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A new force was reported by employees that sales fraud! Official response

2024-05-30 Update From: AutoBeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)04/10 Report--

Faraday Future (FF), the electric car company founded by Jia Yueting, has a new problem.

According to domestic media reports, Jose Guerrero and Victoria Xie, two employees of FF, reported that some of the few cars delivered by FF so far were fake, and pointed out that Jia Yueting, founder of FF, had "weaponized" the company's human resources department in retaliation for anyone who exposed the false sales. To this end, the two internal whistleblowers filed two new lawsuits against FF, Jia Yueting and Yang Nan, the company's human resources director, in Los Angeles Superior Court, accusing them of wrongful dismissal, breach of contract and mental injury.

Jia Yueting and FF responded to the above news at noon today.

Jia Yueting said: "the statement about the lawsuit filed by the recently dismissed employee: I think there are a lot of false statements and slander in the complaint for the purpose of retaliation and racketeering. I will countersue these two people!" "FF attaches great importance to the two lawsuits filed by former employees," FF said on its official Weibo blog. "the company believes that we have good grounds to respond to the allegations in the complaint based on the facts. at the same time, the company will take all necessary measures to protect the company's reputation and all employees from all charges and violations, including personality attacks."

According to media reports, the above-mentioned lawsuit took place on December 6, 2023, when FF sales and after-sales Director Guerrero submitted an internal report letter to FF General Counsel, claiming that FF lied about the sales of the first four FF91 vehicles, FF in the sales process, three of the four FF91 were announced before the completion of the sales process, and only one received full payment 60 days after delivery. The aim is to increase the company's share price by announcing sales. In addition, the two employees pointed out that the leadership team of Jia Yueting's department said: "it is necessary to increase the company's share price by announcing sales, and employees who raise compliance issues will be retaliated by the human resources department."

It is worth mentioning that in February 2022, FF also revealed that the order data were falsified. After an independent audit by the special committee at the time, FF said: previously claimed to have received more than 14000 bookings for FF91 vehicles, which may be misleading because only a few hundred bookings have been paid, while the others (a total of 14000) are unpaid.

Reviewing the process of building FF, it has been nearly 10 years since FF built it, but so far it has delivered only 11 new cars, the fourth of which is owned by Jia Yueting himself.

What is even more surprising to the outside world is that in March this year, FF also filed a recall plan with NHTSA, recalling 11 FF91 that had been delivered because the system could not properly remind consumers of faulty airbags. In this regard, FF will upgrade the iHUB module software update through OTA, and the car owner notification letter is expected to be sent on March 15, 2024. On April 8th, FF announced that it had completed the release of remote OTA software updates, correcting potential security risks identified in previous proactive recalls.

This year is the tenth year that Jia Yueting founded FF. At present, FF has only one mass-production model, FF91, which takes nearly nine years from mass production to delivery. Jia Yueting founded FF in 2014 and completed a $1 billion round of financing the following year. After that, Jia Yueting left the United States because of Letv's financial crisis, and eventually FF funding was in crisis, and the car-building project came to a standstill. In January 2017, on the other side of the Atlantic, FF unveiled its first flagship model, the FF91, which is known as "the world's first Internet eco-electric car." in the following years, FF held several quasi-production conferences, but it backfired and eventually mass production led to multiple ticket skips due to operational difficulties. It wasn't until April 2023 that FF announced the completion of production of its first production car, the FF91 Futurist, and the launch of the FF ieFactory production line in Hanford, California.

At the end of May 2023, Jia Yueting announced the launch of FF91 2.0 Futurist Alliance, offering three models: FF91 2.0, FF91 2.0 futurist version and FF91 2.0 futurist Alliance Edition. Among them, the FF91 2.0 Futurist Alliance is priced at $309000 (about RMB 2.2 million) and is limited to 300 units worldwide. In August of the same year, FF delivered the first FF91 and held a delivery ceremony for the first user of the new car, which was delivered by founder Jia Yueting himself.

It should be noted that although FF has started delivery, it has not received a positive response in the capital markets. In addition, FF had previously received a delisting warning from Nasdaq because its share price was below $1 for 30 consecutive trading days. Under the listing rules, FF needs to return its share price to $1 and maintain it for at least 10 days by June 25, 2024, or face delisting. According to Wind, FF shares fell by 98.94% in 2023.

FF posted a net loss of $78 million (569 million yuan) in the third quarter of 2023, but generated revenue for the first time, with car sales totaling $551000 (4.02 million yuan), according to the latest earnings data. At the end of September 2023, FF had only about $8.5 million in cash on its books, of which $1.85 million was restricted cash.

FF has invested about $3 billion (21.9 billion yuan) since it started building cars, but it has produced only 11 cars, and FF is now heavily in debt. In February, Rexford Industries, the landlord of FF's Los Angeles headquarters, filed a lawsuit against FF in Los Angeles Superior Court, accusing him of failing to pay January and February rent and related maintenance fees and taxes, totaling $91000 (660000 yuan), so the landlord demanded the repossession of the building. On April 9, the latest report said that the two sides had reached a settlement, but it was not convenient to disclose the details of the agreement.

As one of the earliest new car-building forces, FF has delivered only 11 cars in the past 10 years, which is essentially not much different from "PPT car-building". In addition, even if FF91 has been mass produced, it is difficult to open the market. From the positioning and price of FF91, the price of FF91 positioning luxury car, as high as 2 million yuan, is not suitable for the mass consumer market, and it is difficult for consumers to pay for it.

The competition in the car market will only be more fierce this year, and I am afraid there will be fewer opportunities and time left for FF. Whether Jia Yueting, who suffocates his dream, can survive remains to be seen.

As of press time, FF shares closed at $0.112, up 24.44%, with a total market capitalization of $4.7708 million.

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