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Faraday Future Shrinks Planned Factory, Trims Car Lineup

Feb 04, 2017

Reuters reports that Faraday Future, the Chinese-backed startup gunning to enter the U.S. electric car market, has reduced the planned size of a Nevada factory, and will produce only two models instead of seven. The carmaker has faced repeated hurdles since its public debut in 2015, most recently including cash flow issues that left suppliers unpaid and may have contributed to several executive departures.

Instead of a planned $1.3 billion investment in a 3-million square foot Nevada factory that would produce 150,000 cars a year, Faraday Future has reportedly told the city of North Las Vegas that it will build a 650,000 square foot factory. According to sources speaking to Reuters, the facility could build fewer than 10,000 cars a year.

The company issued a statement following the report, denying that it was scaling back its ambitions. Instead, the company says it has divided its construction plans into two phases, with the initial phase aimed at earlier completion to bring its first vehicle, the FF91, to market more quickly.

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But Reuters' sources outline other long-term strategic shifts. Most notably, production of most Faraday vehicles is now said to be centered in China’s Zhejiang province, where a plant with a 450,000 vehicle capacity is planned.

Most intriguingly for those who have followed the Faraday saga, that facility will also produce LeEco’s LeSee sedan. LeEco is owned by Faraday's main backer, Chinese entrepreneur Jia Yueting, with which the U.S. startup has had an unusual and sometimes troubled relationship. Jia reportedly tasked Faraday workers with designing the LeSee, without reimbursing Faraday for the work, and a shift to Chinese production could further erode Faraday’s autonomy.

Perhaps the most disappointed party if Faraday falls short would be the state of Nevada, which early last year approved $215.9 million in tax incentives for Faraday, as part of a larger state strategy to attract energy and transportation investment. Those incentives may be moot if Faraday doesn’t meet certain investment benchmarks.

In a more immediate threat to Faraday's goals, Nevada's state treasurer told Reuters that Faraday hasn’t delivered a performance bond required for the state to begin funding infrastructure development around the factory site. That presumably includes necessities like roads, threatening the viability of even the scaled-back factory plan.

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