April 16, Faraday Future (referred to as “FF”) released a statement on its official Weibo, responding to the recent “early false sales” accusations regarding the FF 91 2.0. FF stated that there is no “early false sales” for the FF 91 2.0, and pointed out that all vehicle deliveries of the FF 91 2.0 are legal. FF emphasizes that the company has established a complete internal control mechanism to ensure that it has received the necessary full payment or down payment before the external announcement, completed the approval of the Lease (lease sales) vehicle, and the registration process of the traffic management bureau. At the same time, FF solemnly declared that there was no any false behavior in the company’s sales activities. FF has always been committed to complying with the law and ethical standards, and encourages employees to report any suspicious behavior, and will never have any retaliatory behavior against well-meaning whistleblowers.
Let’s first review the cause and course of the event: Previously, two FF employees, Jose Guerrero and Victoria Xie, reported that a portion of the few cars delivered by FF so far were forged. Among them, Guerrero, as the director of FF sales and after-sales, submitted an internal report letter to the general legal counsel of FF, claiming that FF lied about the sales of the first four FF91s. In the sales process, three of the four FF91s were announced as delivered before the completion of the sales process, and only one received the full payment 60 days after the delivery was completed, with the aim of raising the company’s stock price by announcing sales. In addition, the two employees mentioned above pointed out that FF founder Jia Yueteng had “weaponized” the company’s human resources department to retaliate against anyone who exposed these untrue sales. For this reason, the two internal whistleblowers filed two new lawsuits in the Los Angeles Superior Court against FF, Jia Yueteng, and the company’s human resources director, Yang Nan, accusing them of illegal dismissal, breach of contract, and mental injury.
In response to this news, on April 10, both Jia Yueteng and FF made responses. Jia Yueteng stated: “A statement regarding the recent lawsuit filed by the fired employee: I believe there are a large number of false statements and slander in the complaint, which is intended to plot revenge and extortion. I will file a counterclaim against these two people!” FF posted on its official Weibo: “FF takes these two lawsuits filed by former employees very seriously. The company believes that we have sufficient reasons based on the facts to respond to the allegations in the complaint. At the same time, the company will take all necessary measures to protect the company’s reputation and all employees from various charges including personal attacks.”
It is worth mentioning that as one of the earliest new forces to enter the field of building electric vehicles, FF has been building cars for about 10 years, but so far it has only delivered 11 vehicles, and one of the owners is Jia Yueteng himself, essentially not much different from “PPT building cars”.
Currently, FF is in a shortage of funds crisis. In late March, FF was also sued for owing USD 91,787.26 (approximately RMB 664,000) in rent for its Los Angeles headquarters. The latest financial report data shows that in the third quarter of 2023, FF had a net loss of USD 7.8 million (approximately RMB 56.9 million), and it consumed an average of approximately USD 875,000 per day. As of the end of September 2023, FF had only about USD 8.5 million in cash on the books, of which USD 1.85 million was restricted cash. Since FF began building cars, it has invested approximately USD 3 billion (approximately RMB 21.9 billion), but only produced 11 vehicles. Certainly, now FF is heavily in debt.
Since the development of the new energy vehicle era to the present, countless new forces have collapsed before this, and this year is defined as a year with more intense market competition. From the current point of view, it is almost impossible for FF to achieve success with the FF 91 model. Firstly, the FF91 has still not achieved large-scale mass production so far. After nearly 10 years of building cars, FF did not achieve revenue until the third quarter of 2023. At that time, the financial report data showed that FF delivered 7 new cars to users in the third quarter and achieved USD 551,000 (approximately RMB 4.02 million) in auto sales revenue for the first time, but it had a net loss of USD 7.8 million in the same period. In addition, to create the FF 91 2.0 Futurist Alliance model, FF has invested approximately USD 3 billion (approximately RMB 21.9 billion) in total, obviously, the revenue of USD 551,000 is “negligible” compared to the huge investment. Secondly, even if the FF91 has been produced, it is difficult to open the market. From the positioning and price of the FF91, the FF91 is positioned as a luxury car, and the high price of up to 2 million yuan is not suitable for the mass consumer market, and it is difficult for consumers to be willing to pay for it.
As of April 15, the latest stock price of FF was closed at USD 0.072, with a decline of 10%, and the market value was only USD 3.0724 million. And its highest stock price at the initial stage of listing reached USD 13.98, and now it has fallen by 99%.
