Source: Lukewen Studio (ID: Lukewen1982)
On May 30th, Jia Yueting held a press conference and conducted a public live broadcast, announcing the official start of delivery of Faraday’s future FF91 car, and the 9-year journey was finally completed.
As soon as the news came out, Faraday’s share price rose by 8%, and Jia Yueting’s Tiktok fans exceeded 900000 in just a few days. The sound of Jia Yueting’s turning over was heard from the outside world. If Jia Yueting could turn over, it would be an epic inspirational story. So, is Jia Yueting really turning over when he returns home next week?
I’m afraid the matter is not that simple.
Let’s take a look at the specific plan announced by FF91. The delivery of FF91 will be divided into three stages. The first stage of delivery will start on May 31st. In this stage, the delivery target is called the Futurist Product Officer. What is the Futurist Product Officer?
In fact, it is industry authorities, including senior technical experts, professors, and even some car reviewers. Experts are experts, and they even give the name “Futurism Product Officer”. Mr. Jia is truly an internet person and never speaks human language.
These professionals must pay the full amount and then receive official training.
The second stage is for these professionals to obtain the car, and the third stage is to start the delivery for ordinary users.
That is to say, FF91 currently cannot be delivered to ordinary users. Of course, with a price of 309000 US dollars, about 2.2 million RMB, few ordinary users can afford it, so they have turned their attention to professionals. They have money, and even if they are cut off, they don’t care about that amount of money. That’s what Mr. Jia is interested in.
However, the matter is not over yet.
The normal purchasing process for a car is as follows: consumers pay a deposit in advance for the car they like. The deposit usually means something like 2000 to 10000 yuan, and then sign a contract. After the car is officially picked up, the final payment will be given.
But the purchasing process of FF91 is extremely strange, requiring full payment from the beginning, which is 2.2 million RMB.
That’s not right. There’s no one who pays in full without seeing the car. So the question is, what exactly does Mr. Jia want?
The secret is hidden in Faraday’s future financing.
Faraday was established in Los Angeles, USA in February 2015, and received $360 million in A-round financing that month. It then conducted multiple rounds of financing in the following years, totaling approximately RMB 30 billion.
Is it over 30 billion? There are definitely many in other industries, but not many in the automotive industry.
Take a look at “Wei Xiaoli”, a new force in car manufacturing. Since its establishment in 2015, Wei Lai has raised more than 70 billion RMB, while Xiao Peng has raised more than 50 billion RMB since its establishment in 2014. Ideal has raised more than 60 billion RMB since its establishment in 2015.
It can be seen that the total amount of financing for Faraday in the future is already relatively small. Automobile is a capital and technology intensive industry, and there is not enough money to play. Therefore, it has been repeatedly reported that there is insufficient funds. Last September, Faraday’s future book cash balance was only $31 million, and it is almost impossible to rely on this money to sustain mass production.
Fortunately, Mr. Jia’s ability was strong enough, and soon he secured a financing of around 150 million US dollars, which looked good. However, to be honest, it was still far from enough, and it was necessary to continue financing, especially in large amounts.
However, this is a bit difficult at the moment. In terms of stock price, Faraday’s future stock price has been below $1 for a long time. At the time of writing this article, it was $0.21. According to the possibility of delisting below $1, this is undoubtedly a junk stock.
It is difficult to raise funds in the capital market, and Mr. Jia’s own credit, especially after taking advantage of Evergrande, has skyrocketed to $150 million, which is already extraordinary. It is also difficult to rely on PPT and lip service to raise more money.
So what should we do?
Mr. Jia has placed all his hope for a lifetime of transformation on FF91. If this cannot be achieved, it will completely cool down. After thinking about it, there is another way – to find consumer financing.
We know that according to the official promotion of Faraday, there are already 15000 orders for FF91, although this order number was subsequently kicked out, with more than half being left handed to right handed. However, even so, there are at least 5000 orders.
These 5000 vehicles are definitely not fully paid yet. If we can have these 5000 people pay in full, based on 2.2 million RMB, it would be 11 billion RMB, which is enough to sustain Faraday for a long time in the future.
So now you know why we are holding this press conference, announcing the start of delivery, and asking everyone to pay the full amount from the beginning.
In addition to providing investors with a nominal explanation, which is to indirectly raise funds from car buyers. As for whether Jia always really wants to turn around with this money or simply to cut leeks, perhaps only he himself knows.
I have no intention of mocking Mr. Jia, but to be honest, I am quite pessimistic about Mr. Jia’s future because the timing, location, and people are no longer on his side.
Speaking of Tianshi, the establishment of a new force in car manufacturing was generally before 2016. At that time, with the rise of mobile internet, transforming cars with IT technology became a new direction. At that time, financing was the easiest to obtain, and market competition was not as fierce.
Today, the new energy market pattern has gradually emerged. If FF91 does not have particularly strong competitiveness, it is difficult to insert it again. According to official propaganda, the maximum horsepower of FF91 is 1050 horsepower, and zero hundred acceleration only takes 2.27 seconds. The battery capacity is 142kWh, and the EPA range can reach 613 kilometers.
This data can still be obtained today, but it is only paper data. The actual performance of general new energy vehicles often lags behind the official promotion. Considering Mr. Jia’s consistent flamboyant style, I feel that the moisture content of this data is not low.
In terms of geographical advantage, it is actually the supply chain.
The headquarters of Faraday Future is located in California, USA, and the focus of the supply chain is also in the USA. However, as is well known, the new energy industry chain in the United States is not perfect. Even early Tesla was once mired in production capacity due to supply chain issues, relying on the Shanghai factory and China’s well-established supply chain to completely overcome the difficulties.
This means that if relying on the US supply chain for early mass production, the cost will be relatively high, which is not good news for Faraday, which is already severely underfunded.
In February of this year, Faraday announced that it would start delivery in April, but by April, due to supply chain issues, it had been postponed again. The lesson had already been learned, and it would happen again in the future.
As for human harmony, that is even more severe.
In August 2021, the Biden administration held an electric vehicle conference, inviting all American car companies, except for Tesla, which instantly ignited public opinion. This was actually a downward pressure given to Musk by American veterans such as Ford and General Motors.
Even Musk, a pure white man who has been in the United States for many years and has deep cooperation with American politics and even the military, cannot help but be suppressed due to the interests of American old money. As a complete and much shallower rooted outsider, can Jia Yueting be spared by the old money?
Besides, you are still a yellow skinned person.
It can be boldly speculated that if Faraday really makes progress in the United States, then iron fists such as “national security” will come crashing down.
Even if Faraday can start delivering in the future, its chances of profitability are really small.
Taking Gaohe Automobile, which also focuses on luxury electric vehicles, as an example, its pricing is around 800000 yuan. Last year, its sales were less than 4400 units, and some media speculated that its annual revenue was around 3 billion yuan. As it is not a listed company, it is not clear whether it will make a profit, but the delivery volume and revenue figure indicate a zero possibility of profitability.
The previous CEO of Faraday, Bifukang, set an initial target of selling 2400 vehicles annually, which corresponds to a sales revenue of approximately 5 billion yuan, making it difficult to make a profit. Therefore, he plans to gradually reach 40000 annual sales in the future.
With its own various problems and external factors, even if the target of 2400 is fractured, it may be difficult to maintain.
It is not ruled out that in the early stages of listing, with the reputation of Mr. Jia, there will be some people who can afford to buy and play. However, if there are any issues with quality control in the future, such sales will be difficult to sustain. With the credit of Faraday’s N ticket jumps, quality control is really difficult to let people rest assured.
Overall, the possibility that Mr. Jia wants to turn around with FF91 cannot be said to be non-existent, but it is also very rare. It may be another trick of “returning to China next week”.
However, the good news is that ordinary people don’t have to worry about being cut off, because we can’t afford a 2.2 million yuan car. Mr. Jia doesn’t cut off the poor but only the rich, and in the early days, he focused on the wealthy in the United States, which is quite a “conscience”.