Gardena’s Faraday Future has its foot on the gas.
In its first two years of existence, the autonomous electric car company has hired more than 750 employees and begun development on a $1 billion factory in Nevada as part of its ambitious goal of putting a vehicle to market by next year.
“We’re embarking on nothing less than a complete rethink of what mobility means,” said Nick Sampson, senior vice president of product research and development, at the Consumer Electronics Show in Las Vegas on Jan 4.
Yet industry observers said the company’s big goals might be hard to achieve given its market position, organizational structure and stiff competition.
For instance, the release at CES of Faraday’s first concept car, the FFZero1 Concept, raised eyebrows. The Batmobile-like vehicle concept Faraday displayed claimed performance of 1,000 horsepower, the ability to go from zero to 60 miles an hour in less than three seconds and a top speed of over 200 miles an hour. However, those specs are all theoretical at this point, because the car on display was not functional. So Faraday’s rumored “Tesla Killer” could be a way off.
Despite the company’s deep ranks of veteran engineers, including executives from Tesla Motors Inc., Ferrari and General Motors Co., the company has yet to name a chief executive and appears to be struggling to maintain its focus after launching in 2014.
“Right now, you have amazingly creative people who don’t have proper supervision,” said a source with knowledge of the situation who was not authorized to comment publicly on the matter. “It would seem they’ve got world-class designers that have been let off the leash and are designing whatever they want. If CES was any indicator, the designers are kind of running the show.”
The company has also spent time on far-out projects, such as a race-car helmet that can supply oxygen and water and proposed aromatherapy features for yet-to-be developed electric cars.
Beyond those initiatives, the company has some sound ideas, say industry experts, such as its Variable Platform Architecture, which could make production more efficient.
But in order to leapfrog the existing electric car industry, Faraday will not only have to refocus, but also build out car dealerships and service centers, according to experts. It will also need a savvy business model, a feature of its ambitious plan that the company has yet to disclose.
Faraday declined to be interviewed.
Despite its penchant for quickly engineering cars, Faraday’s investors would likely have to plow hundreds of millions of dollars – or more – into the startup for years before the company sees a profit, experts noted.
Case in point: Tesla, the Palo Alto company that launched its first electric car in 2008 and has a market capitalization of $26 billion, isn’t expected to turn a profit until 2020.
“The problem I have with Faraday is I haven’t seen any customer insights from them. It’s a me-too strategy,” said Trip Chowdhry, managing director at Global Equities Research of Redwood Shores, who covers Tesla. “Maybe they have a secret sauce, I don’t know. But I don’t see it.”
Tyler Frank, a senior research associate for Robert W. Baird of Milwaukee, said it took Tesla five years to sell its first electric sports car – a difficult journey that almost bankrupted the company. That research and development process taught the company valuable lessons that might be difficult for Faraday to learn in a hurry, he added.
Faraday started its engine quietly about two years ago inside the home of Nick Sampson, its senior vice president of product research and development.
Within a few months, it had moved into Nissan Motor Co.’s research and development offices in Gardena. That facility is owned by Leshi Internet Information & Technology, whose founder and chief executive, Chinese billionaire Jia Yueting, is Faraday’s only disclosed investor.
The secretive company quickly earned media attention thanks in part to its ability to snatch engineers from top competitors such as Tesla, BMW, Ferrari and G.M.
Faraday has also gained attention for the rapid pace it’s pursuing. In order to meet its target go-to-market date next year, Faraday will rely on its Variable Platform Architecture during production, a system that allows its chassis to be extended or shortened depending on car type. Volkswagen Group of Germany uses a similar technology for cars as varied as the Audi A3 sedan and the Volkswagen Touran, a minivan sold in Europe.
“With VPA, we can dramatically compress our time to market and reduce our costs,” Sampson explained on stage at CES.
The company is also breaking ground this month on a $1 billion manufacturing facility in Las Vegas, supported partly by $335 million worth of incentives from the state of Nevada.
It’s there the company plans to manufacture batteries that will deliver 15 percent more energy than ones used by the high-end Tesla Model S sedan and give its cars a range of more than 300 miles. Other vehicle features will include self-driving capabilities, augmented-reality driving displays and an ergonomic seat design based on NASA research and aromatherapy.
“I want to see a scenario where you sit in traffic for two hours, where you’re connected, there’s aromatherapy and a really nice chair in an ergonomic position,” said Richard Kim, head of design for Faraday, at the Los Angeles Auto Show in November. “You can get a ton of work done, watch a movie. With time, you don’t just want to connect, you want to be able to disconnect and relax.”
The company said it is also exploring a subscription car program that would allow consumers to swap vehicles, much like wireless plans allow consumers to trade in cellphones.
But for now, Faraday is going after the luxury car sector. While that represents a $350 billion global market, insiders said there’s one country that could be of particular interest to the company given its aims, as well as the background of its top executive and investor: China.
Leshi, the Chinese company founded by Faraday’s investor, is part of a larger push by Chinese companies into electric cars with the support and sometimes outright direction of the Chinese government.
Insiders also said the man leading Faraday’s hurried journey to market is Ding Lei, head of Leshi Super Electric Car Co. (also known as Le Auto), a Chinese car maker that’s a division of the parent company founded by Faraday’s investor. Lei is also the former vice president of Chinese government-owned SAIC Motor Corp. and a former government official in Shanghai.
A focus on Chinese consumers could well reap big rewards for Faraday despite a long and expensive road to market.
Last week, G.M.’s top executive in China said that country’s luxury car market is expected to account for 10 percent of overall auto sales in 2020, with a total of 3.5 million vehicles sold.
“The first car is going to be … around $150,000-plus,” said the source familiar with Faraday’s plans. “I suspect it will appeal more to the Chinese businessman who doesn’t drive cars and has chauffeurs.”
But that doesn’t mean the car maker is ready to advertise its intentions to the industry.
“They are really worried about being seen as a Chinese car company,” said a second source familiar with Faraday’s plans who was not authorized to comment publicly. “In the car industry, the worst thing you can be is a Chinese car company because all they do is copy people – and they are really blatant about it.”
Analyst Chowdhry put it another way.
“It is called C2C: Copy to China,” he said. “Learn in the USA and then copy the learning to China.”