China-backed Faraday scales back EV factory plans in U.S.
Electric luxury car startup Faraday Future, one of several Chinese-funded companies taking aim at Tesla Inc., is throttling back its plans to build vehicles in the United States, the company and public officials said.
Faraday, an affiliate of Beijing-based Leshi Internet Information and Technology Corp., also has pared its planned product portfolio down from seven to two models, according to two sources with direct knowledge of the company's plans.
Faraday will build a much smaller auto assembly plant than originally planned in North Las Vegas, a city official said.
North Las Vegas city manager Qiong Liu said Faraday told the city that it will launch construction this year on a 60,390-square-meter factory on the site of a plant that originally was planned to be nearly five times larger.
The downsizing follows an acknowledgment last fall by the company's founder, Chinese tech entrepreneur Jia Yueting, that the company's global operations were overextended. Former Faraday executives have said the company struggled with cash-flow issues almost from its inception.
At least a dozen key U.S. executives have departed Faraday in the last nine months, according to the company and several of those executives.
In a statement, Faraday said it still plans to build the larger plant eventually, but gave no timetable.
Faraday is still hiring contractors to begin building the factory shell, according to a source familiar with the plans, but there is no firm date for completion.
"We remain committed to the State of Nevada and are continuing our $1 billion (6.9 billion yuan) investment in the region over the next few years," Faraday said in the statement.
In 2015, Faraday announced plans to build its first assembly plant in Nevada, with an annual capacity of 150,000 vehicles and a production launch scheduled for late 2017. Documents submitted to the state showed a planned investment of $1.3 billion.
Documents prepared for Chinese investors by Faraday's finance team last year show the company planned a lineup of seven electric vehicles, ranging from an ultra-luxury flagship to a tiny commuter car.
Now the company has scaled back its initial product portfolio to just two models: the FF 91 flagship unveiled in early January and a slightly smaller, less expensive crossover called the FF 81.
The FF81 is aimed at the Tesla Model X, people familiar with the company's plans told Reuters.
A source familiar with the company's thinking said the smaller Nevada plant likely will build fewer than 10,000 cars a year and may not open until 2019.
Faraday's change of plans comes after Jia secured a $2.2 billion infusion for his cash-strapped properties, including Faraday's sister company LeEco, from Sunac China Holdings.
Most vehicles for Faraday vehicles and Chinese sister brand LeSee likely will be produced in Zhejiang province, said two sources. The province has agreed to heavily subsidize construction of a new assembly plant with a 450,000 vehicle capacity that could open in 2019.
Faraday stopped work on the Nevada plant last fall. Nevada state treasurer Dan Schwartz told Reuters that a $75 million performance bond required from Faraday before the state issued bonds for infrastructure development at the factory site has not materialized.
Several Faraday suppliers, including seatmaker Futuris, have sued the company for nonpayment, according to court records.
Faraday will build a much smaller auto assembly plant than originally planned in North Las Vegas, a city official said.
North Las Vegas city manager Qiong Liu said Faraday told the city that it will launch construction this year on a 60,390-square-meter factory on the site of a plant that originally was planned to be nearly five times larger.
The downsizing follows an acknowledgment last fall by the company's founder, Chinese tech entrepreneur Jia Yueting, that the company's global operations were overextended. Former Faraday executives have said the company struggled with cash-flow issues almost from its inception.
At least a dozen key U.S. executives have departed Faraday in the last nine months, according to the company and several of those executives.
In a statement, Faraday said it still plans to build the larger plant eventually, but gave no timetable.
Faraday is still hiring contractors to begin building the factory shell, according to a source familiar with the plans, but there is no firm date for completion.
"We remain committed to the State of Nevada and are continuing our $1 billion (6.9 billion yuan) investment in the region over the next few years," Faraday said in the statement.
In 2015, Faraday announced plans to build its first assembly plant in Nevada, with an annual capacity of 150,000 vehicles and a production launch scheduled for late 2017. Documents submitted to the state showed a planned investment of $1.3 billion.
Documents prepared for Chinese investors by Faraday's finance team last year show the company planned a lineup of seven electric vehicles, ranging from an ultra-luxury flagship to a tiny commuter car.
Now the company has scaled back its initial product portfolio to just two models: the FF 91 flagship unveiled in early January and a slightly smaller, less expensive crossover called the FF 81.
The FF81 is aimed at the Tesla Model X, people familiar with the company's plans told Reuters.
A source familiar with the company's thinking said the smaller Nevada plant likely will build fewer than 10,000 cars a year and may not open until 2019.
Faraday's change of plans comes after Jia secured a $2.2 billion infusion for his cash-strapped properties, including Faraday's sister company LeEco, from Sunac China Holdings.
Most vehicles for Faraday vehicles and Chinese sister brand LeSee likely will be produced in Zhejiang province, said two sources. The province has agreed to heavily subsidize construction of a new assembly plant with a 450,000 vehicle capacity that could open in 2019.
Faraday stopped work on the Nevada plant last fall. Nevada state treasurer Dan Schwartz told Reuters that a $75 million performance bond required from Faraday before the state issued bonds for infrastructure development at the factory site has not materialized.
Several Faraday suppliers, including seatmaker Futuris, have sued the company for nonpayment, according to court records.
