Faraday Future is cutting its employees’ salaries by 20 percent, and laying off some others, in an attempt to keep the electric car startup alive as it fights with its main investor, The Verge has learned. It could be a serious blow to the company’s overall goal of shipping the first production versions of its luxury electric SUV, the FF91, around the end of this year.
The austerity measures were announced in an email to staff sent Sunday night and will go into effect next week. Faraday Future will also cut its hourly employees’ wages by 20 percent, according to the email, which was obtained by The Verge.
Faraday Future CEO Jia Yueting will decrease his salary to $1, and some members of the management team have elected to take larger than 20 percent cuts, the company explains in the email. The number of positions being laid off was not disclosed. A representative for the company did not respond to a request for comment, and no layoffs have yet been filed with the state of California.
“The company is committed to monitoring its finances and will reevaluate this decision with the goal of restoring salaries once funding is available,” the email reads.
The cuts are the second sign of trouble after Jia recently tried to back out of the investment from Chinese real estate giant Evergrande. The stalemate between the two sides, which came after Faraday Future spent through the first $800 million tranche, has already resulted in hundreds of thousands of dollars owed to suppliers and vendors, as The Verge previously reported.
Faraday Future had its back up against a wall at the end of 2017. The company had an ugly split with its CFO, and was nearly unable to make its $12 million payroll in the final months of the year. The crucial deal with Evergrande came at the eleventh hour. The health division of the Chinese conglomerate pledged $2 billion over the next three years to Faraday Future, tied to certain undisclosed production goals. In return, Evergrande got a 45 percent stake in the company and lots of leverage over the company.
The first installment of $800 million came at the beginning of the year, but Jia had spent nearly all of it by mid-year, Evergrande said earlier this month. Jia tried to get the board of directors to approve an advance of $700 million, and when Evergrande said no, the CEO took the case to an arbitrator in Hong Kong. The outcome of that arbitration case is still not clear, but Faraday Future said in Sunday’s email that it’s “pursuing funding opportunities with those who share our vision.”
“Faraday Future is facing issues with its current funding because of Evergrande’s failure to live up to its end of the bargain and make the payments it agreed to,” the company wrote.