Sunday, 2024 June 16

EV maker Faraday might have a future after all as it raises new capital

Faraday Future (FF), the California-based electric vehicle maker with Chinese origin, is set to secure RMB 2 billion (USD 309 million) in funding from the Zhuhai government in the Guangdong province, online news portal Sina.com reported on Wednesday, citing unnamed sources.

Automaker Geely, which recently announced partnerships in EV manufacturing and autonomous driving with Baidu and Tencent, is planning to invest USD 30 million to USD 40 million in FF’s new round, which is expected to close as early as next week, 36Kr reported on Tuesday. The tech media further said that real estate giant China Evergrande, which holds a 33% stake in FF, could be participating as well.

Bloomberg reported earlier this month that Faraday Future is also considering go public through a merger with Nasdaq-listed blank-check firm Property Solutions Acquisition Corp. When contacted by KrASIA on Wednesday, FF said it did not have any information to disclose to the public for the time being.

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But that’s still not all. In October, the EV maker disclosed that it raised USD 45 million in debt financing from Birch Lake, a Chicago-based merchant bank, to support mass production of its FF 91 model and to continue the development of FF 81. The firm mentioned but did not provide any details about a new round that was “expected in the near term.”

Founded in 2014, FF has been undergoing a turbulent time, marked by shortage of cash and shift in management. Founder Jia Yueting ran out of money with another company and had to default himself in 2017. Mass production of the FF 91, which premiered in January that year, was paused. Jia left as CEO of Faraday in September 2019 and was replaced by former BMW executive Carsten Breitfeld.

“It’s a pity that FF has lagged behind other late-coming brands due to various reasons, but if you take a close-up look into the company, you will find that FF still has its own advantages, especially its attention to the detail with regards to the product,” Zhang Yang, a former manager with Jia Yueting’s LeTV told KrASIA on Wednesday.

Brand hasn’t lost it yet

“Although the Zhuhai government’s investment has not been confirmed, it could be something quite possible since FF has set up a subsidiary in the city at the end of last year,” said Zhang Xiang, an auto analyst with a government-affiliated think tank. For him, Faraday Future, which has been the first Chinese EV company that attended the CES tech show, still has considerable brand value.

“The governments of Hefei and Shanghai have already set precedents by backing EV firms,” he argued. Zhang believes that it makes sense for the Zhuhai government if it invests as the EV stake could be very valuable and appreciate significantly at a time when EV makers such as Tesla and Nio are trading high. And Zhuhai would be able to boost the local new energy vehicle sector, increase its GDP, and employment as well, he added.

With a little help

In early 2020, the local administration in Hefei came to Nio’s rescue with a of RMB 7 billion (USD 1.1 billion) capital injection at a time when the company suffered from its tight liquidity. Nio agreed to build its new China headquarters in the city.

Shanghai supported Tesla when it was setting foot into China, assisting the US firm to build its plant in the city, while state-owned banks with branches there were lending the company RMB 10 billion (USD 1.4 billion) with a generous discount.

A national goal

China’s positive stance towards EV companies may continue with the national government announcing that it aims to lift the percentage of green vehicles as part of the total car sales to 20% by 2025. Sales have gained momentum despite the overall negative effect of the COVID-19 pandemic on the economy.

A total of 1.37 million new energy vehicles, including fully electric vehicles and hybrid vehicles, were sold in China in 2020, an increase of 10.9% year-on-year, compared to a 1.9% decrease of total auto sales in the country, reaching 25.3 million units, according to data released by the China Association of Automobile Manufacturers this month.

Jingli Song
Jingli Song
I believe Chinese innovation at various level needs to be known by the world.
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