EV startup Faraday Future has told employees on “furlough,” or unpaid leave, that it can no longer bring them back to work on March 1st as planned, according to an internal email sent Tuesday and obtained by The Verge. The company says it is extending the furlough, but did not say for how long. These employees have been on furlough since December, with benefits.
Faraday Future has been searching for new funding since last October, when it got into an ugly public fight with its biggest outside investor, Chinese real estate giant Evergrande. Evergrande committed $2 billion to the California-based EV startup at the end of 2017, but Faraday Future spent the first $800 million installment by mid-2018. When Faraday Future asked Evergrande to advance about half of the remaining $1.2 billion, Evergrande ultimately refused, locking the two in a power struggle that left the startup nearly out of money.
As a result, Faraday Future’s workforce had their pay cut, underwent layoffs, and, eventually, hundreds of employees were placed on unpaid leave in December. Faraday Future’s headcount dropped from about 1,000 to 600 in early November. Only about 250 employees escaped the layoffs and furloughs as of December.
Faraday Future’s fight with Evergrande, and the subsequent layoffs and furloughs, also drove away a number of core executives last fall. The last remaining member of its original executive team, a longtime GM veteran and EV pioneer Peter Savagian, and the company’s co-founder Nick Sampson all resigned in a span of three days.
“The company is effectively insolvent,” Sampson wrote in an email to staff on the day he resigned. “I cannot continue knowing the devestating [sic] impact we are having on the lives of our employees, their families and loved ones as we as the [sic] ripple effect this will have on lives throughout our suppliers and the industry as a whole.”
Faraday Future and Evergrande reached a sort of truce at the end of 2018. Evergrande agreed to terminate the deal and let Faraday Future find a way forward using other people’s money (though the Chinese conglomerate still owns a large non-controlling stake in the EV startup).
The problem now is Faraday Future hasn’t been able to lock in any new investors. In the email sent Tuesday evening, Faraday Future says it “has been engaged in serious discussions with potential investors to raise both asset-based debt financing and equity funding,” but adds that these “funding efforts have taken longer than the Company initially anticipated.”
Founded in 2014, Faraday Future has spent years designing an electric luxury SUV called the FF91, which is supposed to be faster than most Teslas and sell for close to $200,000. The startup has been rocked by financial turmoil the last two years, though, which delayed its first car. After Evergrande’s investment in late 2017, Faraday Future aimed to get the FF91 into production by the end of 2018. But now, more than ever, the company and its car are in jeopardy.