Faraday Future warns it may not be able to deliver its luxury EV

Electric vehicle startup-gone-SPAC Faraday Future has raised a going concern warning, per regulatory filings. The company said it has substantial doubt as to whether it would be able to continue operating over the next year, adding that it is uncertain when it will dispatch first deliveries of its FF 91 luxury EVs.

This isn’t the first time Faraday Future has delayed deliveries of the FF 91s. In July, the company pushed its start of production and first deliveries to the third and fourth quarter, citing supply chain issues and a lack of money. Now, Faraday says it doesn’t expect deliveries to occur in 2022.

As of November 17, Faraday has 369 preorders, down from 399 refundable, non-binding, paid deposits it had as of June 30, according to the company.

Faraday cited many conditions that will affect the timing of deliveries, including whether suppliers meet their deliverables, the timing and success of certification testing and the implementation and effectiveness of the company’s headcount reductions. Top of the list of concerns is whether Faraday will be able to secure the funds it needs to make it through the year, much less make it to first deliveries.

Last week, Faraday got a potential $350 million lifeline to help it launch its vehicle when it signed a financing deal with Yorkville Advisors Global. The equity line of credit includes an initial commitment of $200 million from the investment firm. In September, Faraday also secured up to $100 million in funding from Hong Kong holding company Senyun International. However, it seems the access to eventual liquidity is not enough to keep Faraday out of hot water in the near term.

Per Monday’s filing, Faraday “projects that it may require additional funds during the remainder of 2022 and will require additional funds beyond 2022 in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even.”

Since Faraday was founded, the company has incurred total losses from operations, negative cash flows from operating activities and has an accumulated deficit of $3.3 billion.

The startup closed out the third quarter with $31.76 million in cash, down from $121 million at the end of last year. Net losses for the quarter total $103.4 million, which is about a third of the losses reported in Q3 2021.

Faraday’s stock is down 6.79% today and over 94% this year.

The company has been battling controversies since going public through a merger with Property Solutions Acquisition Corp. in July 2021. Months after its debut, a short seller report by J Capital alleged that Faraday had made a number of inaccurate statements.

An internal probe followed, prompting the company to restructure its board, cut the pay of two top executives and suspend at least one other. The investigation confirmed that employees made inaccurate statements to investors and that its “corporate culture failed to sufficiently prioritize compliance,” which resulted in the U.S. Securities and Exchange Commission issuing subpoenas to several executives.