Former ‘Tesla-Killer’ Faraday Future Shakes Up Management Hoping to Turn the Company Around
The electric-car startup has had a difficult 2017 amid an exodus of executives, a cash shortage, and lawsuits from suppliers.
PHOTO CREDIT: Getty Images
• Cash-strapped electric-car startup Faraday Future will name CFO Stefan Krause as COO in an effort to turn the stalled company around.
• Faraday's sole known investor, LeEco founder Jia Yueting, will be named chairman of Faraday's global executive committee.
• The company is said to be close to securing a manufacturing facility in California after it announced last month that it was abandoning its $1 billion factory project in Nevada.
Faraday Future, the electric-car startup that set out to challenge Tesla with its own electric self-driving SUV, is looking for a fresh start after a tumultuous year of executive departures, a cash shortage, and lawsuits from its suppliers.
To that end, the Los Angeles-based firm plans to shake up its executive ranks, starting near the top. Newly hired chief financial officer Stefan Krause, a veteran of BMW and Deutsche Bank, will also serve as chief operating officer and chief marketing officer at Faraday, according to people with knowledge of the pending announcement.
As COO, Krause will oversee strategic business decisions for Faraday until an official CEO is named, the people said. Faraday has no one operating in that role at this time. Krause will direct the company's marketing arm as CMO on a temporary basis until a permanent marketing officer is appointed.
The company last month brought on BMW's former head of electric vehicles, Ulrich Kranz, as chief technology officer.
Faraday's sole known investor, Jia Yueting, will be named chairman of the company's global executive committee, marking the first time he will assume an official role at Faraday Future. Jia is the founder of the Beijing-based electronics company LeEco, which has been bleeding cash and laying off employees worldwide in recent months.
Unpaid loan payments prompted a Chinese court to impose a three-year freeze on $182 million in assets tied to Jia in July. In the same month, an additional $37.2 million of Jia's assets were frozen for the same period. Jia resigned as CEO of LeEco's publicly listed arm, Leshi Internet Information and Technology, in May, citing cash problems at his non-publicly traded businesses that he said were "having a huge impact on operations."
Substitute factory in the works
According to people with direct knowledge of Faraday Future's plans, the company is close to securing a substitute manufacturing site in California. The company on July 10 said it was pulling out of its proposed factory project in North Las Vegas, Nevada, as its funds dried up.
Faraday had purchased about 900 acres in the Nevada desert last year, where it intended to build a massive assembly plant for its electric vehicle, the FF91, and create about 4,500 jobs.
"We are in a precarious situation right now," a senior-level Faraday Future employee told Business Insider before the announcement. "The generous funding we had in the past is no longer here."
The Wall Street Journal reported on Thursday that Faraday put up its Los Angeles-area headquarters as collateral to secure a $14 million emergency loan from the New York investment firm Innovatus Capital Partners.
It is unclear what other resources Faraday may be using for the substitute manufacturing facility it wants to secure in California. CFO Stefan Krause told Business Insider last month that his initial attempts to round up $1 billion from about 35 global investors were unsuccessful.
But Krause suggested that some prospective financiers were still on the fence.
"Some of them would like to see a factory and would like to see us moving a little bit further down the road," Krause told Business Insider. "We will secure an existing facility that we can lease or buy at a low cost and then bring in our equipment and be faster to market with the FF91," Krause said, adding that Faraday had already purchased some of the equipment for the factory that was planned for North Las Vegas.
An uncertain future
Lots of questions remain. Faraday officials declined to specify how it intends to pay for a substitute assembly plant, and there is still the matter of continuing development on the FF91, which has been in beta testing for some time but is far from being production-ready.
For his part, Jia has said he would focus his attention entirely on his auto business, even as LeEco wobbles in the background.
"Please give LeEco some time, please give LeEco car some time," Jia wrote in a post on China's biggest social-media website last month. "We will pay back creditors, suppliers and any other debts."
He promised to dive headfirst into the car business with Faraday Future, but critics have said the capital-intensive endeavor is the source of his troubles. Still, Jia remained undeterred: "Our dream to revolutionize the auto industry cannot be defeated," he said.
This post originally appeared on Business Insider.