Faraday Future co-founder resigns, confirms company is insolvent

Sean O’Kane (The Verge), quoting from co-founder Nick Sampson’s resignation letter:

The company is effectively insolvent in both its financial and personnel assets, it will at best will [sic] limp along for the foreseeable future. I feel that my role in Faraday Future is no long [sic] a path that I can follow, so I will leave the company, effective immediately,” 

Unless a knight in shining armour investor comes along, Faraday Future’s viability as an automotive manufacturer has come to an end. The death knell has stopped sounding, and now its time for the funeral to occur. There may still be an option for the company to transition to a ride-sharing service or rental car company, but I’ll be very shocked if its FF91 concept is ever mass-produced. Ultimately, this isn’t surprising for a company that generated hype from nonsensical buzzwords, that was dependent on a single large investor and ultimately didn’t even own the intellectual property used to develop the FF91.

ff-91-gallery6.jpg

Above: An image of the concept FF91, the most significant piece of vapourware in the automotive industry this century.


Faraday Future stops building Nevada factory

Stefan Krause, Faraday Future's CFO, quoted in an article by the Nevada Independent:

“We have decided to put a hold on our factory at the Apex site in North Las Vegas. We remain committed to the Apex site in Las Vegas for long-term vehicle manufacturing.

We at Faraday Future are significantly shifting our business strategy to position the company as the leader in user-ship personal mobility — a vehicle usage model that reimagines the way users access mobility. As a result of this shift in direction, we are in the final stages of confirming a new manufacturing facility that presents a faster path to start-of-production and aligns with future strategic options.”

Krause's statement is full of vague buzzwords such as 'user-ship personal mobility' with no substance behind them, and the firm's commitment to 'long-term vehicle manufacturing' is a nice euphemism for the minuscule chance that it will ever put a vehicle into mass production. The death knell is sounding for this vapourware peddling company. 

The Verge report on Faraday Future

Andrew J. Hawkins, writing for The Verge:

Before the tour, head of corporate affairs Greg Adams gave a presentation, where he said FF’s first production car would be “a super device that happens to have four wheels.” Adams went on: it was an electric car, but not one you would own, rather one you would subscribe to. It was a self-driving car, but also one you would summon using your smartphone for a ride-sharing trip. And it was a racecar, one that would compete in an upcoming Formula E race under the Dragon Racing team banner.

“The idea of the company is that we want to liberate everything you do when you’re with a device, how you move, how you breathe,” he said. “But in the end we’re all about liberation. Extreme liberation.” He has also said the company is also about “extreme technology.

A focus on everything is a focus on nothing. Adams' talk about one autonomous super device, incorporating 'extreme' technology, that can serve as a ride sharing, point to point vehicle whilst also being able to compete in a Formula E race sound like marketing buzzwords rather than any real concrete plan to create an electric vehicle.

Hawkins continues:

Additional reporting revealed that FF may have difficulty finding additional investors to stabilize its finances. According to former employees, FF is in effect not one, but two companies, with a separate entity based out of the Cayman Islands just for FF’s intellectual property. “If you’re an investor, you’re fucked,” one ex-executive said. “The company doesn’t own the IP.”

But another former executive disputed the notion that the separate company, FF Cayman Global, was bad for investors. “I don’t think IP being located in the Caymans is a bad thing for investors. It’s a bad thing for suppliers,” the executive said. In the event of a bankruptcy, the source said, the suppliers may not be able to file claims against the assets in an offshore entity like FF Cayman Global.

A large proportion of any company's value is made up of the Intellectual Property (IP) that it owns. For Faraday Future (FF), a newly established start-up that aims to differentiate itself through its unique, highly advanced technology and other innovations, its IP is the entirety of its worth.

Not owning the technology that you have purported to develop has serious consequences. Amongst others, a third party or other company (such as FF Cayman Global) with a stake in FF's Intellectual Property could exert undue influence or pressure on the company's R&D direction and the products that it brings to market. In a worst case scenario, FF's IP could be transferred to a competitor that could legitimately demand (and take legal action) that Faraday Future cease business operations out of infringing the competitor's IP. 

To put it bluntly, Faraday Future not owning its IP gives rise to a very large serving of scepticism regarding its viability as a going concern and as a sustainable business entity. Whilst FF deserves the benefit of the doubt on the basis of the talent they have employed, the company at present is as valuable as Monopoly money.