Beware of Faraday Future and its Potential to Harm the U.S. EV Industry

[ecarfan]

The Chinese Billionaire Who Wants to Out-Tesla Tesla

Quote from that article:

"Yet for all of Jia’s accomplishments, the 43-year-old tycoon has failed to win the confidence of one key man. Dan Schwartz, Nevada’s treasurer, says he’s skeptical Jia can secure financing for the car plant, a project that needs government support for power lines, water mains and roads...The crux of Schwartz’s concern is Jia’s reliance on equity-backed loans, a financing strategy that could leave Nevada taxpayers vulnerable to the whims of China’s volatile stock market. Jia has pledged 87 percent of his holdings in Leshi Internet Information & Technology Corp. -- his flagship firm -- for cash that he then plowed back into his companies, regulatory filings show. The stock, which was halted in Shenzhen for the first five months of 2016, has dropped 11 percent since it resumed trading on June 3, a move that heightens Schwartz’s fear that a margin call could prevent Jia from funding the plant...“You can see where this leads,” Schwartz said in a phone interview. “His Internet company is successful, but that doesn’t generate the billions of dollars he’d need. Where’s he going to get the money?’’"

I'm glad that Nevada is doing some due diligence on Faraday Future. So far, that company has only demonstrated that it can make a mock up of a ridiculous concept car that it will never build.

 

[JohnSnowNW]

I'm glad that Nevada is doing some due diligence on Faraday Future. So far, that company has only demonstrated that it can make a mock up of a ridiculous concept car that it will never build.

This needs to be brought up more. They are literally building a vehicle manufacturing plant without showing a vehicle they plan to produce. I mean, funding concerns aside, they have no product to build.

 

[Allante]

Yes, but FF clearly has enough funding to hire top talent from TSLA, Apple, Google, BMW, GM, and others, and FF expects to announce new Asian investors soon to fortify its position. This alone makes the company a formidable threat -- one which we will ignore to our peril.

 

[johnnyS]

I think Faraday Future (faraway future) will slowly fade away. They were the title sponsor at the E Formula Long Beach race this spring. It seemed strange since they have nothing to show but the batmobile concept car. I have heard very little from Faraday in the L.A. press the last few months until I saw the article about the factory financing.

 

[Allante]

FF has stuck again. Electrek reports that this week, FF poached Tesla's Gregory Ryslik (Head of Data Science). Other recent Tesla poaches include:

• Nick Sampson (Dir. of Vehicle and Chassis Eng'g),
  
• Andrew De Haan (Dir. of Global Supplier Industrialization),
  
• Dag Rechkorn (Dir. of Model S Mfg.),
  
• James Chen (VP of Reg. Affairs and Dep. GC),
  
• Alan Cherry (Sr. Dir, HR)
• Tom Wessner (Dir. of Purchasing)
• Carl Ellis (Supply Chain Mgr.)
• David Mastalerz (Commodity Mgr.)
• Anil Paryani (Sr. Eng'r)

Other notable poaches from other companies include:

• Richard Kim (BMW, Founding member of i team)
• Jan Becker (Bosch, Engineering Dir. and leading automated driving expert)
  
• Bart Nabbe (Apple, Project Titan)
• Peter Savagian (GM, Chief Engineer of EV1)
• Silva Hiti (GM, EV1 team)
  
• Young Mok Doo (GM, EV1 team)
  
• Steven Schulz (GM, EV1 team)
• Jin Won Kim (Toyota, Caty Design Research)
• Marco Mattiacci (Ferrari N. Am., President & CEO)
• Sascha Doering (Lamborghini, Head of Strategy & Bus. Dev't)
• Saeed Uzzaman (A123 Systems Lead Eng'r)

Until the company emerges from its cloak of secrecy, these recent hires establish a clear plan by the Chinese government to poach American talent and IP and transfer it to China. We will ignore this threat to our peril.

 

[Cosmacelf]

OR, this will end up being a giant boondoggle, producing nothing much, and relieving Tesla of some deadwood employees.

I am much more worried about what BYD is doing than a startup that has so far shown us that they don't know what they are doing.

 

[Allante]

I worry about BYD also...but the startups are equally troubling given how many of them exist, and the fact that they are all shills for the Chinese government: FF, Karma, NextEV, Atieva.

 

[AB4EJ]

As I recall, Elon himself has on several occasions said that he welcomes EV competitors. (Why else would have Tesla made their patents public domain?) Regarding Chinese government subsidies, I have read numerous pieces grousing about the "government subsidies" given to Tesla (the US government has also provided quite a bit of funding to the oil & gas industries, as well as to Chrysler and GM). These subsidies don't, by themselves, make or break a big undertaking like building cars in volume. From what Elon has said, I have the impression that he believes that the field is wide enough and opportunities sufficient in this space for a number of companies to be successful.

Will FF pose an existential danger to Tesla? I wouldn't think so, and here's why (besides Elon's thoughts that the pie is big enough) - if the Chinese were so wealthy, clever and powerful that they could do this, they would have already put Ford, GM, and Chrysler out of business. The problems that the Big Three have had over the last decades (I know, because I spent a lot of time working for them) grew out of their own poor management, not from foreign competition.

 

[ApauloThirteen]

FF is missing one key ingredient ... a single person with his own vision, ideas, knowledge, stubbornness and ego. And executional power to change people he sees unfit for the job.

What is there at FF. I just see big pile of cash and even bigger pile of confusion.
Lot of details and no big picture.

That's key. Coming from years at a corporation with great people but so so leadership, leadership & vision motivates, inspires beyond what quarterly reported numbers show.

Musk was criticized for sleeping along the Model X assembly line. Why should a CEO be doing QA checks some say? B/c you cannot believe what a morale boost it is to have a CEO who is willing to get focused at that level on a problem at a time when ppl are asking for extra effort, longer hours, to make a deadline.

Plus he runs another co that well IS rocket science.


Time and time again we've seen companies with large amounts of cash and star hires, do ok to not so well. We've seen it with sports teams - blank checks but poor managers still = no championships. It'll be interesting to see how FF will do But making cars is v v v hard. Tesla has a head start.

The other final note is the competition seems to be focused on what Tesla is doing now. The problem is, when they intro their similar products in 2-3 yrs, Tesla will have already moved the ball forward (lower cost, lighter battery, quicker charging, better network). A strategy based on copy isn't the winning strategy.

 

[Darren Donovan]

Chinese are reputed world wide to go after what they want at all costs, morals, ethics be damned. I'm not sure I like all the new Chinese-national-owned commercial development in downtown Los Angeles either.

 

[ecarfan]

FF has stuck again. Electrek reports that this week, FF poached Tesla's Gregory Ryslik (Head of Data Science)... Until the company emerges from its cloak of secrecy, these recent hires establish a clear plan by the Chinese government to poach American talent

Hmmm...so you think the Chinese government directly controls FF and has embarked on a secret master plan to employ -- at no doubt handsome salaries or those people would not have joined FF -- smart people working in other companies in the US?

I find that implausible. FF is a start up that needs talent. Real talent is always in short supply in growing industries, in this case the EV industry. And there is nothing to stop those smart people from leaving FF and joining another company (unless perhaps you think they are now under some sort of top secret mind control...).

Extremely talented people with skills in high demand change companies regularly. Nothing nefarious or remarkable about that.

Now, does the Chinese government have strong influence over many Chinese companies? Yes. And has the Chinese government embarked over the last decade or more on a worldwide effort to secure and control a number of critical natural resources? Yes it has. But the fact that FF has hired some smart people to get the company going is not evidence of...whatever bad thing you think is happening with recent FF hires.

By the way, did you notice the remarkable diversity of surnames in the list you posted? Including names like Kim, Chen, Young Mok Doo, and others. It's wonderful that in America you can find such a diverse group of such talented people. I'll wager many of them were not born in America but came here looking for opportunity, and I bet they found it.

 

[Allante]

@

Hmmm...so you think the Chinese government directly controls FF and has embarked on a secret master plan to employ -- at no doubt handsome salaries or those people would not have joined FF -- smart people working in other companies in the US?

I find that implausible. FF is a start up that needs talent. Real talent is always in short supply in growing industries, in this case the EV industry. And there is nothing to stop those smart people from leaving FF and joining another company (unless perhaps you think they are now under some sort of top secret mind control...).

Extremely talented people with skills in high demand change companies regularly. Nothing nefarious or remarkable about that.

Now, does the Chinese government have strong influence over many Chinese companies? Yes. And has the Chinese government embarked over the last decade or more on a worldwide effort to secure and control a number of critical natural resources? Yes it has. But the fact that FF has hired some smart people to get the company going is not evidence of...whatever bad thing you think is happening with recent FF hires.

By the way, did you notice the remarkable diversity of surnames in the list you posted? Including names like Kim, Chen, Young Mok Doo, and others. It's wonderful that in America you can find such a diverse group of such talented people. I'll wager many of them were not born in America but came here looking for opportunity, and I bet they found it.

I hope that you are right that FF does not pose a risk to the U.S. EV industry. My concern about FF is that it is not playing on a level field regarding funding. The company is indeed being bankrolled by Chinese government incentives. Yes, Jia Yueting is the founder and claims to be funding the company entirely himself. But research on his holdings in China reveals that he receives significant subsidies from the government, which is the primary source of FF's funding. How else can you explain a Chinese startup being able to build a $1 billion plant, a second one in California, paying 2x salaries and $100K signing bonuses (this is well documented) to hire the world's greatest EV engineers and managers, without even showing a prototype? That is certainly quite a feat. Any U.S.-based startup playing by the rules would struggle to get such funding from VCs. This is unfair competition at its worst.

It is great that FF has assembled such a diverse team of professionals, but think about who will reap the fruits of their efforts: China, much more than the US. Technology, expertise, and IP developed by FF will be directly transferred to China. Had FF been a U.S.-owned and funded operation, all of that would have stayed here.

 

[Fallenone]

@



I hope that you are right that FF does not pose a risk to the U.S. EV industry. My concern about FF is that it is not playing on a level field regarding funding. The company is indeed being bankrolled by Chinese government incentives. Yes, Jia Yueting is the founder and claims to be funding the company entirely himself. But research on his holdings in China reveals that he receives significant subsidies from the government, which is the primary source of FF's funding. How else can you explain a Chinese startup being able to build a $1 billion plant, a second one in California, paying 2x salaries and $100K signing bonuses (this is well documented) to hire the world's greatest EV engineers and managers, without even showing a prototype? That is certainly quite a feat. Any U.S.-based startup playing by the rules would struggle to get such funding from VCs. This is unfair competition at its worst.

It is great that FF has assembled such a diverse team of professionals, but think about who will reap the fruits of their efforts: China, much more than the US. Technology, expertise, and IP developed by FF will be directly transferred to China. Had FF been a U.S.-owned and funded operation, all of that would have stayed here.

Wait what? Jia Yueting bankrolled by Chinese government incentives? I'm LOLing so hard.

Jia Yueting is not a well respected person by many, yes. He's pouring money into FF, yes. A great number of his employee are busying doing powerpoint slides instead of making great products, yes. But government incentives, big no. Basically what Jia is doing is not much different from Musk. They both heavily rely on the financial market and present investors a grand future to get money. Only difference is Jia is going even bigger on this path than Musk. And the Chinese capital market is indeed less prudent and more risk aggressive to let Jia get enough funding.

 

[PtG62901]

Though not talked about much, China's solar subsidies were a key factor in Solyndra going under. Solyndra: $1.2 billion in contracts undercut by China

MBA students are going to be studying Solyndra's failure for a long time to come. I don't think their failure is simple. I suspected they were going to fail from the beginning, because their bet was they were going to drive down the price on their proprietary technology faster than everyone else was going to drive down the price of silicon. One of the things we know, nothing has dropped in price faster then manufactured silicon over the last 50 years.

I'm happy the government lent the money, and had a fund for green energy companies, even though that investment tanked (the fund made money). We likely wouldn't be here, 7 years later, talking about Tesla, batteries and EV's without it IMHO.

 

[Allante]

Wait what? Jia Yueting bankrolled by Chinese government incentives? I'm LOLing so hard.

Jia Yueting is not a well respected person by many, yes. He's pouring money into FF, yes. A great number of his employee are busying doing powerpoint slides instead of making great products, yes. But government incentives, big no. Basically what Jia is doing is not much different from Musk. They both heavily rely on the financial market and present investors a grand future to get money. Only difference is Jia is going even bigger on this path than Musk. And the Chinese capital market is indeed less prudent and more risk aggressive to let Jia get enough funding.

The Chinese government subsidies to Jia Yueting are true indeed. They flow through his partial ownership of state-owned BAIC. He has a very tangled web corporate interests, but Forbes, Bloomberg, etc. have done a good job untangling them.

Here's a relevant quote from a August '16 Forbes article:

"And one more question dangles insistently in the air: Will Jia achieve his vision for a next-generation entertainment system on wheels before the cash runs out? As long as the Chinese government continues to make global leadership in electric vehicles a national priority, LeEco [FF's brand in China] will enjoy a comfortable funding backstop. That’s because Chinese Communist Party leaders in Beijing are the ultimate guarantor of bank loans in the People’s Republic."

 

[Fallenone]

The Chinese government subsidies to Jia Yueting are true indeed. They flow through his partial ownership of state-owned BAIC. He has a very tangled web corporate interests, but Forbes, Bloomberg, etc. have done a good job untangling them.

Just like Elon's relationship with the US government and his enterprises living on subsidies. Forbes, Bloomberg, etc. have done a good job untangling this, too.

 

[Topher]

Though not talked about much, China's solar subsidies were a key factor in Solyndra going under.

So a company financed by the Chinese government put a company financed by the United Sated government out of business?

So is this an example of the Chinese being better at capitalism than the US, or them being better at communism than the US?

Thank you kindly.

 

[GBleck]

Big picture the Chinese government is good at getting *sugar* done. They put their mind to something and just do it. They appear to be putting a real effort into combating climate change with solar pv. Electric vehicles will help out with localized tail pipe emissions and decrease oil import requirements. Win win for China and the planet. Not sure how China's currency devaluation would give them a competing advantage moving capital to the us for dev and build in Nevada. The market is more then big enough and no one can build out a system big enough and fast enough at this point to put tm out of business even with artificially cheap capital. I would be more afraid of shitty short term thinking in the US markets drying up access to capital for TM then FF out competing them into bankruptcy.

 

[Shock-On-T]

If we are worried about Chinese subsidies making FF unfairly competitive, what about the US government subsidizing its own EV industry to the same tune?
The money could come from fast-tracking the G20 plan to phase out fossil subsidies, which are currently around $5,000,000,000/year in the US alone.

 

[Shock-On-T]

So a company financed by the Chinese government put a company financed by the United Sated government out of business?

So is this an example of the Chinese being better at capitalism than the US, or them being better at communism than the US?

Thank you kindly.

Too simplistic.
Neither country is wholly capitalist or communist, both are a mixture.