EV Startup Faraday Future Struggling as CFO and Others Resign
【Summary】Stefan Krause, the company’s CFO who joined Faraday Future just eight months ago, quietly resigned from the company in October, as the production of Faraday’s sleek FF91 electric sedan halts.
LOS ANGELES — There is more turmoil and uncertainty at Faraday Future, the California-based electric car startup run by founder Jia Yueting, who is also founder of financially troubled LeEco.
Stefan Krause, the company's CFO who joined Faraday Future just eight months ago, quietly resigned from the company in October, as the production of Faraday's sleek FF91 electric sedan halted. The FF 91 is powered by a 130 kWh battery and uses Faraday Future's patented Echelon Inverter, which it says can transform more energy while using less space.
Krause was hired in March, which was seen as major move for the fledgling three-year-old startup. As the former BMW global CFO, Krause had been tasked with courting new investors to raise $1 billion this year for Faraday's ambitious EV project.
Faraday Releases Bizarre Statement on Krause's Departure
Krause confirmed he quit nearly a month ago, although it was just reported. In a bizarre statement, the company accused him of "malfeasance", and is currently taking legal actions as a result of Stefan Krause's malfeasance and dereliction of duty. Pascal Coustar will temporarily lead the operations of FF's financial management.
"Stefan Krause's possible violation of law and lack of contribution to FF's goals over the course of his leadership since March has led to severe damages to the interests of FF and its investors," the company writes in a press release, even though Krause submitted his resignation on October 14th.
The company has also terminated Ulrich Kranz as FF's Chief Technology Officer. Ulrich Kranz has only been the company's CTO for a little over three months and this termination will not affect the R&D process and product development of FF, the company states.
Krause Accuses Faraday of Defamation
In response to Faraday Future's statement, Krause accused the Chinese company for defamation surrounding the reasons of his recent departure from the company. The news could further erode investor confidence and reduce the chance for the company to raise much-needed capital to maintain its operations.
"Faraday Future issued a statement today that falsely described my departure from the company. The truth is that I resigned from Faraday Future on October 14, effective immediately," reads a statement issued last Friday by Krause, who was formerly a Deutsche Bank executive and chief financial officer of Bayerische Motoren Werke AG before joining Faraday Future in March.
"The company's statement inaccurately portrays the circumstances surrounding my departure, and includes baseless and defamatory statements about me and my contributions to the company," Krause added. "I have retained legal counsel and will be exploring all options available to me."
Ulrich Kranz, Future Faraday's chief technology officer, also left the company, Faraday Future said in a statement last week. The episode adds another chapter to the Faraday Future saga, which is struggling to raise capital and retain its team of shrinking talent.
Faraday Future said in the statement that it had decided to end the employment contract with Krause due to his possible violation of the law and lack of contribution, which damaged the company and investors' interests. The company claimed that Krause hindered the firm's fundraising process and said it is currently taking legal actions as a result of his malfeasance and dereliction of duty.
Regarding Kranz's departure, Faraday Future said that he "has only been appointed in this role for over three months and this termination wouldn't affect the research and development process and product development of FF."
Krause joined Faraday Future this March, responsible for corporate finance, investor relations and capital management. According to Chinese media reports, Krause has proposed a number of exit and fundraising plans for Future Faraday, including selling part of the company's technology to Indian automotive manufacturer Mahindra & Mahindra.
Founder Jia Yueting's Financial Troubles
Krause has reportedly managed to introduce investors to Faraday Future in potential deals that require founder and exiled Chinese businessman Jia Yueting to relinquish control. Jia refused to do so, which led to the failure of such plans, says local media reports.
Jia Yueting, who was founder of troubled Chinese tech conglomerate LeEco, is in a "personal credit bankruptcy." He left cash-strapped LeEco in July and has since stayed in the U.S. despite stating repeatedly that he would return to China soon to solve the massive outstanding debt issues facing LeEco. While he remains focused on "developing Faraday Future's businesses" in Los Angeles, dozens of creditors and service providers have been camping inside LeEco's Beijing headquarters for months, hoping to get repaid.
New Report Claims Tata Motors is Buying a stake in Faraday Future
In another twist to this story, a new report today says that India's Tata Motors is investing $900 million into Faraday Future, Chinese media outlets have claimed.
Chinese automotive news portal Gasgoo claims that US-based Faraday Future is worth $9 billion, meaning Tata's money will buy it 10 percent of the company. Tata Motors owns Jaguar Land Rover (JLR), which itself is investing heavily in the development of electric technology. Such a deal could give Tata Motors and JLR access to Faraday Future's advanced technology, which includes the high-tech connectivity systems developed by Chinese financial partner and electronics specialist LeEco.
Faraday Future has received more than 64,000 orders for its first model, the sleek FF 91, a Tesla Model S rival, and is building a battery factory in Texas, but plans stalled earlier this year when construction contractor AECOM claimed the company missed a $21 million payment.
Faraday Future has since scaled back its plans for the site and delayed its completion date by a year to 2019. If the struggling company cannot work out its internal conflicts and raise enough capital to fund its ambitious electric car plans, Faraday Future may not have a future.
Originally from New Jersey, Eric is an automotive and technology reporter specializing in the high-tech industry in Silicon Valley. Eric has over fifteen years of automotive experience and a B.A. in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the automotive industry and beyond. He has worked on self-driving cars and as a technical writer, helping people to understand and work with technology. Outside of work, Eric likes to travel to new places, play guitar, and explore the outdoors.
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