Faraday Future Resorts to Layoffs, Salary Cuts to Stay Alive
The startup continues to fight with its main investor.
Electric-car startup Faraday Future is laying off employees and cutting the salaries of other staffers while it continues to fight with its main investor. The moves were originally reported by The Verge and subsequently confirmed by the company in a statement.
The layoffs and salary cuts were announced in an email to employees Sunday night and will go into effect next week, according to The Verge, which reported that it had obtained the email. Both hourly and salaried employees will see their wages cut by 20 percent, the company said in a statement, Engadget reported. Faraday Future CEO Jia Yueting will also decrease his annual salary to $1, while certain other executives have reportedly volunteered to take pay cuts of more than 20 percent. The number of employees being laid off was not disclosed.
This is the second recent piece of bad news for Faraday Future. The company is now fighting with China's Evergrande Healthy Investment Group Limited, which was previously seen as a potential savior when it agreed to a $2 billion investment in exchange for a 45-percent stake in the automaker. But Faraday recently opened arbitration proceedings on Hong Kong after Evergrande withheld an advance payment, claiming the firm was trying to exert too much control. Evergrande claimed Faraday had not met certain targets for the payment.
The Evergrande deal has been viewed in the media as a crucial lifeline for Faraday, which has been short on funding since problems at Jia's LeEco tech company eliminated its main source of cash. Faraday was forced to abandon plans for a factory in Las Vegas, instead repurposing a smaller existing facility in Hanford, California. The financial issues also delayed development of Faraday's FF 91 electric SUV, and led to an executive exodus. Two former Faraday executives subsequently launched a competitor electric-car startup, EVelozcity.
In the months after the Evergrande deal was announced, it appeared that Faraday was turning things around. The first pre-production FF 91 rolled out of Faraday's California factory in August, and financing from Evergrande seemed to have secured the company's future, at least for the time being. But perhaps Faraday hasn't turned things around just yet.