Is Apple buying Faraday Future?
What´s the fact?
Rumours were already around regarding the financial situation of Faraday Future. Six top executives left FF and it is said that the reason was because of the difficult financial situation.
Besides this two different news stories from November 2016 gave a glimpse of what is happening at Faraday Future.
First, it was written that Faraday Future´s parent company LeEco might run out of cash.
In a letter to his employees Jia Yueting, the CEO of LeEco group, admitted that they have overextended themself. Especially within the automotive division. They have spent 1.475 bn USD — a lot more than planned.
LeEco is not only invested in Faraday Future. Besides that investment they have a partnership with Aston Martin for building an electric car. LeEco itself presented it´s own electric autonomous car LeSee at the 2016 Beijing Motor Show and plans to build a car factory in Huzhou City within the Zhejinang Province for 3 bn USD. Altogether a lot of money which is invested within the automotive sector.
As some good news regarding the financial situation of LeEco, it´s parent company Leshi Holding announced on Tuesday 15th that they have secured commitments for 600 mio USD in China to support LeEco.
Second, it was announced that Faraday Future has halted construction of its 1 bn USD factory in Nevada. FF has reportedly missed several payment deadlines with its contractor AECOM. A FF spokesperson said, that they are working with AECOM during an “adjustment period” at the plant and that it is planned to restart work in 2017.
Quite a few facts that show Faraday Future has not the solid financing background as a lot of people thought or hoped.
But why should Apple buy Faraday Future?
There are some facts why it might makes sense for Apple to buy FF:
- Apple is interested in cars
It is a fact that Apple is interested in cars. They are running “Project Titan”, their own approach into the car business. Last month news emerged that they are now focussing only on software. FF itself has already prototypes of its own electric SUV which are tested on streets. And the prototype should be presented in January 2017 at CES in Las Vegas. Apple has the software and FF has the hardware.
- Apple is talking with car manufactures
In late September the Financial Times reported that Apple was in talks with McLaren Automotive. At that point of time it was only a rumor. But in a recent interview with Reuters, McLaren Automotive CEO Mike Flewitt confirmed that McLaren was indeed in discussions with Apple, but it never progressed towards a definitive proposition. Maybe because Apple already noticed that FF has financial troubles?
- Faraday Future has an automotive engineering team
FF has a strong management team with a lot of experience within the automobile industry. It would bring forward Apples ambitions to enter the car industry. And they have some prototypes driving around.
- Faraday Future already started building a factory within the USA
FF has already plans for its 1bn USD factory in Nevada. And they have incentives of 200 mio USD from the State of Nevada for building that factory.
- Apple might already be connected somehow with Faraday Future
From the beginning of FF there were always rumours that Apple is somehow connected with FF and that they are building the iCar. Maybe they gave Leshi the 600 mio USD as a deposit for buying FF.
- There is a cultural clash between Faraday Future and LeEco — Apple would fit a lot better
LeEco started it´s own automotive business after they started investing in Faraday Future. Besides that there was a situation regarding the name of FF: the Chinese managers proposed calling the new company Fara Faro instead of Faraday Future. And the Americans were sure that this is the stupidest name ever.
What will happen?
The next big milestone for FF will be CES2017 where they are going to reveal their production model of their electric car.
After this FF has to solve it´s financial situation and continue building their factory in Nevada. Maybe with the help and the backup of LeEco. Or FF will die because of running out of money.
Or they get bought — maybe by Apple. Which would bring up a new big player — with a lot of creativity, ambitious design, technical and financial potential.