The image arrived in Susan Swenson\u2019s inbox on a Wednesday evening. Her corporate headshot had been crudely crossed out in digital red ink, and the word \u201cKill\u201d was written in the bottom left corner. In the hours that followed, some of her colleagues received similar threats, including messages that referenced the recent assassination of former Japanese prime minister Shinzo Abe.\u00a0<\/p>\n
The menacing emails marked the apex of a months-long fight for control over Faraday Future<\/a>, a Los Angeles, California-based publicly traded electric vehicle<\/a> startup that once billed itself as the next Tesla<\/a>. In September, after the death threats, persistent pressure from Faraday\u2019s largest shareholders, and a surprising cameo from property giant China<\/a> Evergrande Group, Swenson, the executive chair, and three others agreed to leave Faraday\u2019s board of directors in a sweeping restructuring.<\/p>\n While it\u2019s not known who sent the death threats — the company has referred them to the FBI — some leaders inside Faraday believe they were inspired by the boardroom fight recently waged by its largest shareholders, including a group that is partially managed by the startup\u2019s founder, exiled Chinese tycoon Jia Yueting. (The group, FF<\/a> Global Partners, denies any involvement in the threats.) Bloomberg News spoke to three people familiar with the situation who were granted anonymity to discuss sensitive matters, and reviewed dozens of public regulatory and court filings for this story. Faraday Future did not respond to a list of questions.<\/p>\n Seven months ago, Faraday\u2019s board sidelined Jia, who goes by YT, following an internal probe that examined his influence over day-to-day operations, as well as a series of loans employees made to the startup over the years. Now, he stands to benefit greatly from the impending board shakeup, which will be completed when Faraday holds its delayed annual meeting. He has been named an adviser to the board, and FF Global will have input on all six new members. As Faraday put it in a recent SEC filing, \u201cYT Jia and FF Global have strengthened their already significant influence over the Company.\u201d<\/p>\n But as YT reclaims power, it is over a company that\u2019s under investigation by the US Securities and Exchange Commission in relation to the findings of the internal probe — information the Department of Justice has inquired about, too, according to Faraday. The startup also needs money, fast. After burning through more than $3 billion since it launched eight years ago, Faraday reported just $27 million in cash on Oct. 25th, and says it needs millions more if it hopes to finally ship its elusive SUV.<\/p>\n YT ascended in China during the early 2010s, when a tsunami of cash flowed to founders with big visions. He started the \u201cNetflix of China\u201d and parlayed its success into a conglomerate called LeEco, which made everything from smartphones to Android-powered e-bikes. Its expansion was fueled by billions of dollars in debt, and YT personally guaranteed many of the loans. At one point, he pledged 97 percent of his shares in LeEco\u2019s listed arm in exchange for nearly $2 billion, according to the New York Times.<\/p>\n Meanwhile, Elon Musk<\/a> was turning the auto industry on its head. Investors started placing big bets on finding the next Tesla Inc., and dozens of EV startups took root in China and the U.S.. It was in this competitive environment that YT founded Faraday in California in 2014, betting he could beat Musk at his own game.<\/p>\n Eventually, LeEco crumbled under the weight of YT\u2019s ambition. In 2017 it laid off hundreds of employees, abandoned a $2 billion acquisition of TV-maker Vizio, and halted a U.S. expansion. Chinese creditors started pursuing LeEco, and YT. The tycoon landed on a government debtor blacklist and had some assets frozen. So he moved to the US and hunkered down with Faraday.<\/p>\n YT\u2019s connection to Faraday was initially hard to discern. The company had no publicly named CEO, and early executives declined to say where the money came from. According to court filings, it was coming through YT — some $900 million or so over its first few years. He spent much of it hoovering up talent from the likes of Tesla and General Motors<\/a> — including a large swath of the team that created the EV1, the Detroit automaker\u2019s first attempt at a mass-market EV.<\/p>\n Faraday struggled to meet YT\u2019s ambitions. He wanted an ultra-luxe EV packed with fancy technology. But by late 2017, months after revealing its first prototype, the company was running out of cash.<\/p>\n YT brought in a pair of former BMW<\/a> executives, but when they proposed filing for Chapter 11 protection, the tycoon bucked. A restructuring would have jeopardized his control of the company, according to a person familiar with the matter, so he resisted. The executives resigned, and Faraday accused them of \u201cdereliction of duty.\u201d<\/p>\n At the end of 2017 YT found an unlikely savior in China Evergrande Group, which pledged to inject up to $2 billion into Faraday in exchange for a 45% stake. YT also officially took over as CEO. Faraday spent the first $800 million ahead of schedule. Evergrande agreed to advance another $700 million in mid-2018, according to filings from a Hong Kong arbitration case between the two companies, but on the condition that YT step aside and sacrifice his ownership.<\/p>\n YT obliged — at least on paper. He transferred his stake to the daughter of a Faraday vice president, which the Chinese property giant argued was not far enough. The new money never came, and in late 2018 YT and Faraday sued Evergrande in U.S. court, claiming the property giant was \u201cdeliberately starving\u201d the EV startup. Evergrande accused YT of \u201cacting as a shadow director controlling or directing the decisions of directors closely associated with him.\u201d The property giant did not respond to a request for comment.<\/p>\n Faraday had to furlough and lay off hundreds of employees, and suppliers hounded the startup with lawsuits. Nick Sampson, a former Tesla executive and Faraday co-founder, walked away. \u201cThe company is effectively insolvent,\u201d he said in his resignation letter.\u00a0<\/p>\n On the final day of 2018, Faraday and Evergrande struck a truce. Evergrande agreed to reduce its stake to roughly 33%, and allowed Faraday to seek other investors. The property giant gave Faraday a $10 million bridge loan, and YT\u2019s startup survived with him at the helm.<\/p>\n These bitter disputes — each centered around YT\u2019s control of the company — made it hard for Faraday to raise money. In 2019, the company made some moves that appeared to dilute the founder\u2019s power: it set up a management group called FF Global Partners, that received a chunk of YT\u2019s ownership. (It now owns around 30% of Faraday.) YT was also replaced as CEO by a different former BMW executive, Carsten Breitfeld.<\/p>\n By October, YT filed for personal bankruptcy in the U.S. to settle billions of LeEco debt he\u2019d guaranteed. Creditors exchanged their claims for slices of a trust that owned Faraday Future shares, allowing some repayment if the startup was acquired or went public — giving many of YT\u2019s foes a tangible interest in his company\u2019s success.<\/p>\n What kept Faraday afloat during all of this was a series of more than a dozen loans made to the company by employees or parties related to YT, according to SEC filings.<\/p>\n In April 2019, the company received a $9 million loan from an employee in Faraday\u2019s Global Capital Markets department, funded by Ocean View Drive, Inc., a California corporation YT established in 2014 in order to buy three mansions on the Pacific coastline. (YT no longer controls it, according to Faraday\u2019s SEC filings, though the current owner is the spouse of his nephew, Ruokun Jia, who also worked at Faraday.) In July, another employee from the same department loaned Faraday $16.5 million. That loan was funded by FF Global Partners LLC, whose members borrowed the money from a Delaware LLC called \u201cDream Sunrise,\u201d which in turn borrowed its funding from an LLC owned by Ruokun Jia\u2019s spouse.\u00a0<\/p>\n Asked about these loans, a spokesperson for FF Global said Faraday was \u201cunable to obtain significant third-party financing\u201d at the time, and so it instead had to rely on \u201cnumerous smaller-scale financings that YT Jia helped facilitate,\u201d which the group said is a \u201ctypical financing approach for founder-led startups.\u201d<\/p>\n \u201cOver the past several years, YT Jia and FF Global Partners have rescued FFIE many times,\u201d the spokesperson said.<\/p>\n Even after this series of multi-layered transactions, Faraday still needed a $9.2 million loan from the Paycheck Protection Program to ride out the pandemic downturn. With just $1.8 million in the bank at the end of the year, Faraday tapped into the sudden boom of special purpose acquisition company mergers, which helped turn peers like Nikola, Canoo and Fisker<\/a> into public companies. The startup partnered with a SPAC run by two brothers from the New York City real estate industry, Jordan and Scott Vogel. Not only did they see promise in Faraday\u2019s EV tech, according to two of the people familiar with the matter, but they were told — and believed — YT was no longer in control.<\/p>\nDebt binge<\/span><\/h2>\n
Custody battles<\/span><\/h2>\n
Creative fundraising<\/span><\/h2>\n