(Yicai Global) Oct. 23 -- Faraday Future, the American electric carmaker that is feuding with its largest shareholder, is cutting the salaries and hourly wages of all employees by 20 percent as it looks to bounce back from a gap in funding that it did not expect.

Jia Yueting, the controversial entrepreneur behind the firm, will also cut his chief executive's salary to just USD1 dollar a year, state-backed news site The Paper reported, citing an internal email sent to all staff on Oct. 21. The firm is looking to source alternative financing after seeking arbitration to end all agreements with its biggest shareholder, Evergrande Health Industry Group, the email added.

Faraday will reassess its accounts and hopes to return salaries and wages to normal once it secures funding from alternative sources, it said, adding that it will also need to lay off some workers. Some executives have also agreed to take cuts larger than 20 percent, according to the email.

The Silicon Valley startup is stuck in a cash rout as it battles to start mass production of its first vehicle, the FF91. It was anticipating a USD700 million injection from Evergrande in July, but the investor refused to cough up as it believed Faraday had missed the mark on requirements laid out for the funding. Neither party can disclose what those conditions were because of a confidentiality clause in the contract, a source close to Evergrande told Yicai Global.

Faraday filed for arbitration in Hong Kong earlier this month with an ultimate aim of severing all ties with Evergrande, despite burning through USD800 million of the investor's cash in two months this year.

Evergrande Health said in June it had agreed to splurge USD2 billion on a 45 percent stake in Faraday's parent Smart King, and would pay USD800 million this year, USD600 million next year and USD600 million in 2020. It paid the initial tranche in May, then in July signed a supplementary agreement to make an advance on the later installments provided certain requirements were met.

Faraday believes Evergrande is stifling attempts to get mass production underway by the end of this year, as an agreement between the two parties stipulates that if it fails to do so, the investor will take control of the company from Jia. The carmaker has accused Evergrande of reneging on its end of the bargain in order to assume power and take over Faraday's intellectual property, whereas Evergrande has charged that Jia manipulated the board into pushing for the early money despite not meeting the agreed requirements.

The pair are still waiting for the Hong Kong International Arbitration Center to reach a conclusion.

Editor: James Boynton