Faraday Future – Death throes

Chapter 11 or 7 is but months away

• A recent test drive of Faraday Future’s FF91 vehicle reveals that it is very far from being ready which combined with a very chequered history and dreadful management execution to date leads me to think that bankruptcy is only a few months away.
• Faraday Future showed off its “near-production” vehicle at the Monterey Vehicle Week which revealed a vehicle that looks to me to be very far from being ready to ship to customers.
• This means that it is very unlikely that vehicles will be delivered this year which will mean that even more money is needed, and I think the time is rapidly approaching when even the most faithful investors will refuse to comply.
• Fortune was able to have a short test drive in the FF91 and my assessment is based on this experience (see here) and my 4+ years of following this company (see here).
• The problems experienced by Fortune were dire:
  • First, performance: Despite touting 1050hp and 0-60mph in a blistering 2.39 seconds, when the driver suggested that he “punched it” on the open road, the experience was hugely underwhelming.
  • Similar experiences in the Tesla Plaid or the Lucid Air tends to drive one’s eyeballs into the back of one’s head but here there was barely a twitch.
  • “Heavy and slow” was the assessment leading me to think that the most critical part of this vehicle is not close to being ready and needs months of work and hundreds of millions of dollars.
  • Second, electrics: There are screens everywhere in this vehicle including rear passenger entertainment screens that drop down from the roof.
  • When the reviewer finally managed to find the command to lower the screens, the screen dropped down as if there was a tired person winding it down manually who then paused for a break halfway through.
  • The seat adjustment controls failed to function when selected on another touch screen on two occasions.
  • This strongly implies that both the physical electrical systems and the software that controls them is far from ready.
  • Third, software: The screens are powered by Android meaning that at least a basic level of functionality should be present.
  • However, despite the vehicle sporting voice recognition, the reviewers were unable to get it to work with simple functions like opening the doors having to be executed manually.
  • This is yet another sign of the vehicle being far from finished and as Cariad is discovering, software can be the hardest and most expensive part.
• The net result of this test drive is that the FF91 appears to be not remotely “near-production” and feels more like a prototype that has been hastily cobbled together in order to meet an investment milestone.
• Furthermore, this company’s ability to consume cash is almost unparalleled in the industry.
• Since the company went public, the company has burned $571m that was not planned in its SPAC documents on top of another $800m of unplanned cash burn in 2018 that forced it to go and ask for more money.
• The company is now on the ropes again and urgently needs to raise more money in order to stay afloat.
• The company has announced a $600m convertible bond but this is non-binding which in plain English means that the company has yet to convince investors to put all of the money in.
• The company has managed to close around $52m of the bond which will see the company through until roughly the end of October.
• I think it is likely that it is at this point that the company calls it quits as there are no circumstances whatsoever under which a prudent, reasonable or rational investor should invest in this company.
• The only area where the company has surprised me positively is in its ability to survive this long.