Financially struggling battery-electric automaker Faraday Future will cancel plans to build a $1 billion assembly complex in the Nevada desert near Las Vegas, raising further questions about the start-up’s long-term future — and costing about 4,500 planned U.S. jobs.
Construction work at the plant has been on hold since last November and the company has been hit by legal claims from vendors who say they have not been paid. The latest setback comes days after a court in Shanghai reportedly froze some of the assets of Jia Yueting. The tech billionaire has been a key backer of both Faraday and another EV start-up, LeEco.
But Faraday officials insist their company will move forward on plans to produce a long-range, high-performance electric vehicle, the FF91, which was unveiled at a splashy news conference in Las Vegas during the Consumer Electronics Show last January.
Faraday announced plans to build the Nevada plant in late 2015 and broke ground early last year, but the ambitious project quickly ran into trouble. After rumors began to surface last autumn the company confirmed in November that work on the plant was on hold, dubbing the move a “temporary adjustment.”
With $120 million already invested in the sprawling facility, it insisted it would move forward, but doubts have been growing in recent months, especially as key backer Jia ran into his own financial difficulties, cutting back funding for both Faraday Future and LeEco.
The decision to scrub the Nevada plant project entirely was announced by Chief Financial Officer Stefan Krause, who said 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.”
Exactly what that announcement means for Faraday is uncertain. It appears the company is looking for an existing plant, rather than building a new facility of its own. Stephanie Brinley, an analyst with IHS Automotive, said she would not be surprised if Faraday now shifted production from the U.S. to China — if it is able to move its plans forward at all.
“I’m not really surprised,” by the news about the Nevada plant, she said, pointing to recent “cash issues” for Faraday. “It doesn’t mean the company won’t ever build cars,” Brinley added, “but they certainly will miss their timeline.”
Not Good News for Nevada
The original goal was to have the first Faraday Future FF91 roll out of the Nevada plant in 2019, a target that industry analysts called aggressive even if everything had come together smoothly.
Nevada officials have not yet responded to the announcement, but it is likely to come as unwelcome news. The state has been making a major push to become a player in high-tech and automotive ventures. It was the first state in the country to enact laws permitting public testing of autonomous vehicles. And it provided major incentives to Tesla to build its Gigafactory battery plant near Reno. Under Gov. Brian Sandoval, Nevada authorized $200 million in financial assistance for Faraday.
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But state officials took shots at Faraday after learning of the production delay last November. “This is a Ponzi scheme,” Nevada State Treasurer Dan Schwartz told Reuters. “You have a new company that has never built a car, building a new plant in the middle of the desert, financed by a mysterious Chinese billionaire. At some point, as with Bernie Madoff, the game ends.”
The plant project has now ended, though Faraday insists that the company itself will move forward. According to various news reports in recent weeks, Faraday has also put development work on the FF91 on hold and might even miss its upcoming payroll. Whether it can come up with funding to replace what it has lost from Jia Yueting could be the critical factor.