Faraday Future issues ‘master plan’ as stock nears $1

Last-ditch effort to pacify investors as company plans cutbacks

Faraday Future issues ‘master plan’ as stock nears $1
The markets are not being forgiving to the struggling automaker

Californian EV start-up Faraday Future (FF) is once again fighting to stay afloat. CEO Matthias Aydt and founder YT Jia have penned an open letter to shareholders pledging the company to measures “protecting stockholder interests”.

As the company’s share price languishes near $1, it is trying to placate investors with promises of cutbacks to its operating costs.

“Although the company has successfully achieved numerous significant milestones and built a strong structural foundation, its stock price and resulting market capitalisation have reached the darkest moment. The company’s current market capitalisation is equal to around 1pc of the approximately $3bn of cash invested into the business,” the letter says.

Highlights of the letter include the company announcing that it will initiate investigations into potential illegal short positions taken against the firm, having engaged stock market analyst Shareholder Intelligence Services.

Following C-level management’s commitment earlier this month to exchange three months’ salary for stock holdings, the letter also says that “executive leaders of the company intend to increase their holdings, demonstrating their confidence in the company’s development”.

Master plan

Separately, FF has laid out what it calls a “master plan to achieve sustainability and further stability, while aiming to reduce dependence on external funding sources”. Layoffs are part of the company’s plan, which revolves around trimming operational costs, although it does not say how many jobs are at risk.

“Primary near-term focuses are on appropriate operational cost structures and organisation, including meaningfully reducing people cost and other general and administrative expenses that are not directly related to FF 91 2.0 Futurist Alliance production, as well as cost reductions for FF 91 2.0 Futurist Alliance materials and production, which would be supported by insourcing capital-intensive systems where feasible,” the company says.

Any planned cutbacks could risk contradicting the steps that CFO Jonathan Maroko outlined towards production ramp-up at Q2 results. “We are planning to triple our manufacturing team in the coming months with the addition of a second shift, a step that will support our anticipated increase in production volume,” Maroko said in August.

The abrupt U-turn on manpower could signal just how quickly operating costs appear to have spiralled out of control at the company.

The automaker also pledged to cease entering into new convertible note commitments with structure similar to existing convertible notes and pause its equity line of credit (ELOC) programme. FF signed an ELOC with Yorkville Advisors Global in November 2022.

Financial analyst and journalist Clark Schutz says that FF must “enhance its supply chain management capabilities and cost control abilities to achieve the lowest possible operational costs for the company while rapidly increasing production capacity and the number of deliveries”.

Quite the laundry list awaits the company, then, but management tells shareholders in the letter that “we believe that it is evident FF has essentially established all the foundations for substantial growth, subject to obtaining needed funding”.

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