Troubled electric car startup Faraday Future has received a new surprise lifeline in the form of a new 50/50 joint venture partnership with Chinese online video game company The9, the company announced. The9 says it is willing to contribute up to $ 600 million to the joint venture, and Faraday Future has pledged to spend the money making a new car in China (and for the Chinese market) called V9.
The new car will be based on FF91, the ultra-luxury electric SUV that Faraday Future debuted at CES 2017, and the one it has used in recent years is struggling to recover. The9 and Faraday Future claim that they will be able to make 300,000 cars a year, even though they have not shared where they should be built.
Faraday Future says the new joint venture will also help the start-up, trying to get FF91[ads1] into production in 2019 in USA. The9 says in its own release that it will make an initial deposit of $ 5 million, which Faraday Future says it will use to "overcome its short-term cash flow difficulties and support its ongoing equity financing efforts." The9 says the rest of its $ 600 million laws are "contingent on financing conditions", but it's not clear what those terms are.
The news comes just a few days after The Verge reported that Faraday Future had sold its headquarters in Los Angeles in a bid to generate short-term cash, and a few weeks after the start had to tell employees on unpaid leave to they would not be able to come back yet.
The9 is listed on the Nasdaq Stock Exchange and has a market capitalization of around $ 100 million. It is "one of the earliest companies building virtual communities in China," according to a press release from 2018. The9 launched when it launched an online community called "Ninth City" back in 1999, where people use virtual currency to "perform online social and exchange activities such as playing games, reading, music, etc. " It also once held an exclusive license to operate World of Warcraft in China, even though it lost its asset in 2009. Known more as a game development company, The9 has also recently moved into the blockchain technology.
Founded in 2014, Faraday Future made original waves as a secret start that claimed a ton of talent from Apple, Tesla and most of all traditional automaker. The start-up took place on the verge of financial insolvency at the end of 2017, mainly due to the high price of designing and producing a car from scratch, but also the financial mismanagement of founder and CEO Jia Yueting.
Jia took control of the company in 2017 after he himself exported to the United States to escape his second company, LeEco, in China. Jia and LeEco (and the myriad-related companies that spread in and around it) are still on the hook for hundreds of millions of dollars in China, which resulted in him being placed on a blacklist for a citizen.
Faraday Future was rescued at the end of 2017 by the Chinese real estate association Evergrande, which pledged $ 2 billion to launch. But the relationship between Evergrande and Faraday Future eventually soured in 2018. Faraday Future spent the first part of the investment in advance, and when Jia asked for an advance on the remaining money, the two were locked in a heated stroke for control of the EV startup which eventually led to hundreds of layoffs, the departure of many leaders and Jia's only remaining co-founder, and a delay on FF91.
Evergrande and Faraday Future agreed to restructure the deal by the end of 2018 so that the EV startup could seek new funding to get the car to be produced. But Faraday Future has struggled over the past few months to unlock a deal, and in the meantime, hundreds of employees have stayed on unpaid vacation while others left to start working at competing companies.
Faraday Future faces the difficult task of trying to employ talent to fill these positions, many of which are important roles. For example, the company recently lost many of those responsible for developing the company's electrical fuel to rival EV startup Rivian.