Faraday Future Co-founder Resigns as the Automaker Forces Workers to Take Unpaid Leave

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【Summary】Financially troubled EV startup Faraday Future (FF) is on the brink of collapse and the company’s co-founder Nick Samson has resigned from the company, stating the automaker "is effectively insolvent in both its financial and personnel assets."

Eric Walz    Dec 06, 2018 1:51 PM PT
Faraday Future Co-founder Resigns as the Automaker Forces Workers to Take Unpaid Leave

Financially troubled EV startup Faraday Future (FF) is on the brink of collapse and the company's co-founder Nick Samson has resigned from the company The Verge has reported.

Nick Sampson, one of Faraday Future's three co-founders, resigned suddenly on Tuesday, according to a separate email obtained by The Verge. Sampson's departure came just one day after Peter Savagian, Faraday Future's senior vice president of technology and product development announced his resignation.

Faraday Future spokesperson John Schilling confirmed Sampson and Savagian's departures in an email to The Verge. "We wish them the best of luck in their future endeavors," he wrote.

In an email announcing his resignation, Sampson wrote, "The company is effectively insolvent in both its financial and personnel assets, it will at best will [sic] limp along for the foreseeable future. I feel that my role in Faraday Future is no long [sic] a path that I can follow, so I will leave the company, effective immediately," "I cannot continue knowing the devastating impact we are having on the lives of our employees, their families and loved ones as we as the ripple effect this will have on lives throughout our suppliers and the industry as a whole."

Sampson added that "if circumstances should materially change, I certainly would consider returning to the company."

Just last week, Faraday Future announced layoffs and salary reductions as cost-cutting measures, as the company struggles to pay its bills and meet its payroll, but apparently that wasn't enough. Faraday's CEO, Jia "JT" Yueting, also agreed to forfeit his salary and agreed to be paid a salary of just $1 per year.

Instead the company's management has decided to shut down some operations this week at the company's headquarters in Gardena, California, and at its factory in Hanford, California as the company runs low on cash.

Remaining employees will be placed on furlough, forcing them to take mandatory unpaid leave until new funding is secured, according to an email from CEO Jia "YT" Yueting that was obtained by The Verge. Jia wrote in an email that all Faraday Future employees who started working after May 1st of this year "must take a furlough."

Hourly workers who have been with the company for more than six months will be allowed to stay on, but at minimum wage. Those hired before May 1 will have the option to remain on board with a reduced salary of $50,000 per year, according to the current and former employees The Verge has learned.

"We are grateful to all of the hundreds of employees who are willing to stay with the minimum wage [sic] and continue to work on the FF91 core project," Jia wrote. "This was an extremely tough decision to make, and we recognize the emotional stress and financial strain this puts on people's personal lives."

Faraday is blaming investor Evergrande for its current financial situation.

The news comes after a rift between the Faraday and its biggest investor Evergrande Health Industry Group, the healthcare division of Chinese real estate group Evergrande.

Last December FF announced its has secured $2 billion in last-minute funding from Evergrande to keep the company afloat. Evergrande agreed to invest the money in FF over the span of three years in exchange for a 45 percent share of FF stock, starting with an initial payment of $800 million, which was made at the time.

The disbursement of funds was contingent on FF meeting agreed upon production goals for its luxury electric SUV, the FF91. However, Evergrande claims Faraday has wasted hundreds of millions of dollars, while Faraday insists that Evergrande has broken agreements to make payments to the company.

Faraday Future was denied an advance on the remaining $1.2 billion after taking the case to arbitration in Hong Kong. The arbitrator did allow Faraday Future to seek up to $500 million in new investment money, but it is subject to Evergrande's approval, which seems unlikely.

Jia said in Tuesday's email that Faraday Future is "currently engaged in conversations with investors from different backgrounds."

The ongoing conflict leaves the company future in limbo and unable to pay its suppliers, as it looks for an investor bailout that may never come.

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