It’s no secret that a host of top automakers are making – or plan to make – all-electric cars.
Tesla Motors Inc. (TSLA) and Toyota Motor Corp.’s (TM) Prius are arguably the most prominent among the crowd. But Nissan Motor Co. Ltd. (NSANY), Ford Motor Co. (F), Chevrolet, BMW (BMW.DE), and others are currently manufacturing all-electric cars and have big plans for better cars with longer ranges.
However, there’s a new player on the horizon – one that you’ve probably never heard of.
That’s because it’s a strange combination of public, yet secretive information.
After all, it’s pretty hard to go unnoticed when you break ground on what will be among the biggest buildings in America – a three million square-foot automobile manufacturing facility in North Las Vegas that will cost around $1 billion to construct, and employ over 4,500 full-time workers.
That’s exactly what Faraday Future did last week.
However, not a lot is known about Faraday’s plans. It hasn’t said what kind of vehicle it will build or how many of them it hopes to make. The company has simply said that it intends to ship whatever it makes within two years.
So that’s as clear as mud, then!
It’s also an incredibly aggressive target, given that the building site is bare desert right now.
It’s not like Faraday is being completely secretive, though.
The Next Tesla?
Like any good company, it’s just being selective about what it shares in order to protect its work.
For example, Faraday says there are over 700 employees working on the design of its car –whatever that may be!
Among those employees are several Tesla veterans, so there’s speculation that Faraday might be targeting the high-end electric car market, which Tesla has had to itself so far.
On the other hand, Tesla has long been known to eye the broader market, which it’s addressing with the $35,000 Model 3, so perhaps Faraday intends to go after that market.
If its new mega-plant is as efficient as the best existing auto plants in the United States, it should be able to assemble more than 500,000 cars per year – a number that lends weight to the argument that it plans to make a car for people other than the very wealthy.
But that’s if assembly is the only activity at the plant. If workers are also building parts such as the motors, the potential output of the factory would be lower.
Another hint is that Faraday unveiled a car at this year’s Consumer Electronics Show – a 1,000-horsepower behemoth supercar. That isn’t the car it’s planning to build – it’s a concept car (or “car of concepts,” according to the company) designed to introduce some of the features that it hopes to have on the car that does get built.
Big Backing… But Where’s the Catch?
Other things about Faraday:
~ Backed by China: The company appears to be bankrolled by Jia Yueting – a Chinese billionaire credited with creating the “Netflix of China.” Jia is known to have an interest in electric vehicles as part of a solution for China’s enormous pollution problem.
~ Another Nevada Tax Deal: Faraday received a tax-abatement package of over $215 million from the state of Nevada, along with $120 million in infrastructure improvements. That’s dwarfed by the deal that Tesla got for its battery “gigafactory,” but still large enough to require a special session of Nevada’s legislature.
Sounds promising, right? Well, perhaps not quite…
One prominent Nevada politician has his doubts about Faraday. State Treasurer Dan Schwartz traveled to China to meet with government officials and business leaders, and came back convinced that Jia doesn’t have the money to complete the project. In fact, shares of Jia’s flagship company have been suspended since December.
As for tax abatements, they only exist when Faraday actually spends money. The infrastructure improvements are another matter, though. Nevada would feel pretty stupid building a $30 million rail link to a factory that never gets built. So Schwartz has insisted on some escrow accounts and other assurances that Faraday has something other than just grand plans. At the moment, his conditions haven’t been met, despite the company breaking ground on the factory.
So what are we to make of this? Is Faraday for real?
The Good, the Bad… and Potentially Ugly?
- Faraday has hired senior auto executives from Tesla, BMW, and others.
- It’s sponsoring auto-related events with real money (for example, it’s sponsoring an all-electric race in Long Beach, California).
- It’s produced a concept vehicle.
- It’s bought at least 900 acres of land in North Las Vegas for its new factory – and broken ground on it.
- It’s backed by a Chinese billionaire.
- Faraday’s timetable to produce cars is at odds with history and common sense. It hasn’t even started on the massive factory that it hopes to have producing cars in two years.
- It hasn’t even announced exactly what it intends to build and for whom.
- It hasn’t yet funded even a few relatively small escrow accounts to free up a big amount of government money.
So are we looking at the most advanced auto company ever built? Or some kind of scam?
I suspect neither of those is the answer.
Faraday may simply be more ambitious than justified by its ability to meet that ambition. But whether that excess ambition includes having the resources for a $1 billion investment remains to be seen.
This could go a number of ways. It could be a huge black eye for Nevada and an embarrassment for the executives poached from Tesla. Or it could be the next great American success story.
I’ll follow the story and bring any updates to you.
To living and investing in the future,