Electric car start-up Faraday Future has delayed indefinitely its plans to build a $1bn "factory of the future" in Las Vegas, and has radically scaled back its production targets. The move follows increasingly severe cash flow problems at the Chinese media group that was behind the venture.
Reuters reports that the company now intends to produce two, rather than seven, models and will build a smaller facility.
Our pace is too quick. We over-stretched in global expansion, but our funds and resources are in fact very limited– Jia Yueting, founder of Faraday Future
According to Qiong Liu, a North Las Vegas city manager, Faraday told the city that it would launch construction this year on a 60,390-sq-m factory. This would be on the same site as the original, but around a quarter the size.
The founder of the company is Jia Yueting, a Chinese businessman who runs the Leshi Internet Information and Technology Corporation. This company’s main product is LeEco, a TV subscription service similar to Netflix.
In November, it was reported that his personal wealth had shrunk by $150m as the company paid the price of expanding too rapidly. In an internal letter, seen by Forbes magazine, Jia said: "Our pace is too quick. We over-stretched in global expansion, but our funds and resources are in fact very limited."
His business model has been to sell electronic devices at a low cost and make a profit on providing services on them.
Despite the company’s expansive claims for Faraday, it is quite a small part of Jia’s empire, particularly compared with LeSEE, its Chinese electrical car operation, which has just completed a $1bn financing round.
The announcement that Faraday was scaling back its plans did not come as a surprise. About 12 senior managers have quit in the past nine months, and several of them have suggested that the company was struggling with cash-flow issues almost from its inception.
Work on the factory was delayed last year after Aecom, the US engineer managing construction, halted work over non-payment of fees.
Faraday issued a statement saying it still planned to build the larger plant, but gave no timetable. It is now hiring contractors to begin building the factory shell, according to Reuters, but there is no firm date for completion.
Image: Faraday’s flagship vehicle is expected to retail for around $300,000 (Faraday)