FF 91 quasi-production car unveiled: Jia Yueting car ushered in the dawn?

21st Century Business Herald reporter Du Qiaomei reported that after experiencing many "ticket jumps", The new car company Faraday Future Intelligent Electric Inc. founded by Jia Yueting. (Faraday Future, hereinafter referred to as "FF", NASDAQ transaction code: FFIE) finally ushered in a quasi-production version of its first model, the FF 91.

At 8:05 a.m. Beijing time on February 24, FF Global CEO Carsten Breitfeld and Jia Yueting, founder and chief product and user ecosystem officer of FF, drove a silver-and-white FF 91 quasi-production version into the production hall of its Hanford factory in California.

"The arrival of the first FF 91 quasi-production vehicle is an important milestone for FF, which is currently progressing smoothly and will be put into production in the third quarter of this year as planned." Bi Fukang said that its second electric vehicle, the FF 81, will be produced in South Korea in 2024, and the company is expected to achieve profitability in 2025.

Jia Yueting said that the 100-kilometer acceleration of its first quasi-production car, the FF 91, will far surpass most of the Maybach and Ferrari models.

In the coming months, more quasi-production vehicles will continue to be produced for final engineering verification and certification work.

It is understood that on February 17, the intelligent production and manufacturing equipment customized by the automobile manufacturing supplier Guangzhou MINO Equipment Co., Ltd. (hereinafter referred to as Mingluo Equipment) for FF has all arrived at the FF Hanford factory, including the key equipment used for the body assembly and other production lines in the production and manufacturing process of FF 91.

Mass production is imminent, and the stock price is shrinking

In a sense, the appearance of the quasi-production version of FF 91 is a positive signal for FF. However, the feedback from the capital market is not optimistic.

Affected by the news of the unveiling of the FF 91 quasi-production version of the model, before the US stock market on February 23, FF's stock price rose by 8% at one point, but it fell back after the opening. As of press time, FF's share price is only $4.74, and its market value has fallen to $1.537 billion, which has shrunk by two-thirds from the total market value of $1.398 per share and about $4.5 billion at the issue price of $13.98 per share in July last year.

In fact, nearly 8 years after its establishment, Jia Yueting and FF's road ahead is not smooth.

Since May 2014, after FF registered in California, the United States, Jia Yueting carried the banner of China's new car-making forces and marched all the way; however, with the outbreak of the LeTV capital chain crisis at the end of 2016 and Jia Yueting's visit to the United States, FF has traveled to the brink of life and death several times, and FF, which has borne huge losses, is still struggling.

On December 8 last year, FF disclosed for the first time the company's financial position after the IPO. According to its Chief Financial Officer Chuck McBride, FF expects total assets of approximately $1.1 billion, including approximately $667 million in cash and cash equivalents as of September 30, 2021. As of December 31, 2020, FF's total assets were approximately $316 million, an increase attributable to the completion of the business merger with PSAC and the completion of proceeds from related PIPE financings.

FF expects total liabilities of approximately $354 million as of September 30, 2021, compared to approximately $896 million as of December 31, 2020, representing a decrease of $542 million.

"The decrease in total liabilities was due to the completion of the settlement of supplier trusts, certain notes payable and notes payable by related parties through the issuance of shares and the payment of cash." Chuck McBride said.

In addition, FF said that from its establishment in 2014 to September 30, 2021, FF's cumulative loss was about $2.8 billion, and it is expected to continue to generate serious operating losses in the foreseeable future. At least $1.5 billion more is needed to advance the FF81 and FF71 projects, up from a previous estimate of $1.4 billion.

However, Bi Fukang said that the first truly high-end global luxury electric vehicle manufacturer is not Maybach, not Rolls-Royce or Porsche, Maserati, but Faraday Future, and FF currently has sufficient funds to support the mass production of its first model, the FF91.

"The Hanford plant is going well and we have ample cash support to complete production by July FF 91. It is believed that when it is put into production in July 2022, the FF 91 will be the first leader to enter the luxury electric vehicle market. Bifukang said its first flagship store will be located in Beverly Hills, California.

Judging from its release financial situation, FF is still in a state of continuous burning money.

Chuck McBride said operating losses are expected to widen to $143 million in the third quarter of 2021, which the company attributed to increased costs of manufacturing facilities at the Hanford plant, additional accrued gains from certain corporate litigation, and losses on the disposal of property and equipment related to the abandonment of certain FF91 project assets.

"We expect increased costs compared to the business plan we launched prior to the business consolidation. These increases are primarily due to certain product improvements and upgrades related to the enhancement of FF 91 product capacity, accelerated spending related to the preparation and development of FF 81 projects, and recent macroeconomic challenges including increased construction and labor costs, rising raw material prices, semiconductor chip shortages, tariffs, and other supply chain constraints. Chuck McBride stressed that funding is sufficient to complete the FF 91 project.

Orders are in doubt, executives "change blood"

For Jia Yueting and the upcoming mass production of FF 91, the industry evaluation is also inconsistent.

On October 7, 2021, J Capital Research, a SHORT-selling agency in the United States, released a 28-page report on FF, expressing doubts about FF from multiple perspectives such as production capacity, capital operation performance, and R&D investment, and believed that "FF cannot sell even one car".

"It's nothing more than a barrel of money raised from American investors and then pouring the money into a debt black hole created by its founder, Jia Yueting, China's best-known securities fraudster." Short-selling agency J Capital Research said in FF's short selling report that after on-site visits, analysis of the company's financial data and various capabilities, and combined with a series of capital operations after the listing, they believe that FF cannot sell even one car.

The short-selling report pointed out that after three visits to FF's Hanford plant in California between August and September, no progress was found, and the relevant person in charge of the company also said that there were still engineering problems to be solved. But earlier, FF promised to restart the plant within 7 months and mass-produce electric vehicles.

In response, Jia Yueting responded: "Cold rice is hot and fried, which is nonsense. ”

FF officials have also said that since the listing in July, the company has started the construction of the Hanford plant and has completed the installation of the production line to support the production of quasi-production vehicles to ensure that the FF91 is delivered on time.

However, due to the short report, FF, which has achieved initial results in 2021 and achieved backdoor listing, has once again fallen into controversy. At the same time, under the influence of this report, FF Automotive did not file its first quarterly financial report after listing to the SEC as required.

A month later, FF received a delisting warning letter from the U.S. Securities and Exchange Commission, and because FF did not file a third-quarter financial report within the specified time limit, it was alleged that the company did not comply with the NASDAQ listing rules, and required the company to file a third-quarter financial report within 60 days, otherwise it may be required to delist.

In response, FF said that the company has filed a document with the U.S. Securities and Exchange Commission on November 15 to explain the reasons for the delay in releasing the third-quarter earnings report. FF said in the filing that the company is investigating allegations of inaccurate disclosures from short-selling agencies, so it postponed the filing of the third quarter earnings report. Earnings reports will not be submitted until the end of the investigation.

On February 1 of this year, FF announced that the Independent Directors Special Committee had completed an investigation into allegations of inaccurate disclosure. The investigation found that FF said before listing that receiving more than 14,000 orders was misleading to the outside world, of which hundreds of orders paid a deposit and 14,000 other orders were not paid; other allegations, including those in the short selling report, were not supported by review evidence.

"The reservation form issued by the company includes two types of paid bookings and free bookings, of which the company collects more than 14,000 FF 91 bookings, which has the information of all booking users, and this part is free booking data; and the company's public announcement of the global 300 invitation system limited edition FF 91, this part is a paid booking form." FF further explained it to the outside world after the release of the investigation report.

The commission and the FF prefer the 14,000 orders that are not paid, which is also part of the order, which is only some flaw in the language and is not false data. In July last year, FF Auto opened the booking of FF 91, users can pay 50,000 yuan for the order to enjoy, the deposit support can be refunded.

In addition, FF Motors did not have any other issues mentioned in the short report, and the special committee appointed Susan Swenson, independent director of the board, as the executive chairman of the board. In view of Susan Swenson's assumption of the position of Executive Chairman, Jia Yueting and Bi Fukang report directly to him; appoint Jordan Vogel as Lead Independent Director; Brian Krolicki stepped down as Chairman of the Board of Directors and Chairman of the Corporate Governance and Nomination Committee under the new leadership structure to become a member of the Audit and Compensation Committee of the Board; Jordan Vogel will step down as Corporate Governance and Nominating Committee; Scott Vogel will be the Chairman of the Audit Committee, Corporate Governance and Nomination Committee of the Board.

In addition, Wang Jiawei, vice president of FF's global capital markets, was suspended, and Jia Yueting and Bi Fukang were cut by 25%.

Can the asset-light model work?

As the mass production time of FF91 approaches, FF is accelerating its layout in the field of products and manufacturing.

On February 9, local time, FF announced that it has signed a contract with South Korean automaker Myoung Shin Co., Ltd. to start production of (SOP) FF's second electric model, the FF81, in 2024.

It is understood that Myoung Shin, located near Seoul in South Korea, is an OEM parts supplier and car manufacturer whose factory in Gunsan will be used to produce FF81.

"Faraday Future's strategy is based on an asset-light business model, employing a global hybrid manufacturing strategy that includes Faraday Future's leased manufacturing facility in Hanford, California, and partnering with Myoung Shin, a leading foundry partner in South Korea." FF said that over time, Faraday Future will continue to expand the geographical scope of its manufacturing operations in China, the world's largest luxury car market and the world's largest electric vehicle market.

It is worth noting that in January 2021, Geely signed a framework cooperation agreement with FF, planning to cooperate in the field of technical support and engineering services, and explore the possibility of oem services provided by geely and Foxconn's joint venture. At the same time, as a financial investor, Geely Holding Group also participated in the investment of The Day Future SPAC listing.

At the same time, with the news that "the relevant departments of Zhuhai Are negotiating FF financing and landing cooperation with Faraday Future, and Faraday Future has registered a new company in Hengqin New Area", FF China business has also pressed the "restart button".

"The cooperation between FF and Geely Holdings has made substantial progress, achieving the first phase of technical cooperation. At present, the technical teams of the two sides are closely docking to carry out the acceptance and development preparation of platform technology. The implementation of this technical cooperation will help promote further cooperation between the two sides, and will also promote the development of FF's business in China. On September 19, 2021, Chen Xuefeng, CEO of FF China, brought the latest progress of Geely's cooperation with FF at the event site.

Chen Xuefeng said that FF firmly promotes the Sino-US dual home strategy, and the Chinese market will become the core battlefield of FF, and the Chinese market will contribute 70% of FF product sales in the future.

According to the plan, FF will mass-produce FF91, FF81 and FF71 product lines in the next five years. In terms of production capacity, in 2025, FF will achieve an annual production capacity of 100,000-250,000 vehicles in China, and add an additional 150,000 units in 2026.

"The main battlefield of the core of electric vehicles is in China, not in other places, especially the promotion and application of intelligent network technology." Chen Xuefeng revealed in an interview with the 21st Century Business Herald reporter that "the site selection of FF ecological flagship stores has been completed, and the first batch has been determined in Beijing, Shanghai, Guangzhou and Shenzhen." ”

Regarding the industry's concern about cooperation with the local government of Zhuhai, Chen Xuefeng said that due to the establishment of the Hengqin Guangdong-Macao In-depth Cooperation Zone, relevant process standards at the government level are still being formulated, and the cooperation between the two sides is still communicating.

In November 2021, according to informed sources, Chen Xuefeng led a team of senior executives to Wuhan to visit the Yangtze River Fund Management Company and discuss the strategic layout of FF and the cooperation between the Chinese headquarters and the research and development, production, sales and operation of the FF91, FF81, FF71 and other series models.

Previously, it was also reported that FF China is now in talks with a number of local governments, including Zhuhai, and there are 5-6 target provinces and cities, and it is accelerating the search for FF China headquarters to settle in cities.

Although there are doubts about the settlement of FF in the city, in the industry's view, "returning to China as soon as possible" is undoubtedly the right choice for Jia Yueting and FF. Since last year, China's new energy vehicles have achieved explosive growth.

A few days ago, Ouyang Minggao, an academician of the Chinese Academy of Sciences, predicted that even if it is limited by battery supply, chip supply and production capacity, China's new energy vehicle sales will continue to grow to 5 million in 2022, and the market share of new energy vehicles will reach more than 20%.

However, in the vast Chinese new energy vehicle market, there are many competitors. Not only xiaomi, Baidu and other technology companies have come down, including Mercedes-Benz, BMW, Volkswagen and other traditional car companies have long awakened and rapidly transformed, and even Weilai, Ideal, and Xiaopeng have gradually gained a foothold in their respective market segments. In the face of rapid iteration of technology and FF, which has lost its first-mover advantage, the future is not clear.