Faraday Future to lease tire factory to take on Tesla
Faraday Future is running on fumes. But it’s still running.
The Gardena, Calif.-based luxury electric car startup raised $14 million in emergency funding and will lease an old factory near Fresno that will enable it to turn out 10,000 cars a year.
The company has dramatically lowered its ambitions. Its goal now is to try to remain solvent enough to start manufacturing and selling the FF 91, a powerful, technology-packed luxurious electric sedan with a base price expected to top $100,000.
As recently as last year, the company had plans to turn out 150,000 cars a year from a massive new $5 billion assembly plant near Las Vegas.
Those plans were dashed when the company’s primary investor, Chinese entrepreneur and LeEco Chief Executive Jia Yueting, ran into severe financial difficulty in his home country, including a government-decreed freeze on assets.
Faraday financing dried up, and the Las Vegas factory never got off the ground.
Last week, a 2-year-old investment firm called Innovatus Capital Partners handed Faraday $13.75 million on a one-year loan but not before laying claims to Faraday’s Gardena headquarters as collateral. The cost of the loan was not made public.
A Deutsche Bank and BMW veteran, Krause is on the hunt for capital to keep Faraday alive. The recently borrowed $14 million is peanuts against the tens to hundreds of millions of dollars Krause must raise.
The Hanford plant covers a million square feet with a section more than 300 yards long once used for tire making, the right shape and length for an auto assembly line.
When Krause came in last March, he saw how much time and money a brand new plant would require, and steered the company in a new direction. The need for speed is urgent, he said. “It’s strategically important to be the second (luxury electric car) after Tesla.
If Faraday’s plans are met, the first production cars will come off the line headed for customers by the end of next year.