By CHENG Di, ZHOU Chunlin, ZHOU Yixue
Faraday Future, China’s Tesla wannabe, Wall Street darling in the making, much-hyped love object of flamboyant entrepreneur JIA Yueting, is on the verge of going public. If successful, the money injection would not only pull the EV startup out of its financial distress, but also be a happy ending to the collapse of Jia’s previous tech conglomerate, LeEco, which left him hundreds of millions in debt.
The company announced on January 28 that it will be listed in the NASDAQ through a merger with a shell company Property Solutions Acquisition Corp (PSAC), a New York real estate investor. The entity after the deal will be valued at US$ 3.4 billion (21.9 billion yuan).
Faraday Future also said the merger will not be done before Q2, and FF91, its first EV model, will be released within 12 months of the merger, which means those eagerly awaiting the FF91 will have to wait at least another year. The company said it has received some 14,000 orders for the FF91 and is looking for a factory in China to manufacture them.
Earlier this week, car manufacturer Geely, which owns Volvo and a 9.7 percent stake in Daimler, was reported to be in talks on an investment rumored to around US million. Geely has also been enlisted to provide tech support and contract manufacturing. Faraday Future plans to build a research center and manufacturing with a 100,000 car a year capacity. The real estate conglomerate Evengrand Group, which already owns 32 percent of Faraday Future, is reportedly involved as well.
Geely announced on January 29 that it has signed a framework cooperation agreement with Faraday Future. Geely said the two will work together in technology and engineering support, and explore the possibility of production offered by a joint venture between Geely and Foxconn.
Geely said it also signed an agreement to become a minority investor of Faraday Future's SPAC merger.
The astounding valuation is not surprising, given that Faraday Future has been one of the most sought-after companies in a boom that started last year. Since June, potential US-based investors have toured Faraday Future’s idle factory in Hanford, California. Randolph Square IP, a patent data analytics firm, has said that Faraday Future’s patent portfolio is stronger in comparable technologies than many leading OEMs, including Toyota, Ford, and Honda.
Other media outlets have chimed in. The Tech Tribune, a self-aggrandizing publisher of technology news and “best startup” listicles, has listed Faraday Future among “Best Tech Startups in California” every year since 2018, despite mass layoffs, a ceaseless money drain, feuds with investors, and Jia Yueting’s personal bankruptcy.
The distressed electric car maker has remained the darling of Wall Street, which has assured itself of Faraday Future’s cutting-edge technology, innovative business model, and imminent mass production, despite all its previous setbacks. The PIPE deal is seen as a bargain, given its relatively low valuation in a market supercharged with billions of dollars chasing the next Tesla.
If Faraday Future pulls it off, Jia’s creditors in China would be given a slice of the windfall, through the trust that holds his Faraday Future shares. His personal debts cleared, Jia would be free to return to China, expand on both sides of the Pacific, and be hailed as a hero once more.
The already enthusiastic investors hardly need any more assurance, but with stakes so high, a warm back-up from Geely or any other good samaritan would be more than welcomed by all parties.
