Faraday Future Nixes US Production Facility Amid Growing Skepticism Over Its Financial Strength

Yicai

2017-03-28

(Yicai Global) March 27 -- Faraday Future, the electric vehicle maker owned by Chinese Internet company Leshi Internet Information and Technology Corp. [SHE:300104], has again changed its carmaking plan. Faraday Future is set to halt its plan to build a new manufacturing plant on a former US Navy base on Mare Island in Vallejo, California, US.

Vallejo city officials confirmed the news two days ago, and said Faraday Future will focus on its factory in North Las Vegas after negotiations.

Faraday Future said that same day it remains interested in the 157-acre plot on Mare Island and does not rule out the possibility of renewed negotiations with local authorities. “We are very grateful to the local government for its generosity and professionalism in the project. We hope to have the opportunity to work with the Vallejo city government in the future,” Faraday Future said in its official press release.

LeEco Supercar has become cash-starved since last October, say repeated recent reports. Jia Yueting, chief executive of Leshi, also confirmed in an open letter to its employees that the company faces a financial fix.

Media stated earlier this year that Faraday Future has reduced the size of its North Las Vegas plant from 3 million square feet to 650,000 square feet, with annual production falling from 100,000 to 10,000 units and total investment dropping from USD1 billion to USD120 million.

The company’s carmaking plan seems to be at stake. LeEco Supercar, its Chinese partner, faces similar issues. Leshi kicked off the construction of its vehicle base in the Mogan Shan area of Zhejiang province on Dec. 28. However, media reported that only a guard hut has been built at the USD20 billion base thus far and the rest of the planned site remains a vacant lot.

Ding Lei, co-founder, global vice chairman, China CEO and Asia Pacific CEO of LeEco Supercar, left the company March 20.

Leshi secured financing totaling USD2.44 billion (CNY16.8 billion) earlier this year, with Sunac China Holdings Ltd. [HK:01918] contributing CNY15 billion. “We will provide the money Leshi needs, but not for its car business,” said Sun Hongbin, chairman of Sunac China. That Leshi will find enough funds to support its LeSEE supercar project and Faraday Future’s operations prompts disbelief among many.

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