Startup Carmaker Faraday Future Says It's Unaffected By Job Cuts At Partner LeEco

Faraday Future, a cash-strapped carmaker hoping to build next-generation electric vehicles, avoided further complications today as the Los Angeles-area company says dramatic cuts Chinese partner LeEco is making to its U.S. operations does not affect it.
The startup’s sole source of investment since its creation a few years ago has been LeEco and founder and CEO Yueting Jia, or YT, an entrepreneur who styles himself as a mashup of Tesla’s Elon Musk, Apple’s Steve Jobs and Virgin’s Richard Branson. LeEco, which operates a Netflix-like streaming service and makes televisions, smartphones and bicycles, ran into funding challenges last year, acknowledging that it was overextended. Separate from Faraday Future, LeEco even invested in the LeSee auto line, adding considerable confusion to YT’s overarching vehicle strategy.
LeEco is eliminating 325 jobs at its U.S. operations and scaling back R&D work there, Bloomberg reported today. Reuters estimated the reductions accounted for about 70 percent of LeEco’s staff. The company didn’t immediately respond to a request from Forbes for details.

 Stefan Krause, Faraday’s newly hired global CFO, discussed LeEco’s moves with employees today and said the cuts weren’t aimed at the unit. Krause, formerly CFO for BMW and Deutsche Bank, joined this year to help Faraday solve its own funding issues. To get the FF 91 electric supercar into production, Faraday now needs hundreds of millions of dollars from outside investors.

“Hearing about layoffs at our strategic partner LeEco is discouraging. However, I want to be clear that these layoffs have no impact on Faraday Future,” Krause told employees at its Gardena, California, headquarters today. “We remain committed to our immediate goals of diversifying FF’s investment sources and getting FF 91 on the road in 2018, and we remain confident in the outlook for diversifying FF’s global investment.”

Faraday’s goal is to open an assembly facility in Nevada sometime next year to build the FF 91, a futuristic crossover vehicle that accelerates from 0 to 60 miles an hours in under 2.5 seconds.

Work on the plant stalled in 2016 when funding from LeEco dried up. Faraday also scaled back plans for what was to be a $1 billion, 3-million-square-foot factory in North Las Vegas, Nevada. Now the goal is to open a small factory capable of building thousands of units annually that could be enlarged over time, company officials have said.
Faraday also insists that LeEco’s cutbacks won’t impact its daily operations or development work on the FF 91, shown off in Las Vegas in January at CES 2017. Along with being incredibly fast, Faraday wants the FF 91 to rival Tesla vehicles in technology. Company officials have said they’ll continually gain new functionality through over-the-air software updates, offer advanced in-car entertainment and web-connectivity features and, eventually, be fully self-driving.
Doing all of that won’t be cheap. If Faraday Future is to become a genuine competitor to Musk and a player in the fast-changing world of advanced mobility, Krause has his fundraising work cut out for him.

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Source: Forbes