Faraday Future Co-Founder Quits, Calls EV Startup 'Insolvent'
Faraday Future shut down its headquarters and a factory in California, placing all workers involved on unpaid leave, indefinitely.
Electric vehicle startup Faraday Future officially shut down operations in California, both at its headquarters in Gardena, and at its factory in Hanford, following a series of unfavorable business developments, The Verge reports.
The company filed a lawsuit against EVelozcity in January, alleging the electric car company, founded by former Faraday Future executives, stole trade secrets. Both February and June saw Faraday secure crucial investment funding, which has kept the company afloat and seemingly on track to manufacture its FF 91 electric SUV by year’s end. After a debilitating battle against its main investor, Chinese real estate company Evergrande Group, however, Faraday Future is reportedly almost out of money.
Shutdowns of both the California headquarters and factory are leading workers to an indefinite period of unpaid leave, or “furlough,” as CEO Jia Yueting explained. Until new funding is secured, operations at these two vital locations have ceased, with no sense of job security for any of its employees.
Faraday’s estimated $10 million monthly payroll previously resulted in layoffs and salary reductions. On top of which, one of Faraday Future’s three co-founders, Nick Sampson, resigned Tuesday. Last week, Faraday lost its senior vice president of technology and product development, Peter Savagian.
“The company is effectively insolvent in both its financial and personnel assets, it will at best will [sic] limp along for the foreseeable future,” said Sampson. “I feel that my role in Faraday Future is no long [sic] a path that I can follow, so I will leave the company, effective immediately. I cannot continue knowing the devestating [sic] impact we are having on the lives of our employees, their families and loved ones as we as the [sic] ripple effect this will have on lives throughout our suppliers and the industry as a whole.”
Sampson did add, however, that a potential upswing in financial backing would change his outlook regarding a return. “If circumstances should materially change, I certainly would consider returning to the company,” he said.
As the only remaining founder and current CEO of the company, Jia has ordered all employees who began working after May 1 that they “must take a furlough.” Full-time employees who started sooner than said date can choose to remain employed at a reduced salary of $50,000 per year, with hourly workers who’ve been at Faraday for over six months having the option to stay on at minimum wage. This furlough, according to Jia, will most likely not end before year’s end.
“We are grateful to all of the hundreds of employees who are willing to stay with the minimum wage and continue to work on the FF 91 core project,” he said. “This was an extremely tough decision to make, and we recognize the emotional stress and financial strain this puts on people’s personal lives.”
Though it was Season Smart Limited who invested $2 billion in Faraday earlier this year, the investment group sold its stake to Evergrande Group shortly thereafter. Faraday spent $800 million of that funding by July and was denied an advance on the remaining $1.2 billion after taking the case to arbitration in China.
Ultimately, the situation is littered with complex legal issues and complete uncertainty regarding the financial backing to continue stable production. With all co-founders but one resigning, layoffs and factory shutdowns, Faraday Future will have to move logically and wisely in order to survive this maelstrom of difficulty.