The electric car startup Faraday Future has finally settled its month-long war with the Chinese investor who is a real estate conglomerate Evergrande. On Monday, Evergrande that they have agreed on reconstructing its $2 billion investment in Faraday Future. According to a release posted on the Hong Kong Stock exchange, the Chinese real estate conglomerate will work with full control over the Faradays company and both the sides will drop the ongoing lawsuit filed against one another.
Also, Spokesperson John Schilling said in an email that the company will receive a loan from Evergrande to overcome the cash flow difficulties. The flow difficulties include the company’s assets will completely run out over the last few months.
“Upon signing these new terms, [Faraday Future’s] equity financing and debt financing efforts will now be able to progress quickly,” the startup said in a statement. “In terms of equity financing, investors from all over the world have expressed interest in [Faraday Future], and several have already started discussions with [Faraday Future].”
Evergrande also agreed to lose its control over Faraday Future’s assets which were collected as collateral part of the investment. Whereas the company has claimed that they won’t be able to raise new investment without assets to collateralize, as they have no current product or revenue. Evergrand 45 percent stake the future Faraday will be backed by 32 percent plus the company has an offer to buy out Evergrande’s stake in five years.
At the end of 2017, Evergrande agreed on terms to bail out Faraday, also the company is run by one of the world’s richest people, Hui Ka Yan who gives $2 Billion to the ailing EV startup over a span of three years. At that time, Faraday company was about to bankrupt because of grand plans and not having enough sources like workforce of some 1,500 employees, and a failed attempt to build a $1 billion factory in the Nevada desert.
In the early months of 2018, Evergrande invested $800 million in Faraday company which they had used to set up a modest factory in Handford California to get prepare for a December production target for its first car, a luxury electric SUV called the FF91. Apart from this, the Faraday company also begin paying back suppliers who owned around $100 million at that time.
Faraday startup even organized a grand showcase in late August at Pebble Beach Concours d’Elegance, which was one of the ritziest car shows in the world. But it was canceled when there were just 12 days left before its main event. Faraday Future is now being sued for the almost $2 million over breaking the contract with The Visionary Group. It was the company that was planning the event.
Currently, Faraday gets the task of rebuilding its workforce to get the FF91 into production in 2019, told by the Matthias Aydt to employees, who is the startup’s vehicle line executive at a mid-December and they would take about $500 million. Aydt also claims that Evergrande wants to take over Faraday Future had decreased since the issue was recently used by the Trump administration as an example of their unfair transfer of technology and property theft.
Therefore, the startup promised to bring back the employees but many workers had joined other companies in between the company crisis. Only 250 employees remained at the company’s Los Angeles headquarters during the elimination.