Faraday Future Versus EVelozcity Legal Battle Heats Up
EVelozcity countersues as original lawsuit moves forward.
In January, Faraday Future filed a lawsuit against EVelozcity, alleging the electric-car startup, founded by former Faraday executives, stole trade secrets and poached employees. Now EVelozcity is suing Faraday, claiming a clause in the company's employment contract against soliciting employees to join other firms violates California laws. At the same time, Faraday's original lawsuit is moving forward.
In a complaint filed in California Superior Court in Los Angeles August 8, EVelozcity claims Faraday used a "solicitation of employees" clause in its employee contract" to "actively and effectively trap employees at FF and to frighten other employers from hiring FF employees for fear of retribution from the company." The clause prevents departing Faraday employees from soliciting others to leave the company for 12 months, something EVelozcity claims violates California law.
Faraday, which refers to itself as FF, denied the claims of the lawsuit and accused EVelozcity of mudslinging.
"FF has reviewed the recently filed complaint by EVelozcity in California Superior Court and finds the claims baseless and unsupported by law," the automaker said in a statement. "FF takes its obligations under California law seriously and respects employee mobility. While purporting to challenge a provision in FF’s at-will employment agreement, EVelozcity spends much of the complaint asserting frivolous allegations that have no bearing whatsoever on the actual claims asserted. As such, the complaint is meant solely to harass and discredit FF given its progress towards the delivery of its first production vehicle—the FF 91. FF looks forward to its day in court and is confident it will succeed on the merits."
Faraday made a big initial splash with its FF 91 electric SUV but has struggled to get the vehicle into production. The company was affected by financial troubles at patron Jia Yueting's LeEco tech company and abandoned plans for a Nevada factory. In its lawsuit, EVelozcity alleges that Faraday deceived new hires into believing the company was healthier than it was. Jia has refused to return to his home country of China to settle debts but has taken over as CEO of Faraday and secured additional funding.
Faraday is now making progress on starting production at a California factory, but many executives have left over the past few months, including two who went on to start EVelozcity.
EVelozcity was founded in 2017 by Stefan Krause and Ulrich Kranz, who were previously CFO and CTO of Faraday, respectively. In its original lawsuit, Faraday accused Krause of beginning to set up EVelozcity before he left, although that seems to be based on a Faraday accusation that Krause left a month earlier than originally stated. Faraday also accused both Krause and Kranz of aggressively soliciting Faraday employees to join EVelozcity and encouraging those employees to steal trade secrets.
The same day that EVelozcity filed its lawsuit, a potential roadblock to Faraday's lawsuit was removed. United States District Court Judge Dolly Gee denied a motion by EVelozcity to compel arbitration, meaning the case will continue to proceed toward a trial. Faraday is also pursuing arbitration against 11 former employees in the matter.
Outside of its legal wrangling with Faraday, EVelozcity has kept a low profile. In its complaint against Faraday, the startup said it will develop "lifestyle, city commuter cars, last-mile delivery cars, and ride-share cars" at a price "targeted for $50,000 or less," but has offered few other details. EVelozcity previously said it would launch its first car in 2021.
Updated: After publication, Faraday Future reached out to The Drive with a statement, which is included above.
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