While electric vehicle startup Faraday Future (FF) has yet to unveil its first vehicle meant for production, the aspiring automaker has two important things going for it: it’s attracting a lot of top talent and it reportedly secured a lot of funding.
Now FF says that it is about to announce a “meaningful” funding round from “Asian investors” in the coming weeks, which will help pay for the $1 billion factory under construction in North Las Vegas.
The news comes has Bloomberg China released a new report about Nevada’s treasurer, Dan Schwartz, questioning the company’s ability to pay for the factory, which obtained a significant incentive from the state consisting of $215 million in tax credits and abatements, and $120 million worth of publicly financed infrastructure improvements at the industrial park where the factory will be located.
It’s not the first time the treasurer has brought up his concerns with Jia Yueting’s, the Chinese billionaire financing Faraday, ability to generate enough cash from his main company, Leshi Internet Information & Technology Corp, to finance the electric vehicle factory.
Bloomberg now reports:
“The crux of Schwartz’s concern is Jia’s reliance on equity-backed loans, a financing strategy that could leave Nevada taxpayers vulnerable to the whims of China’s volatile stock market. Jia has pledged 87 percent of his holdings in Leshi Internet Information & Technology Corp. — his flagship firm — for cash that he then plowed back into his companies, regulatory filings show. The stock, which was halted in Shenzhen for the first five months of 2016, has dropped 11 percent since it resumed trading on June 3, a move that heightens Schwartz’s fear that a margin call could prevent Jia from funding the plant.
“You can see where this leads,” Schwartz said in a phone interview. “His Internet company is successful, but that doesn’t generate the billions of dollars he’d need. Where’s he going to get the money?’’
Apparently, the company is about to answer the question. It looks like the answer will again be ‘China’.
Jia Yueting reportedly already invested $300 million of his own money in Faraday Future, which has employees around the world, but is primarily based in California.
FF is among a few US-based electric vehicle startups receiving incredible amounts of money in funding from Chinese investors. Atieva received hundreds of millions in funding from investors including Mitsui & Co and Venrock in the past few years to develop its EV platform and its first vehicle, an all-electric luxury sedan. The company is also based in California
There’s also NextEV. The startup is primarily based in China but has significant resources in the US, where it has been hiring top talent. The company has reportedly raised close to 1$ billion to produce electric vehicles in volumes by the end of the decade.