Written by | Yin Taibai
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Image source | IC Photo
After receiving a warning letter after being accused by short-sellers and failing to file its third-quarter financial report on time, Faraday Future, after several setbacks, finally decided to speak out.
In the early morning of December 8, Faraday Future held an online investor communication meeting online, and for the first time disclosed the company's operating conditions, as well as the latest progress in the construction of the FF factory and the delivery progress of FF91 mass production.
Faraday Future also responded to the failure to file its third-quarter earnings report on time. Global Chuck McBride, CFO of Faraday Future, revealed that Faraday Future's specific financial situation is still under review.
The crisis occurred on October 7, when JCapital Research, a well-known short-selling organization, released a 28-page short-selling report that made a detailed analysis of Faraday's future capital investment, research and development, production capacity and capital situation, and even specially investigated and analyzed Faraday Future founder Jia Yueting.
Megakin Investment believes that Faraday Future has forged a fake on production capacity and orders, and characterizes Faraday Future, which has been operating for eight years without delivering a car, as "a scam of high-end players filling the debt black hole".
As soon as the short report was released, it quickly triggered a series of chain reactions, with Faraday Future's stock price bearing the brunt. As of the close of the U.S. stock market on October 8, its stock price fell 4.17% to $8.05, down 41.58% from the issue price of $13.78, almost to the waist.
Immediately after, U.S. law firm Bernstein Litowitz Berger & Grossmann LLP said it would launch an investigation into whether Faraday Future violated U.S. federal securities laws, focusing on whether Faraday Future disclosed misleading information to investors about the ability to produce new energy vehicles.
The SEC's warning letter also arrived as scheduled. According to the regulations, all listed companies must submit financial reports on time, otherwise they will receive a warning letter, and if the warning letter is not submitted after 60 days, they will be delisted by NASDAQ.
Faraday Future then submitted an explanatory document to the U.S. Securities and Exchange Commission, in which it admitted that "the company is currently receiving accusations from short-sellers, which is the main reason for the delay in filing the three quarterly reports" and that "it is currently under investigation so it is impossible to file the third quarterly report, and it is currently uncertain when the investigation will be concluded." ”
With a cumulative loss of about $2.8 billion, will Faraday be cool in the future?
On July 22, 2021, the questioned Faraday Future finally ushered in a highlight moment - successfully landing on the NASDAQ in the eyes of the outside world. After the listing, Faraday Future successfully raised $1 billion in funds, and Jia Yueting also announced that it would start delivering Faraday Future's first new electric model, the FF91, in July 2022.
However, less than half a year after its listing, Faraday Future has encountered many thorny problems. Nowadays, a situation that cannot be ignored is that not only Isaday's future car-making ability is doubtful, but even its financial situation is not optimistic.
At an online investor networking session on 8 December, Faraday's future financial position was disclosed. As of September 30, 2021, Faraday Future had an operating loss of approximately $143 million and a net loss of approximately $280 million, compared to an operating loss and net loss of $18 million and $33 million for the same period in 2020.
"The increase in this data is primarily due to the increase in the cost of Hanford manufacturing facilities associated with the full commercial mass production of the Hanford plant. Including the completion of the production and manufacturing mold, the implementation of the supply chain, the further improvement of engineering, testing, certification and verification capabilities, and more expenditure generated by the development and production of future electric vehicle models. McBride explained.
Not only that, since Faraday Future's inception, the cumulative losses arising from operating activities have been approximately US$2.8 billion, and will continue to generate serious operating losses in the future. McBride said Faraday needs $1.5 billion in additional funding in the future and expects to achieve profitability and positive cash flow by 2024.
Despite being overwhelmed, In the view of Carsten Breitfeld, Faraday Future's global CEO, Ferrari Future has sufficient financial support and still plans to deliver the first model, the FF91 on time, in July 2022.
Bi Fukang introduced that the Hanford plant is progressing smoothly, and the installation of trial production equipment has been completed, and the pre-mass production trial production area of the factory is also fully functional, "the first car has begun production."
According to the plan, Faraday will mass-produce the FF91, FF81 and FF71 product lines in the next five years. In terms of production capacity, in 2025, Faraday Future will achieve an annual production capacity of 100,000-250,000 units in China, and an additional 150,000 units in 2026.
Contrary to Bi Fukang's statement, Megakin Investments noted in the short-selling report, "We made three visits to the Hanford plant in August and September, and found that there was very little activity, the factory site was quiet, and on the recruitment website Glassdoor and Faraday Future' official website, the Hanford factory had only 11 jobs on the job." For a business with such tight production schedules, this seems a bit too relaxed. In this regard, Mekkin Investment believes that Faraday may not be able to produce a single car in the future.
It was concluded that Mechkin's investment was not based solely on the anomalous state of the Hanford plant, but also pointed out in its short-selling report that Faraday Future unilaterally claimed to have received a deposit of 14,000 cars, but this deposit is highly questionable, because more than three-quarters of the money came from the same company.
At present, it is uncertain whether Faraday Future will be able to deliver the FF91 on time in July 2022, but it is certain that Faraday Future is in deep trouble.
It is not easy to build a car, where does Faraday go in the future?
In July 2017, Jia Yueting resigned as chairman after the outbreak of the LeEco crisis and went to the United States to develop, trying to complete his comeback through Faraday Future, and his position became the global chairman of LeEco Automotive Ecology. In the due diligence statement released by Jia Yueting, the keyword he mentioned the most is still the car, "(resigning from all positions) is to go all out to achieve the fastest mass production and listing of FF91, no matter how big the run, it can not squeeze the dream of changing the automobile industry." ”
Jia Yueting has high hopes for FF91, he once described on Weibo, "FF91 Futurist (Futurist version) and FF91 are the only smart tram spire products in the world that are higher than Tesla Model X and S Plaid in terms of product and technology positioning." The FF91Futurist and FF91, which have invincible product power, are not only a high-performance EV, but also an all-round car, a super car robot and a third Internet living space. ”
But now, it is not easy for Jia Yueting to realize this dream. In addition to internal contradictions such as huge losses and production capacity, threats from the outside are a hurdle that Faraday's future has never been able to overcome.
New energy vehicle giants Such as Tesla and "Li Xiaowei" are rising car-making forces, the new energy vehicle product lines continuously launched by traditional domestic car companies, and the influx of various industry giants such as Xiaomi, making the competition on the new energy vehicle track extremely fierce.
In November 2021, a total of 12 new energy vehicle companies delivered more than 10,000 vehicles. Among them, BYD is 90,142 vehicles, SAIC-GM-Wuling is 44,157 vehicles, and Tesla China is 31,732 vehicles, accounting for a total of 43.9% of the market share. According to the November delivery volume announced by various new energy vehicle companies, "Li Xiaowei" in the first echelon delivered 13485 vehicles, 15613 vehicles and 10878 vehicles respectively, and the second echelon of "Which Zero Wei" delivered 13500 vehicles, 5628 vehicles and 5027 vehicles respectively.
Ouyang Minggao, academician of the Chinese Academy of Sciences and vice chairman of the China Electric Vehicle 100 Association, predicted that the total sales of new energy vehicles in China will reach 3.3 million this year, and next year will reach about 5 million, and the market penetration rate will exceed 20%. It will reach 7-10 million vehicles by 2025 and 17-20 million vehicles in 2030.
In the face of the new energy vehicle market that is about to enter a steep growth period, Faraday, which still needs more than half a year to achieve mass production delivery, may first think about where its core advantages are in the face of a number of strong competitors, and what is the confidence of those who start late to achieve curve overtaking.
Another problem that cannot be ignored is that car building is a very expensive business.
The contradiction between how to maintain the lack of hematopoietic capacity and continuous investment is still a problem to be solved in front of all new energy vehicle companies. Up to now, even the three new forces of "Li Xiaowei" are also mired in losses, and at the same time, the construction of factories, laying infrastructure, research and development of technology and patents, and development of markets still need huge funds as support.
According to the third quarter financial report of "Li Xiaowei" in the third quarter of 2121, the net loss of Ideal Automobile was 21.5 million yuan; the net loss of Xiaopeng Automobile was 1.595 billion yuan; and the net loss of Weilai was 835 million yuan.
A big reason for the loss is the huge expense. In the third quarter of 2021, ideal automobile's sales and management expenses were 1.021 billion yuan and R&D expenses were 889 million yuan; Xiaopeng Automobile's sales and marketing expenses were 1.538 billion yuan and R&D expenses were 1.264 billion yuan; And Weilai's sales and management expenses were 1.825 billion yuan and R&D expenses were 1.193 billion yuan.
It is worth mentioning that as of the end of the third quarter, Ideal Auto has 153 retail centers, 223 after-sales maintenance centers and ideal car authorized sheet metal spray centers; Xiaopeng Automobile has 271 stores; NIO has 32 NIO centers, 285 NIO spaces, 43 NIO service centers, and 181 authorized service centers.
Peng Yong, chief auto analyst of BOC Securities, once calculated an account, "As far as independent brand passenger cars are concerned, according to the design of 150,000 vehicles, the investment in production equipment and facilities of each vehicle is about 300 million to 400 million yuan, plus related links, at least about 3 billion yuan of funds are needed." ”
In this way, at a time when the competition for new energy vehicles is particularly fierce, even if Faraday, which has repeatedly jumped tickets, can achieve mass production delivery on time, it will face huge pressure in terms of building sales networks and marketing, and it is not easy for it to occupy a place in the new energy vehicle market.
Faraday's future ideals and missions are very full, but whether they will be punched in the face by reality or bottomed out, everything is unknown. The only thing that can be known is that the patience and confidence of the capital markets in Faraday's future are gradually disappearing. As of the close of U.S. stocks on December 10, Faraday Future's stock price was only $5.41, and the total market value was only $1.755 billion, which was a significant decline of 61.1% from the total market value on the first day of listing of $4.511 billion.