Electric vehicle startup-gone-SPAC Faraday Future issued a going concern warning according to regulators shavings. The company said it had serious doubts about whether it would be able to continue operating next year, adding that it was uncertain when it would ship the first deliveries of its FF 91 luxury EVs.
This isn’t the first time Faraday Future has delayed deliveries of FF 91s. In July, the company accelerated the start of its production and first deliveries for the third and fourth quarters, citing supply chain issues and a lack of cash. Faraday now says it doesn’t expect deliveries to happen in 2022.
As of Nov. 17, Faraday had 369 pre-orders, down from the 399 refundable, non-binding, paid deposits it had as of June 30, according to the company.
Faraday cited many conditions that will affect the delivery schedule, including whether suppliers meet their deliveries, the timing and success of certification tests and the implementation and effectiveness of the company’s downsizing. Top of the list of concerns is whether Faraday will be able to secure the funds it needs to get through the year, much less make the first deliveries.
Last week, Faraday got a potential $350 million lifeline to help him launch his car when he signed a financing agreement with Yorkville Advisors Global. The equity line of credit includes an initial commitment of $200 million from the investment firm. In September, Faraday also secured up to $100 million in financing from the Hong Kong holding company Senyun International. However, access to potential liquidity doesn’t appear to be enough to keep Faraday out of hot water in the short term.
According to Monday’s filing, Faraday “projects that it may require additional funds through the remainder of 2022 and will require additional funds beyond 2022 to continue its operations and support the ramp-up of production of the FF 91 to generate revenue , to put the company on a path to cash flow profitability.”
Since Faraday’s founding, the company has suffered net losses from operations, negative cash flow from operating activities, and has an accumulated deficit of $3.3 billion.
The startup ended the third quarter with $31.76 million in cash, down from $121 million at the end of last year. Net losses for the quarter totaled $103.4 million, about a third of the losses reported in Q3 2021.
Faraday shares are down 6.79% today and over 94% this year.
The company has been battling controversy ever since becomes public domain through merger with Property Solutions Acquisition Corp. in July 2021. Months after its debut, a short seller report from J Capital alleged that Faraday had made a number of inaccurate statements.
Ann internal probe followed, prompting the company to restructure its board, cut the salaries of two top executives and remove at least one more. The investigation confirmed that employees made inaccurate statements to investors and that its “corporate culture did not sufficiently prioritize compliance,” leading to the U.S. Securities and Exchange Commission’s issuance subpoenas to several managers.