- 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.
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.