When Carsten Breitfeld accepted his job as CEO of beleaguered electric vehicle startup Faraday Future in September 2019, his friends greeted the news with disbelief.
"People were telling me, 'Why are you doing this? There is no way to save this company,' " he said. "It was, 'You're going to ruin your reputation,' and 'Why the hell are you doing this?' "
Breitfeld readied his response.
"I think it can be done," he said. "And maybe I like challenges to some degree."
Key dates for EV startup Faraday Future:
In Faraday Future, the challenge ahead was less a matter of degrees — more like an order of magnitude beyond anything that Breitfeld, former CEO of Chinese EV company Byton and creator of BMW's i8 program, had previously encountered.
Founded in 2014 as the first full-fledged attempt to ride Tesla's trailblazing coattails into EV prominence, Faraday Future had been riddled with turbulent twists throughout its existence. The CliffsNotes version: The company teetered on the brink of insolvency, suffered a CES indignity that exacerbated its all-sizzle-no-substance reputation, found a $2 billion savior in Chinese real estate giant Evergrande, nearly went bankrupt again, and angered investors and suppliers as it wheezed along on financial fumes.
Then Breitfeld arrived. Two years in, he's at least been a stabilizing force. A public listing via a July merger with a special-purpose acquisition company, or SPAC, infused the company's coffers with approximately $1 billion. It was desperately needed after independent auditors registered concerns about Faraday Future's survival at the end of 2020. The cash seemed to relegate the topsy-turvy past to the rearview mirror.
Last month, the latest twist arrived. Short seller J Capital Research skewered Faraday Future in blunt terms, calling the company an "EV scam." It alleged that for Faraday, EV stands for "Embezzlement Vehicle."
J Capital's report not only cast doubt on the market for the FF 91 crossover, Faraday's forthcoming flagship vehicle, it accused the company of faking reservations. It suggested Faraday Future should receive the same scrutiny from Securities and Exchange Commission investigators as Lordstown Motors, another troubled EV company that went public via a SPAC one year ago.
Faraday is "nothing but a bucket to collect money from U.S. investors and pour it back into the black hole of debt created by its founder, China's best-known securities fraudster, Jia Yueting," wrote Anne Stevenson-Yang, author of the report. "We don't think Faraday Future, an EV SPAC, will ever sell a car."
Faraday Future declined to comment on the specifics of the J Capital report.
Despite the questions the report raises, determining how Faraday fares and whether it's capable of producing a tangible product should be known in the short term.
J Capital noted the company has "reneged" on plans to build five factories, notably a proposed $1.3 billion plant in the Nevada desert that never materialized. It said recent visits to Faraday's factory in Hanford, Calif., yielded no evidence of activity. Faraday says that will change in a matter of weeks.
Renovations to the facility, a former Pirelli tire plant, will begin in the first half of December, Breitfeld said. Machinery will start arriving shortly thereafter, he said. Production of the FF 91 is slated to start in July.
For all of Faraday's past ambitions, Breitfeld understands there's only one thing that matters at this point.
"I'm stepping the brake on all these advanced things," he said, "and focusing the whole company right now on getting the product out. This is challenging. It can be done."
Faraday Future, which counts Chinese automaker Geely as an investor, ranked 11th out of 20 EV startup entrants analyzed by consulting firm Guidehouse Insights in a July 2020 report. The report measured the companies on everything from partners to geographic reach to go-to-market strategy.
Finding success in that crowded field will require Faraday Future to walk a tightrope: Rebuild a staff decimated by departures and layoffs, build a brand from scratch and ensure the facility becomes an up-and-running factory within the next seven months.
In September, the company added a fresh round of senior executives, including Vice President of Manufacturing Matt Tall, who came to Faraday from Rivian, as well as others who arrived from EV upstarts such as Lordstown Motors and Karma Automotive.
"You need a company where you have the right technology and product ideas in place, and that's all a given here," Breitfeld said. "The market and product was here. What was not here was a team that could really execute."
Last week, the executive ranks churned again. Faraday announced CFO Zvi Glasman, who arrived only 10 months ago, had resigned. He was replaced by Chuck McBride, a public company veteran who has worked in multiple industries.
Faraday says it has 300 employees. Roughly a third have joined since the company's July public offering. At its peak, Faraday had approximately 1,500 employees.
The J Capital report said staffing was "way below" needed levels and that the automaker would need a minimum of 1,200 engineers to produce the FF 91 and the more mass-market FF 81 sedan, scheduled to follow in early 2023. Perhaps a fix is on the way: This week, Faraday is set to hold a job fair in Hanford to begin hiring factory employees.
Will customers want the vehicles those workers ostensibly are going to build? The J Capital report said, "there isn't much demand for the car" and suggested the market in the U.S. and China for $180,000 electric vehicles — the target price Faraday envisions — is thin.
That'd be the high end of luxury EVs. For comparison, the Lucid Air costs $77,400 to start and runs to $169,000 with its Dream Edition Range, which gets more than 500 miles of range per charge. A Tesla Model S starts at $91,000, and its Long Range trim runs $131,190.
Indeed, the S-1 form Faraday filed with the SEC in October acknowledged the company has a "limited operating history and faces significant barriers to growth in the electric vehicle industry."
Perhaps most damning, J Capital's Stevenson-Yang alleged Faraday has "fake reservations, just like Lords- town." A Faraday spokesperson affirmed, in mid- October, that the company has 14,000 reservations across the world for the FF 91.
Breitfeld says the company — at least in his tenure — has aimed to shy away from the more grand pronouncements and take a conservative approach in describing its business plans and strategy.
"One of the problems of many startup companies, and it was at Faraday a challenge as well, is that companies overpromise and under-deliver because they're not able to really understand how complex things are to do," he said.
"Our whole plan is built on a five-year plan, no shared mobility, no software business or digital data business. It's very conservative. Selling cars. We may do some of that, but that's all upside."
Starting with the FF 91, the first 300 vehicles, marketed as a limited edition run, have already been "completely sold out," he said.
From there, Faraday plans to produce 2,400 vehicles in its first nine months of production. Hanford will be equipped to produce 10,000 vehicles per year, and it could be outfitted to handle as many as 30,000 per year.
In starting small, Breitfeld carries confidence from his days as program manager of BMW's i8 plug-in hybrid iconic sports car and from his two decades at BMW overall. One of the lessons he learned from the i8 and brings to Faraday was what pitfalls to avoid.
He said the process of moving the project from its early engineering days and transitioning it to a production program was painstaking.
"What I learned from the i8 was that if you want to be fast, you have to bring people together from the first moment," he said. "The engineers build the prototypes together with the production team. There are no silos. It's one team, and it's integrated early."
Such a plan could help Faraday condense its path to production and enable quick success — if its technology and vehicle are actually ready in the first place.
The J Capital Report said there are safety concerns with the vehicle's battery pack and that the company's core technology was "not ready for prime time," a rebuke that stirs a reminder of the FF 91's splashy debut at CES in 2017.
On stage, Jia attempted to demonstrate the vehicle's self-parking feature, but the vehicle didn't move an inch. An awkward silence followed. Nearly five years later, car enthusiasts, investors and industry experts are again waiting to see whether a revamped Faraday Future can ever get started.
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