EV start-up Faraday Future (FFIE) inches one step closer to finally launching its flagship EV, the FF 91, after announcing Monday it has reached an agreement to resolve an ongoing dispute with its largest shareholder to fund production.
Faraday Future continues raising money for FF 91 launch
Faraday Future has faced endless delays as it prepares to begin production of its first electric vehicle, the FF 91. It’s been an uphill battle, to say the least.
The LA-based EV start-up has consistently pushed back launch dates as it seeks additional funding to keep the business alive. Faraday Future first claimed it would begin production of the FF 91 in 2018, and we still have yet to see the launch.
Ever since then, it’s been one hurdle after another for Faraday Future. The company has lost a few top executives to other EV start-ups and has been raising funds to keep the business alive for what seems like forever now.
In the company’s Q2 earnings, Faraday Future reported an operating loss of $137 million, up almost 400% from 2021, and $121 million in cash. However, the EV start-up noted it would need to raise $325 million in capital to continue operations with projected cash use of $368 million through the end of this year. It also said it would need additional funds to keep the business running by September.
The struggle has led some of Faraday Future’s top investors to question the company’s motive. Last week, the dispute peaked as FF Top Holding, Faraday Future’s largest shareholder, sued the EV start-up, citing that the company is “suffering from a crisis of leadership at the board level” and calling for several board members to be replaced.
Faraday Future has, nonetheless, kept the dream alive, insisting the FF 91 will begin production by the end of 2022. With Faraday Future resolving the monthslong dispute, the company has up to $100 million in new financing. Will we finally see the FF 91 hit the production line?
Faraday Future settles dispute with new funding, board shake-up
Faraday Future announced it has agreed with FF Top Holding, according to a new 8K filing, to resolve the ongoing dispute, which includes new financing and the removal of two board directors.
As part of the agreement, the following changes will take place to Faraday’s board:
- Brian Krolicki will step down as director.
- Sue Swenson will step down as executive chair.
- Faraday Future’s board has been expanded from nine to ten, with Adam He joining.
In addition, Faraday says it will receive $40 million in near-term funding from convertible notes and another $60 million from Senyun International (a subsidiary of Daguan International).
FF Top Holding will drop the lawsuit as a result. A spokesperson from FF Top stated:
FF Top is glad that a resolution has been reached. We look forward to this opportunity for a new start and brighter future for FFIE, and to all parties performing their obligations under the governance agreement, to achieve the best interests of Faraday Future and all shareholders.
Meanwhile, Dr. Carsten Breitfeld, Faraday Future’s CEO talks of the milestone, claiming:
The resolution of governance and related issues with our largest shareholder is a major accomplishment and an important step forward for Faraday Future and all our stakeholders. We can now focus our effort on building the FF 91. We appreciate all parties’ efforts in reaching this agreement.
With another round of funding, will the FF 91 see the light of day? That’s what Faraday Future claims. Although we have heard this many times before, there’s reason to believe this time may be different.
With FF Top getting its way and removing two board members, the investing group may be more willing to work with the EV start-up. Faraday still says production will begin in the fourth quarter of this year. Should we believe them? I wouldn’t keep my fingers crossed, but the company is in a better position now with a new capital injection. More importantly, it isn’t wasting time and resources defending itself in court against its largest investor.
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