Faraday Future Settles Dispute with Top Investor

Electric car startup Faraday Future Inc. says it has resolved a dispute with its largest investor that will enable the company to pursue additional funding elsewhere.

The agreement ends months of legal wrangling between Faraday founder Jia Yueting and billionaire Chinese tycoon Hui Ka Yan’s Hong Kong-based Evergrande Health Industry Group

Evergrande said last July it would invest $2 billion in Faraday but balked after making the first $800 million payment. Jia sued to escape the Evergrande deal, claiming that Evergrande was blocking other investors and attempting to steal the carmaker’s intellectual property.

After Evergrande announced its investment last summer, the company moved Faraday’s operating headquarters from California to China, restored the startup’s product plan and predicted that five factories in China would be producing 5 million EVs annually by 2028.

The new agreement scraps the original $2 billion Evergrande deal. Evergrande will gain control of Faraday’s operations in China but end up with 32% the company’s preference shares compared with the originally targeted 45% stake.

Evergrande reportedly will provide an unspecified bridge loan to Faraday to keep the startup running. The investor also has agreed to release its control over the carmaker’s assets, thereby enabling Faraday to chase other investors. Faraday has the option of buying back Evergrande’s stake in five years.

Faraday originally hoped to launch its first EV, the FF91 high-performance crossover vehicle (pictured above), in 2017. But financial strains prompted the company to delay the car’s debut, shrink its produce lineup plan from seven models to two and cancel plans for a $1 billion assembly plant in Nevada. Faraday also conducted massive layoffs and cut the salaries of remaining employees by a reported 20%.