created a legion of rabid fans.
I doubt the company will ever put a vehicle into production. Even in the best of times, building a vehicle from scratch is hard. That’s why Tesla tapped Lotus for half of its first car. Essentially Faraday Future is skipping the minimum viable product phase of startups, and as many founders can attest, that’s the wrong way to do it.