Faraday Future putting more employees on unpaid leave: report

Faraday Future’s planned
FF91 electric SUV.

Faraday
Future

• The electric vehicle startup Faraday
  Future has put at least 250 employees on furlough,
  The Verge reports.
• The automaker has reportedly decreased its US workforce
  from around 1,000 employees as of October to under
  350.
• Faraday confirmed that it has put additional employees
  on furlough in a statement to Business Insider, but the
  automaker did not disclose the number of employees that were
  affected. 
• The automaker has struggled to build its planned FF91
  electric SUV amid financial concerns.

The electric vehicle startup Faraday Future has put at least 250
employees on furlough,
The Verge reports. The automaker has reportedly decreased its
US workforce from around 1,000 employees as of October to under
350.

Faraday confirmed in a statement to the press that it had put
additional employees on furlough, but the automaker did not
disclose the number of employees who had been affected. The
statement said the automaker had received interest from investors
and hopes to solve its funding problems within three
months.

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Faraday has attributed its financial difficulties to one of its
investors, Evergrande Health, which the automaker claims has
failed to make scheduled payments while preventing Faraday from
seeking outside funding. Evergrande
said in an October filing on the Hong Kong stock exchange
that Faraday had not met the terms necessary to receive the
disputed funding.

Evergrande did not immediately respond to Business Insider’s
request for comment.

According to The Verge, Evergrande had wanted Faraday CEO Jia
Yueting to resign from director positions at other companies
affiliated with Faraday and to give up his controlling stake in
the automaker. Faraday and Evergrande reportedly failed to reach
a resolution over whether the automaker had fulfilled those two
requirements, and Faraday is attempting to cancel its $2 billion
deal with Evergrande.

The automaker says it is awaiting the results of an arbitration
case against Evergrande, though it was allowed in October to seek
a maximum of $500 million in outside funding, according to an
Evergrande
filing.

This latest round of furloughs follows a round of
layoffs and wage cuts first reported by
The Verge in October. Nick Sampson, one of the automaker’s
founders, reportedly resigned in October, saying Faraday Future
is “effectively insolvent” in an email to employees.

Faraday Future was founded in 2014 and has struggled to build its
planned FF91 electric SUV amid financial concerns. The automaker
has faced lawsuits and liens from suppliers who claim they have
not been paid, and the first pre-production version of the FF91
caught fire hours after it was shown to employees and their
families, according to
The Verge.

Yueting, who is also the founder and chairman of the Chinese tech
company LeEco, last year had $182
million in assets frozen by the Chinese
government because of unfulfilled loan payments.

You can read Faraday Future’s full statement below:

FF’s recent financial crisis was brought about by investor
Evergrande Health refusing to make its scheduled payments. The
investor has further breached its contractual obligations to FF
and refused to release its liens over FF’s assets as it was
required to do. This has resulted in making it more difficult
for FF to achieve short-term financing through asset-backed
loans resulting in the current temporary cash flow
difficulties. This action has unequivocally harmed FF employees
worldwide, our suppliers, our partners and all of our
reservation holders.

We are filing the new emergency relief application on the main
arbitral tribunal soon. Since the ruling may be delayed by two
to three months, FF will continue to experience a negative
impact on our already very tight cash flow, therefore we
unfortunately must take further cost-reduction measures to deal
with the current financial situation which includes putting
additional employees on furlough beginning this week. We are
grateful to all of the one thousand global employees,
especially hundreds of employees in the US who are willing to
stay and continue to work on the FF 91 production and delivery
as well as those who will be on a temporary furlough.

This was an extremely tough decision to make, and we recognize
the emotional stress and financial strain this puts on people’s
personal lives. In addition, we take our relationships with our
suppliers seriously, and we hope to receive support and
understanding from our global partners as FF overcomes our
difficulties.

The FF executive team is receiving interest from investors from
around the world who see strong value in FF’s seasoned tech and
automotive management. We will continue to push forward on the
delivery of the hyper-performance FF 91 luxury vehicle and
secure our medium- and long-term strategies. We hope to solve
the funding issue in 2-3 months.