Faraday Future Investment Ruling Could Be The Final Nail In The Coffin

Faraday Future may struggle to survive after an arbitrator in Hong Kong ruled against a motion from the electric automaker to loosen the stranglehold that Chinese conglomerate Evergrande has on its intellectual property and assets.

The startup requested relief from the arbitrator in the hope that it would allow it to secure investment from new outside sources. While the company’s request to seek $500 million in outside funding has been granted, Evergrande’s stranglehold remains unchanged, The Verge reports.

Chinese real estate giant Evergrande saved Faraday from bankruptcy at the start of the year by pledging $2 billion in investment. The first $800 million of this was to be delivered up front, while the remaining $1.2 billion would be dispersed throughout 2019 and 2020. In return for its investment, Evergrande received a 45 per cent stake in Faraday Future, with the automaker also offering up its intellectual property and many hard assets as collateral.

Evergrande claimed a few months ago that Faraday Future chief executive Jia Yueting spent $800 million by July and requested an advance on $700 million of the remaining $1.2 billion. Evergrande was willing to hand over more cash, but only if Jia stepped down from his director roles at companies associated with Faraday while also turning over this controlling shares to a third party. Jia allegedly failed to oblige and the additional $700 million never materialized.

With virtually no money left, the company laid of hundreds of employees and co-founder Nick Sampson resigned in October.

Faraday Future has since claimed that Evergrande is starving it for money to force it into bankruptcy and walk off with the carmaker’s intellectual property and assets.

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  • Shane

    I swear I always forget about this company 5 minutes after reading the article.

    • benT

      yes , it is always news to me too.

  • BlackPegasus

    Sounds like the Chinese conglomerate is placing the squeeze on Faraday.

  • Mike anonymous

    This last part really caught my attention: “Faraday Future has since claimed that Evergrande is starving it for money to force it into bankruptcy and walk off with the carmaker’s intellectual property and assets” .

    This does seem like something that could very well be a possibility and could have a much larger scope than much of the media is giving it credit for. This is something that can happen. Faraday actually has a number of patented technologies that would put it at the forefront of the electric automotive world, BUT they have not done so well in actually putting these technologies into vehicles that are available for the public to buy and drive.

    This all being caused by a company who is essentially stealing (or trying to, through a ‘legal’ loophole.), simply to take if for themselves is most certainly not out of the realm of possibility.

    • benT

      maybe just dud product and management.

  • EM1

    So the real issue is the prospect of intellectual property being stollen by Chinese?

  • Mr. EP9

    Wait a sec, didn’t the CEO of Faraday have his own debts and obligations in China that he was ordered to return to so it can be sorted out? I could’ve swore he did.

    Update: Ok, wait, he did and he had is assets frozen by a Chinese court and blacklisted on top of all that because of unpaid loans. It’s no wonder this dead horse is still being flogged. Probably never had a chance to begin with.

  • Сафиуллина-Мохамед Рамазанов

    I will say something strange but
    Toyota need a fast move to take this design and give us the long waited second generation Venza

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