Electric vehicle startup Faraday Future is close to finalizing a $310 million round of funding from a group of China’s state-owned enterprises and national funds, as the company is set to go public via special purpose acquisition company in the US.
Why it matters: The new investment will ease near-term cash flow pressure on the embattled EV maker and clear some roadblocks for the company resuming its expansion plan into the Chinese EV market, the world’s biggest of its kind.
Details: Faraday will receive around RMB 2 billion ($310 million) from a consortium of investors led by two Chinese state-owned enterprises, Zhuhai Gree Group and Zhuhai Huafa Group, TechNode has confirmed.
- The cash injection is under the direction of the municipal government of Zhuhai, a city in the southern Chinese province of Guangdong, a person close to the matter told TechNode on Wednesday, speaking on condition of anonymity.
- The state-owned Nanfang Media Group first reported the news (in Chinese). Faraday Future declined to comment when contacted by TechNode on Wednesday.
- The Los Angeles-headquartered EV startup has been in touch with the government since late last year. This was followed by the incorporation of a fully-owned subsidiary with registered capital of $250 million in the city in late December, according to Chinese business research platform Tianyancha.
- Zhuhai is among the regional governments aiming to play a major role in China’s leadership in electric vehicles, in September revealing plans to make new energy carmaking one of its five pillar industries by 2025. Chinese media reported that local authorities have been preparing plans to build a new vehicle assembly plant with Faraday.
- Gree Group is a former major shareholder of Gree Electric Appliances Inc, China’s biggest air conditioner maker, while Huafa, also fully owned by Zhuhai municipality, is the city’s biggest real estate developer. Gree and Huafa did not respond to TechNode’s request for comment.
Context: Faraday has struggled for years to secure funds to get its first car, a luxury EV model called FF91, into production, in part due to the debt issues of founder Jia Yueting. The company’s second chance comes as Chinese local governments are racing to back EV startups amidst a Wall Street craze for EV stocks.
- Zhuhai is not the first city to pay to bring an EV maker to town. Hefei provided a lifeline to EV maker Nio in February in return for establishing its Chinese headquarters in the central Chinese city.
- Faraday is expected to file for listing through a merger with Property Solutions Acquisition Corp, a special purpose acquisition company (SPAC) within the next two weeks, Chinese media reported. It has hired Credit Suisse as an underwriter, the person close to the matter told TechNode.
- The company is also looking to source manufacturing from Chinese private automaker Geely, with plans to build a plant with annual capacity of 100,000 vehicles, Reuters reported Monday.