Is There a Merger In Faraday Future’s Future?
After FF 91 launch at CES, all eyes turn to the head of Faraday Future's sister company LeEco.
The car that can park itself...didn’t.
It was an embarrassing stumble in Faraday Future's otherwise impressive launch event for its new FF 91 production prototype, an electric car with 1,050 horsepower and a 2.39-second 0-60 mile-per-hour time. The FF 91, outfitted with a 130-kilowatt-hour battery, offers an estimated 378 miles of range, and promises seamless connectivity and driving profiles for every occupant in the cabin. It will learn the owner's driving and music preferences, and can unlock without keys using facial recognition software and cameras embedded in the B-pillar.
And not only can it drive itself, but it can park itself—just not inside the World Market tent in Las Vegas where the crossover was unveiled.
You could sense Faraday Future senior vice president Nick Sampson’s frustration as he explained the driverless valet system's hiccup to reporters.
"If you look up at the roof of this building, there's a lot of steel structure up there that inhibits some of the signals the car needs to self-drive," he said. "The really crucial thing we did outside where we knew it would work perfectly."
It’s quite possible that the volume of metal from the bleachers and tent frame caused the FF 91 to misbehave in front of the gathered crowd of hundreds of people. If that's the case, poor event planning, not over-engineering, was the culprit behind the awkward struggle Jia Yueting, CEO of LeEco and a major investor of FF, endured as he tried to command the car to park itself.
But you can’t help but wonder if the recent departures of several high level executives were also contributing factors. Last month, FF lost its lead Band and Commercial Officer Marco Mattiacci, as well as vice president for product marketing Joerg Sommer. Then, a few days before the close of 2016, Ding Lei, the "global CEO" of FF and LeEco, abruptly resigned. When asked if a new CEO had been identified, Sampson wryly replied, "We didn't have an old CEO, did we?"
He could be referring to the over-reaching hand of Jia Yueting, who reportedly pulled engineers off the FF 91 prototype development late in 2015, causing the car to miss its rumored launch at 2016 CES. Yueting is a major financial backer of Faraday Future, and the two companies are technology and strategic partners. But it's possible that soon they will become even closer.
"I’m expecting a merger really quick in the next couple of months," says Angelos Lakrintis, automotive analyst for Strategy Analytics. The word on the street is that FF is looking for funding and venture capitalists to back them, he says.
One potential way to cut costs would be to merge with its sister company, LeEco. That theoretical move could help the company streamline its engineering processes, achieve economies of scale, and shore up finances that are currently running low. Yueting has reportedly secured $1.4 billion in new financing to complete development of FF's manufacturing facility in Nevada—which was halted in 2016 after phase one, reportedly due to missed payments. LeEco is also in the process of building a vehicle production plant in China for the electric LeSee sedan.
But money alone may not fix FF's problems.
Yueting admitted last year to expanding his businesses too quickly, which included the $2 billion purchase of Vizio and a $250 million real estate acquisition. With so many new endeavors to oversee, he may not have the attention needed to build the complex FF 91 and deliver vehicles in 2018.
However, Sampson says they have achieved a lot in a short time and may be closer to production than what outsiders think.
"We've already done a lot of work, a lot of development," he explained. "Everything we've achieved we've achieved in a faster pace and in a different way than the conventional industry."
FF's story is shrouded in uncertainty, but it's also just the beginning. Its glitchy self-valet feature eventually sorted itself out by the end of the media event, and the car drove off stage to park itself outside. Overall, the audience left impressed with the vehicle's capabilities. Perhaps FF is on the path to success—but much like its ambitious technology, it just needs a second chance.