EV launch gone – SPAC Faraday Future has issued a going concern alert, according to regulatory filings. The company said it had significant doubts about continuing operations next year, adding it was uncertain when it would make the first deliveries of its FF 91 luxury electric vehicles.
This isn’t the first time Faraday Future has delayed delivery of the FF 91. In July, the company postponed the start of production and first deliveries to the third and fourth quarters due to problems in the supply chain and lack of funds. Now Faraday says it doesn’t expect deliveries in 2022.
As of November 17, Faraday has 369 pre-orders, versus 399 refundable, non-binding, paid deposits it had as of June 30, according to the company.
Faraday identified many conditions that will affect the timing of deliveries, including meeting suppliers’ delivery commitments, the timing and success of certification testing, and the implementation and effectiveness of the company’s downsizing. High on the list of concerns is whether Faraday will be able to secure the funds it needs to get through the year, let alone make it to the first deliveries.
Last week, Faraday received a potential $350 million lifeline to help it get its vehicle to market 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 firm. In September, Faraday also secured up to $100 million in financing from Hong Kong holding company Senyun International. However, it appears that access to eventual liquidity will not be enough to keep Faraday out of a tight spot in the short term.
According to the filing filed on Monday, Faraday anticipates “it may need additional funding for the remainder of 2022 and will require additional funding beyond 2022 to continue operations and support ramping up production of the FF 91 to generate revenue.” to generate to get the company on a path to break even cash flow.”
Since Faraday’s inception, the company has suffered overall losses from operations, negative cash flows from operations and an accumulated deficit of $3.3 billion.
The startup ended the third quarter with $31.76 million in cash, compared to $121 million at the end of last year. Net losses for the quarter are $103.4 million, about a third of the losses reported in the third quarter of 2021.
Faraday stock is down 6.79% today and over 94% this year.
The company has been struggling since going public through a merger with Property Solutions Acquisition Corp. in July 2021 with controversy. Months after its debut, a J Capital short seller report claimed Faraday had made a number of inaccurate statements.
An internal investigation followed, leading the company to restructure its board, cutting the salaries of two top executives and suspending at least one other. The investigation confirmed that employees made inaccurate statements to investors and that the “corporate culture did not prioritize compliance” enough, leading to the US Securities and Exchange Commission issuing subpoenas against several executives.