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Image credit: AP Photo/Jae C. Hong

Faraday Future comes crawling back to its main investor

The EV startup can take on much-needed cash, but will backers bite?
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AP Photo/Jae C. Hong

Faraday Future is ending its very tumultuous year on a positive note... in a manner of speaking. The electric car startup has reached a restructuring deal with its main investor, Evergrande Health's Season Smart, that will put legal battles in the past and potentially keep the money flowing. The two sides have dropped their earlier contract, and Faraday has pulled litigation that tried to force Evergrande to cough up cash. The pact both lifts a hold on the EV maker's assets and removes limitations on its equity financing, theoretically freeing it to take on financing that just wasn't an option before.

It's not yet clear how this will affect furloughed employees, although their status likely depends on Faraday's ability to attract financing.

That's the real challenge. The company predicted a "breakthrough" in financing and said that investors "all over the world" have already been interested in equity deals. However, it's not clear that backers will necessarily flock to the company's side. It's still destined to burn cash for a long time even if the FF 91 proves a hit, and that still doesn't tackle issues like founder Jia Yueting's various offshore roles or the departure of key executives. While Faraday is no longer knocking on death's door, it's not guaranteed to enjoy a resurgence.

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