Economic review

Faraday Future secures $14m in bridge funding

2017-08-09 10:21:00 (Beijing Time)         China Daily

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The U.S.-based Faraday Future unveils its prototype EV FF91 at the Consumer Electronics Show in Las Vegas in January. (Provided to China Daily)

The electric vehicle startup Faraday Future has recently secured $14 million in bridge funding while it seeks new investment sources.

"The $14 million is the bridge funding till the Series A. We are in the process of seeking $1 billion in funding through a Series A fundraising campaign, with a target of $500 million by the end of Q3, and the other funding by early 2018," Dan Zhu, a spokeswoman with Faraday, told China Daily on Monday.

The company has pledged its corporate headquarters in Los Angeles as collateral to secure the rescue loan from Innovatus Capital Partners, a New York investment firm, for a term of one year, according to a Wall Street Journal report on Aug. 3.

Innovatus Capital Partners declined to comment.

The startup's planned $1 billion funding is aimed to protect itself from the financial woes of its primary backer, LeEco.

Early last month, the assets of Jia Yueting, LeEco's founder and chairman, valued at about $183 million, were frozen by a Shanghai court after LeEco failed to pay interest due on bank loans taken out to fund its smartphone business.

But FF said that development has no impact on the startup's daily operations, as LeEco and FF have been two separate companies since the latter was founded in 2014.

FF has recently signed a lease on a new factory in Hanford, California, as it was shifting its manufacturing focus to a turnkey facility that offers a faster path to production.

A cleanup process has begun to prepare the site for the arrival of the manufacturing equipment.

Over the weekend, the company hosted an event for the new facility, which is 1 million square feet (92,888 square meters) and will eventually employ up to 1,300 workers over three shifts.

"We know there is a lot of work and risks ahead, but this event represents a major step forward for the company," said Stefan Krause, COO and CFO, in a statement.

Krause, a former Deutsche Bank executive and BMW Global CFO, joined the startup recently to drive investor diversification.

The company also hired Ulrich Kranz, former senior vice-president at BMW as CTO.

FF will continue the process of site preparations, including planning, refurbishment and permitting.

Following the departure of current tenants in late November, the company expects significant activity on site in early 2018.

But it did not provide an update on the construction of the originally planned 3 million-square-foot factory in North Las Vegas.

Qiong Liu, North Las Vegas city manager, told Reuters earlier this year that the company would build a 60,390-square-meter facility beginning later this year.

It has ended talks with the city of Vallejo, California, for a planned second factory on a 157-acre site on the city's Mare Island.

LeEco and FF are intricately linked. Jia has personally invested $300 million in FF. The cash crunch at LeEco has worsened since November last year, when Jia admitted publicly that it was expanding too fast into smartphones, automobiles, the cloud and internet finance.

In May, Jia stepped down as chief executive of Shenzhen-listed Leshi Internet Information and Technology Corp, the company's video-streaming branch.