Skip to main content

Faraday Future gets a $9 million government pandemic loan

Faraday Future gets a $9 million government pandemic loan

/

Other small or struggling EV startups have applied, too

Share this story

Photo by Sean O’Kane / The Verge

Electric vehicle startup Faraday Future has obtained a $9,167,800 loan from the Small Business Association’s Paycheck Protection Program (PPP), which was recently launched to help small businesses keep people employed during the COVID-19 pandemic, the company tells The Verge.

That’s close to the $10 million maximum allowed in the program, and the loan will be 100 percent forgiven as long as Faraday Future uses it for payroll, interest on mortgages, rent, or utilities, and doesn’t lay off any of the 400 or so employees who are still there for the next eight weeks (or rehires any who were recently let go). News of the loan was first reported in China by state-funded outlet The Paper.

Faraday Future is not the only EV startup to have gotten one of the PPP loans, either. Struggling electric trucking startup Workhorse received a PPP loan of $1,411,000, according to a recent filing with the Securities and Exchange Commission (SEC). Arcimoto, which finally started production on its three-wheeled electric utility vehicle late last year, also applied for a PPP loan according to its own recent SEC filing, and CEO Mark Frohnmayer tells The Verge that the startup should have an update on the outcome of that application in the “coming days.”

The $9 million (and change) comes at what is a crucial time for Faraday Future. The company’s founder and main financial backer, Chinese billionaire Jia Yueting, personally filed for bankruptcy in October. While his creditors (many of which are Chinese companies that lent him money for his failed tech conglomerate, LeEco) are largely on board with the payment plan he proposed, the process of confirming that plan has dragged on for months. Jia has said in court filings that potential investors in Faraday Future are waiting for his own personal bankruptcy case to be resolved before putting any money into the EV startup.

Meanwhile, Faraday Future had just $6.8 million in the bank at the end of July 2019, according to financial statements filed as part of Jia’s bankruptcy. It has spent at least $30,000 per month on Jia’s salary alone since then, as well as $284,000 per month to lease its headquarters in Los Angeles, California (which it sold a year ago in order to generate cash). Faraday Future’s also funding Jia’s bankruptcy. One of the startup’s holding companies lent him $2,687,629 right before he filed, and the court recently approved another $6.4 million loan (which Jia’s lawyers say was “largely” made up of contributions from the management committee currently running the company) from the same entity.

The company has otherwise kept the lights on thanks to a $45 million loan arranged by restructuring firm Birch Lake, which Faraday Future started working with last May.

While smaller, the loan that Workhorse acquired is also likely crucial to keeping the Ohio-based electric trucking startup afloat. Sales of its existing electric truck have cratered, and the company’s future is now highly dependent on winning the bid to build the United States Postal Service’s next-generation mail truck.

Workhorse is also currently highly leveraged like Faraday Future, having taken a $25 million loan at the beginning of 2019 from a hedge fund in order to pay off a previous loan from a different hedge fund. Workhorse did sell the rights to an electric pickup design to its founder Steve Burns last year for $15.8 million, after he created a new EV startup to buy the Lordstown, Ohio factory once occupied by General Motors. Workhorse will get a cut of any sales of that truck and 1 percent of any equity raise that the startup, called Lordstown Motors, is able to secure.

A number of other EV startups in the United States that are trying to get to production are too big to qualify for the loans. Lucid Motors, which is backed by Saudi Arabia’s sovereign wealth fund, has at least 600 full-time employees at its headquarters in California. Rivian, which is based in Michigan but already has a number of offices around the country, employs over 2,000 people.

Both of those startups have recently said they’re doing well, with employees getting work done remotely (though Rivian has pushed back the release of its vehicles). But some companies that are already making vehicles in the space are putting employees on unpaid leave, like the electric bus and truck division of Chinese conglomerate BYD, which furloughed 465 people (about 75 percent of the workforce) at its North American headquarters in Lancaster, California last week, according to the state’s employment office. BYD also furloughed 26 people in its North American energy division and 18 more in its corporate offices.

Update April 20th, 7:20PM ET: Faraday Future corrected the amount of the loan it received from $9,176,800 to $9,167,800. The company also now says that it has paid back the $45 million loan set up by Birch Lake. The article has been updated to reflect these two points.

Today’s Storystream

Feed refreshed 37 minutes ago The tablet didn’t call that play by itself

A
External Link
Andrew J. Hawkins37 minutes ago
Vietnam’s EV aspirant is giving big Potemkin village vibes

Idle equipment, absent workers, deserted villages, an empty swimming pool. VinFast is Vietnam’s answer to Tesla, with the goal of making 1 million EVs in the next 5-6 years to sell to customers US, Canada and Europe. With these lofty goals, the company invited a bunch of social media influencers, as well as some auto journalists, on a “a four-day, multicity extravaganza” that seemed more weird than convincing, according to Bloomberg. Guests were treated to a champagne and lobster lunch, but also were left wondering why none of VinFast’s machinery was working. They even got to visit the company’s real estate holdings outside Hanoi, where they were greeted by empty swimming pools, dusty construction equipment, and a library devoid of books.


J
James Vincent57 minutes ago
Today, 39 years ago, the world didn’t end.

And it’s thanks to one man: Stanislav Petrov, a USSR military officer who, on September 26th, 1983, took the decision not to launch a retaliatory nuclear attack against the US. Petrov correctly guessed that satellite readings showing inbound nukes were faulty, and so likely saved the world from nuclear war. As journalist Tom Chivers put it on Twitter, “Happy Stanislav Petrov Day to those who celebrate!” Read more about Petrov’s life here.


Soviet Colonel who prevented 1983 nuclear response
Photo by Scott Peterson/Getty Images
J
The Verge
James VincentAn hour ago
Deepfakes were made for Disney.

You might have seen the news this weekend that the voice of James Earl Jones is being cloned using AI so his performance as Darth Vader in Star Wars can live on forever.

Reading the story, it struck me how perfect deepfakes are for Disney — a company that profits from original characters, fans' nostalgia, and an uncanny ability to twist copyright law to its liking. And now, with deepfakes, Disney’s most iconic performances will live on forever, ensuring the magic never dies.


E
External Link
Elizabeth LopattoTwo hours ago
Hurricane Fiona ratcheted up tensions about crypto bros in Puerto Rico.

“An official emergency has been declared, which means in the tax program, your physical presence time is suspended,” a crypto investor posted on TikTok. “So I am headed out of the island.” Perhaps predictably, locals are furious.


Welcome to the new Verge

Revolutionizing the media with blog posts

Nilay PatelSep 13
R
The Verge
Richard LawlerTwo hours ago
Teen hacking suspect linked to GTA 6 leak and Uber security breach charged in London.

City of London police tweeted Saturday that the teenager arrested on suspicion of hacking has been charged with “two counts of breach of bail conditions and two counts of computer misuse.”

They haven’t confirmed any connection with the GTA 6 leak or Uber hack, but the details line up with those incidents, as well as a suspect arrested this spring for the Lapsus$ breaches.


R
The Verge
Richard Lawler1:00 PM UTC
Green light.

Good morning to everyone, except for the intern or whoever prevented us from seeing how Microsoft’s Surface held up to yet another violent NFL incident.

Today’s big event is the crash of a NASA spaceship this evening — on purpose. Mary Beth Griggs can explain.


D
David Pierce12:54 PM UTC
Thousands and thousands of reasons people love Android.

“Android fans, what are the primary reasons why you will never ever switch to an iPhone?” That question led to almost 30,000 comments so far, and was for a while the most popular thing on Reddit. It’s a totally fascinating peek into the platform wars, and I’ve spent way too much time reading through it. I also laughed hard at “I can turn my text bubbles to any color I like.”


T
Thomas Ricker10:44 AM UTC
The Simpsons pays tribute to Chrome’s dino game.

Season 34 of The Simpsons kicked off on Sunday night with an opening credits “couch gag” based on the offline dino game from Google’s Chrome browser. Cactus, cactus, couch, d’oh! Perfect.


T
Youtube
Thomas Ricker7:29 AM UTC
Table breaks before Apple Watch Ultra’s sapphire glass.

”It’s the most rugged and capable Apple Watch yet,” said Apple at the launch of the Apple Watch Ultra (read The Verge review here). YouTuber TechRax put that claim to the test with a series of drop, scratch, and hammer tests. Takeaways: the titanium case will scratch with enough abuse, and that flat sapphire front crystal is tough — tougher than the table which cracks before the Ultra fails — but not indestructible.


E
Twitter
Emma RothSep 25
Rihanna’s headlining the Super Bowl Halftime Show.

Apple Music’s set to sponsor the Halftime Show next February, and it’s starting out strong with a performance from Rihanna. I honestly can’t remember which company sponsored the Halftime Show before Pepsi, so it’ll be nice to see how Apple handles the show for Super Bowl LVII.


E
Twitter
Emma RothSep 25
Starlink is growing.

The Elon Musk-owned satellite internet service, which covers all seven continents including Antarctica, has now made over 1 million user terminals. Musk has big plans for the service, which he hopes to expand to cruise ships, planes, and even school buses.

Musk recently said he’ll sidestep sanctions to activate the service in Iran, where the government put restrictions on communications due to mass protests. He followed through on his promise to bring Starlink to Ukraine at the start of Russia’s invasion, so we’ll have to wait and see if he manages to bring the service to Iran as well.


E
External Link
Emma RothSep 25
We might not get another Apple event this year.

While Apple was initially expected to hold an event to launch its rumored M2-equipped Macs and iPads in October, Bloomberg’s Mark Gurman predicts Apple will announce its new devices in a series of press releases, website updates, and media briefings instead.

I know that it probably takes a lot of work to put these polished events together, but if Apple does pass on it this year, I will kind of miss vibing to the livestream’s music and seeing all the new products get presented.


E
External Link
Emma RothSep 24
California Governor Gavin Newsom vetoes the state’s “BitLicense” law.

The bill, called the Digital Financial Assets Law, would establish a regulatory framework for companies that transact with cryptocurrency in the state, similar to New York’s BitLicense system. In a statement, Newsom says it’s “premature to lock a licensing structure” and that implementing such a program is a “costly undertaking:”

A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.