FF and Evergrande settled, challenges for FF in the future.

In June last year, Evergrande Health acquired 100% of the shares of Season Smart Limited for HK$6.746 billion. And since then the both parties have been battling. Evergrande and FF (FARADAY FUTURE) finally settled after half a year. IIA learned from the FF official: FF and the investor Season Smart officially signed a new cooperation agreement, terminated the original investment agreement and litigation, released the asset preservation pledge and equity financing rights, and all the original agreements were terminated immediately after the settlement.

According to the new agreement, Season Smart will hold a 32% stake in FF, down from the previous 45%.

In addition, all the original agreements have been terminated, and the asset preservation pledge and equity financing rights have been released, and the parties have agreed to revoke the lawsuit.

For FF, this settlement is quite positive, but FF still faces many challenges. The first is the funding problem, followed by the brain drain caused by the funding.

Foreign media reported that since October last year, hundreds of FF employees have been suspended from pay (dismissed). On October 22nd, FF internal mail showed that the company was forced to make a 20% pay cut for its employees. The founder and CEO Jia Yueting played a leading role and only received one dollar a year. On December 5th, FF issued a statement saying that cost reduction measures will be carried out according to the financial situation (including further “unpaid leave” for employees).

(Nick Sampson)

Even several executives left the company including Peter Savagian, senior vice president of global R&D, and even one of the three founders, Nick Sampson. The loss of brain drain can’t be measured by money.

However, FF has received a lot of attention from the consortia. Various investors have shown interest in FF. However, It is said that these consortia include the Saudi Arabia sovereign wealth fund that planned to help Tesla’s privatization. This foundation has invested in Lucid Motors, the EV automaker that Jia Yueting once participated in. In addition, a blockchain company from the United States has also contacted Jia Yueting on investment issues.

In addition, according to Jia Yueting himself, FF will accomplish the mass production and delivery of FF 91 this year, and plans to have an independent IPO by 2020. In December, FF also signed a contract with the investment bank Stifel to speed up the financing. Stifel analyzed the assets of FF and said that FF’s net assets in the USA has reached 600 million US dollars, much higher than its debt.

All the R&D work of FF 91 has been completed on December 31 and several production models have been off the assembly line. Jia said that in the future FF will reduce the production capacity of FF 91 properly and will allocate part of the resource to the FF 81 project. According to Jia, FF 81 and FF 91 will share the parts and the supply chain integration will be accomplished. The new model is expected to be mass produced in the USA in the end of 2020 and will be introduced to China later.

In the end: FF and Evergrande finally settled on the last day of 2018, but this does not mean a bright future of FF. Since there are still some problems like the funding and the brain drain etc. Jia Yueting, who started from scratch, may have a profound realization of the hardship of building a new car. In 2019, whether FF can achieve its promise and get on the right track, let us look forward to it.