Electric vehicle start-up-gone-SPAC Faraday Future has issued a continuity warning, according to regulations registrations. The company said it has serious doubts about whether it will be able to continue operating for the coming year, adding that it is uncertain when it will ship the first deliveries of its FF 91 luxury EVs.
This is not the first time that Faraday Future has delayed delivery of the FF 91s. In July, the company pushed back the start of production and first deliveries to the third and fourth quarters, citing supply chain issues and a lack of cash. Now Faraday says it doesn’t expect deliveries in 2022.
As of Nov. 17, Faraday has 369 pre-orders, up from 399 refundable, non-binding, paid deposits as of June 30, the company said.
Faraday cited many circumstances that will affect the timing of deliveries, including whether suppliers meet their deliverables, the timing and success of certification testing, and the implementation and effectiveness of the company’s workforce reductions. At the top of the list of concerns is whether Faraday will be able to secure the cash it needs to get through the year, let alone make the first deliveries.
Last week, Faraday was awarded a potential $350 million lifeline to help launch the vehicle when it signed a financing deal with Yorkville Advisors Global. The equity line of credit includes an initial commitment of $200 million from the investment company. In September, Faraday also secured up to $100 million in funding from Hong Kong holding company Senyun International. However, it seems that access to any liquidity is not enough to keep Faraday out of trouble in the short term.
According to Monday’s filing, Faraday projects it may need additional funds during the remainder of 2022 and will need additional funds beyond 2022 to continue operations and support ramping up production of the FF 91 to generate revenue to to keep the company afloat. a path to cash flow break-even.”
Since Faraday’s inception, the company has experienced total operating losses, negative operating cash flows and a $3.3 billion accumulated deficit.
The startup ended the third quarter with $31.76 million in cash, up from $121 million at the end of last year. Net losses for the quarter total $103.4 million, which is approximately one-third of the losses reported in the third quarter of 2021.
Faraday’s stock is down 6.79% today and more than 94% this year.
The company has faced controversy since going public through a merger with Property Solutions Acquisition Corp. in July 2021. Months after his debut, a short seller report from J Capital alleged that Faraday had made some inaccurate statements.
An internal investigation ensued, prompting the company to restructure its board, cut the pay of two top executives and suspend at least one other. The investigation confirmed that employees made inaccurate statements to investors and that “corporate culture did not prioritize compliance” enough, leading the U.S. Securities and Exchange Commission to subpoena several executives.