Faraday Future Smart Electric (FIE) – Get the report from Faraday Future Intelligent Electric Inc. has long been seen as the electric vehicle maker that would challenge Tesla (TSLA) – Get the Tesla Inc report dominance. The company even embraced the title of Tesla’s #1 competitor.
It is clear that the two groups no longer seem to play in the same court.
Tesla is now more concerned with exceeding one million vehicles produced per year. A performance that the group led by Elon Musk should achieve this year despite the disruptions observed in supply chains around the world and the soaring prices of raw materials, such as nickel, palladium and aluminum.
And to drive the point home, the market capitalization of Tesla exceeds 1,120 billion dollars when that of Faraday barely reached 1.60 billion dollars at the last check.
The gap between the two companies has continued to widen against Faraday. It could widen further as Faraday faces a wall of investigations.
The company announced Thursday that the Securities and Exchange Commission (SEC) has opened an investigation into Faraday’s statements regarding pre-orders of its only electric vehicle in the run-up to its public offering. Faraday went public via a merger with a special purpose acquisition company, or SPAC, named Property Solutions Acquisition Corp., which provided the beleaguered automaker with $1 billion.
The company and the employees subpoenaed
“The company, certain members of the management team and company employees have received a preservation notice and subpoena from staff of the United States Securities and Exchange Commission,” Faraday said. noted in a filing with the SEC.
The federal regulator’s investigation relates to revelations from an internal investigation conducted by Faraday. That investigation was led by a special committee that “had completed a previously announced independent investigation into allegations of inaccurate disclosures by the company,” Faraday said.
“Since then, the company continues to implement appropriate corrective actions approved by the Special Committee and continues with additional investigative work and remedial work recommended by the Special Committee, under the direction of the Executive Chairman and reporting to the Committee of ‘Company Audit. Board of Directors.’
Faraday warned that “this work could lead to new findings and corrective actions.”
The SEC notice “indicates that the SEC has initiated a formal investigation regarding the matters that were the subject of the special committee’s investigation,” the company said.
Scroll to continue
Faraday said he was cooperating “fully” with the SEC investigation.
In February, Faraday announced that Chairman of the Board Brian Krolicki had resigned after an internal investigation showed the company had made statements about pre-orders for its electric vehicle that could have misled investors.
“The Company’s statements prior to the Business Combination that it had received more than 14,000 reservations for the FF 91 vehicle were potentially misleading as only several hundred of these reservations were paid for, while the others (totalling 14,000) were unpaid expressions of interest”, Faraday noted at the time.
The company also said the investigation identified significant weaknesses in its internal controls and that it needed staff and systems upgrades.
Corporate culture has failed
“The company’s corporate culture has not prioritized compliance enough,” Faraday concluded. “The company, under the direction of the executive chairman, will continue its investigative and remedial work, including to determine whether any inaccurate disclosures have been made regarding its corporate accommodation arrangements and disclosures with related parties.”
The automaker had to part ways with some executives, hired a new chief compliance officer and warned it “may take certain other disciplinary actions against other employees.”
These difficulties sum up the story of Faraday, co-founded in 2014 to much buzz by Jia “YT” Yueting, a Chinese millionaire and owner of a media conglomerate in China.
Faraday announced at the end of February that it had finally succeeded in producing a car, the FF 91. Full production of this luxury SUV is on schedule and will begin in the third quarter of 2022, according to the firm.
Before production begins this summer, Faraday Future will focus on “pre-production builds for final technical validation and certification.”
The startup, also called The FF 91 Futurist Alliance, burst onto the automotive scene in 2014 by bringing in top talent from Tesla, BMW (BMW.DE) Audi (VLKAF) ford (F) – Get the Ford Motor Company reportLamborghini, Google (GOOGL) – Get the Class A report from Alphabet Inc. and Ferrari (RACE) – Get the Ferrari NV report.
Faraday was also at one point mistaken for a covert front operation for Apple’s self-driving project.