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Business Insider Article on Faraday Future - It looks bleak...

Discussion in 'Electric Vehicles' started by rolosrevenge, Jan 18, 2017.

  1. rolosrevenge

    rolosrevenge Dr. EVS

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  2. Tam

    Tam Active Member

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    #2 Tam, Jan 18, 2017
    Last edited: Jan 19, 2017
    Starting a car company is difficult.

    And it's even much harder if you need money to pay the bills while there's no revenues.

    It's not a surprise.
     
  3. BluestarE3

    BluestarE3 Active Member

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    I have a feeling the sad saga of Fara Faro will become a case study in business school of how not to launch a car company. And there will be the inevitable comparisons of FF/Jia and Tesla/Musk and why one failed and the other one succeeded.

    One interesting tidbit from that article is how many of the 64,000 reservations were paid: less than .01% or around $300,000. So, they can't count on customer deposits to help with their cash situation.
     
  4. Tam

    Tam Active Member

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    Could it be because: Tesla took its investors/customers for a test ride on the spot.

    Elon Musk told the story that he saw the non-reaction of Mercedes-Benz to Tesla verbal presentation and he immediate stopped the talk and took them for a test ride on Tesla-modified Mercedes-Benz's Smart car instead. Done deal!
     
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  5. Yggdrasill

    Yggdrasill Active Member

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    Tesla chose a much more cautious approach:

    - They first made the Roadster based on a Lotus Elise chassis, before they started on the Model S.
    - When they first launched the Model S, the focus was on the drive line. It didn't even have parking sensors or folding side view mirrors, never mind ACC or self driving technology.
    - They got Fremont for almost nothing.
    - They supported the early years in part with supply deals made with Toyota (RAV4) and Daimler (Smart, B-class).
    - They could sell the early CARB credits for 5000 USD. Now the market is much more saturated, so they're lucky to get 2500 USD. They also got up to 7 credits per car at one point, that's now reduced to 4 credits per car.

    Faraday Future decided to go straight for a top end car designed from scratch and produced in large-ish numbers. They decided to stuff the car full of every feature they could think of, and build a new billion dollar factory. And never mind actual revenue, they decided to self-fund absolutely everything. I don't think Jia is rich enough to pull it off.
     
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  6. RobStark

    RobStark Active Member

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    Jia is rich enough at ~$4B.

    He doesn't have the balls the size of Elon's to go all in.

    Elon put every last penny of his $160M Paypal money into Tesla,SpaceX and Solar City.

    ~$3B is more than enough to launch FF with their Nevada factory.

    Jia has (almost) chosen not to do so.
     
  7. Yggdrasill

    Yggdrasill Active Member

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    I suppose he could sell Le.com and use the funds to launch Faraday Future. But he isn't rich enough to keep ownership of Le.com *and* bring the FF91 to market.
     
  8. RobStark

    RobStark Active Member

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    Or he could borrow against his Le.com shares.
     
  9. Yggdrasill

    Yggdrasill Active Member

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    I'm not so sure if anyone would lend him enough money, and it would be extremely risky.

    His position in Leshi seems to be worth $3.1 billion at the moment. If he borrowed 2 billion against the shares, he'd be geared by a factor of three, and I doubt 2 billion would be sufficient to bring the FF91 to market (as revealed).
     
  10. RobStark

    RobStark Active Member

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    Of course it is risky.

    He also has ~$600M in cash.

    You don't need to build the entire factory first before Job 1.

    A new vehicle generally cost legacy automakers ~$1B.

    They have already spent quite a bit and have some patents to show for it.

    Again, not even most billionaires are like Elon.
     
  11. Ampster

    Ampster Member

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    Nor the liqiudity. His net worth is market value of companies he controls. At the time Musks proceeds from PayPal wis liquid securities
     
  12. Tam

    Tam Active Member

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    How much money does Fara Faro need?

    Daimler invested $50 million which was enough to get Tesla out of the death bed on Christmas Eve of 2008.
     
  13. Krugerrand

    Krugerrand Well-Known Member

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    Business Insider interviewed eight people with intimate knowledge of Faraday Future's business to learn about the state of affairs leading up to the CES presentation. All the executives spoke on condition of anonymity so that they could speak freely.

    That quote from the article made me laugh. Because the company is so huge there's no way an educated guess of who spoke could happen. :rolleyes:

    Anyway, we all know that money doesn't solve everything. It's how the money is used that's critical.

    Give me two bank accounts full of money and I'll show you a) how to *blow* one account and have virtually nothing to show for it, and b) how to *spend and invest* the other account and have more to show for it than the two accounts combined. That, my friends, is the difference between FF and Tesla respectively.
     
  14. wdolson

    wdolson Supporting Member

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    A major part of the secret sauce to Tesla's success has been Elon Musk. Tesla was on it's way to failure when Elon took over. Tesla is an unusually well run company that has also had a heavy dose of luck.

    Elon Musk had experience creating two companies from scratch before starting SpaceX and getting involved in Tesla. He's also has a combination of incredible genius combined with an insane drive to make his ideas into reality.
     

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