Things aren’t looking good for electric vehicle startup Faraday Future. Earlier this week, a company spokesperson confirmed that the Faraday Future factory has laid off a large part of its workforce and has cut the wages of its employees by 20 percent.
At the end of 2017, Faraday Future was able to avoid disaster after securing an $800 million investment deal with Chinese real estate group Evergrande. According to a new filing with the Hong Kong Stock Exchange, however, Faraday Future manged to blow through most of their funding by mid-July. When Faraday Future founder and CEO Jia Yueting attempted to persuade the board of directors to approve an advance of an additional $700 million, Evergrande agreed. Soon after, however, Yueting filed for arbitration and stated that the payment had never come, resulting in Yueting trying to back out of the deal. Evergrande has since accused Yueting of manipulating them into paying $700 million after burning through their initial funds, as well as trying to strip the company of their right to approve future financing deals.
Since spending their initial $800 million of funding, Faraday Future has struggled to stay afloat. Jia Yueting will decrease his salary to $1, as well as cut many employees’ salaries by 20 percent, with some members of the management team electing to take cuts larger than 20 percent. The exact number of positions being laid off at the Faraday Future factory has yet to be disclosed.
The company has since released a statement in regards to the Faraday Future factory wage cuts and lay offs:
“Effective immediately, all FF salaried employees will receive an immediate 20% cut to their annual base salary, and effective next week, all hourly employees will receive a 20% cut to their hourly wages. The Company is committed to monitoring its finances and will reevaluate this decision with the goal of restoring salaries once funding is available. As an additional measure, we are reducing our headcount. We recognize that those who are now leaving have contributed tremendously to FF, and we appreciate their contributions.
During this transitional phase, FF Founder and CEO YT Jia has decided to take a $1 annual salary. In addition, members of the leadership team have volunteered to take a further reduced salary beyond the 20% reduction.
We take pride in our close-knit community, and we are mindful of the impact these changes will have on our employees and their families. These steps are unfortunate given the great progress we have made as a company in recent months. The Company is taking concrete steps, including pursuing funding opportunities with those who share our vision. We are committed to making progress towards our goals, and continuing the necessary investments in our people, our products, technology, and business to develop an industry-leading connected mobility ecosystem. No further information related to the financial state of FF including additional business operations will be communicated at this time.”