Author: Big Eye

On July 22nd, Faraday Future (FF) was successfully listed on NASDAQ through a SPAC merger, with a company valuation of $3.4 billion, which is approximately RMB 22 billion.

Through this listing, FF will raise about $1 billion to fund the mass production of FF91, the development of subsequent models such as FF81, and the core technologies.

Why can FF revive?

As early as 2016, the concept car of FF91 was unveiled. Leaving the appearance aside, in terms of the three-electric system, FF91 is equipped with a 130 kWh battery pack, and has an EPA range of 608 km, a maximum power of 1050 horsepower, and can accelerate from 0 to 100 km/h in just 2.4 seconds, which is still impressive today.

In terms of size, FF91 has a length of 5.25 meters, a width of 2.283 meters, a height of 1.598 meters, and a wheelbase of 3.2 meters, which is flawless for consumers in China and the United States who emphasize interior space.

Its VPA variable electric drive chassis architecture can help FF quickly complete its model matrix by flexibly matching batteries and different vehicle bodies, which is similar to Volkswagen’s MEB.

In terms of configuration for autonomous driving, connected cars, fully automated parking, and AI artificial intelligence, it is still regarded as a product highlight by many automakers. The only thing that FF lacks is the ability to exhibit all these functions through mass production.

Therefore, Jia Yueting does have his own set of ideas, which is why he was able to recruit Ding Lei, the former general manager of SAIC-GM, from his position as deputy mayor of Pudong New Area in the early days, and later gathered Zhang Hailiang, the former unsuccessful general manager of SAIC Volkswagen, and a group of Volkswagen executives under the LeTV Automobile.

If it were not for the breakdown of the LeTV ecological chain, LeTV Automobile would not have lost to today’s NIO in China. After Jia Yueting sold Letv assets to Sun Hongbin, he focused on operating FF in the United States.

As the most important ace in Jia Yueting’s hand, FF represents Jia’s biggest and last hope. Even if Jia gave up on LeEco and went to a foreign country, he never gave up control of FF. He firmly believes that as long as FF91 can be mass-produced, all problems can be solved. The holes left by LeEco can be filled, and he himself can make a comeback.

It is precisely because of Jia Yueting’s persistence that FF has attracted many investors in recent years, among which the most famous is Evergrande Group. However, the cooperation ultimately failed. Until last year, Jia Yueting gradually stepped back and handed over the control of FF to Byton’s founder, Bin Li, to achieve the understanding of investors and ultimately promote FF’s listing on NASDAQ.

And these new investors are mostly financial investors who have no more strategic and operational interference with FF. After all, last year, Tesla’s soaring in the United States made the concept of new energy vehicles relatively scarce in the US securities market. Currently, FF is in a low position. If it can promote its listing at a relatively low valuation, it will undoubtedly make investors earn a lot of money.

Another point we need to understand is that listing in the United States is different from listing in China. They follow the policy of “loose entrance and strict exit,” similar to the policy of the college entrance examination in the United States. That is, the listing threshold is not high, but delisting is also easy. This is exactly the opposite of China where it is very difficult to list on the main board, but once a company successfully goes public, the delisting policy is also very tolerant. Therefore, listing in the United States through SPAC reverse merger is easier. We should not think that FF’s listing is so remarkable. It is still far away for Jia Yueting, who will return to China next week to solve a large amount of debt problems.

Successful listing only injects possibly the last funds into FF91’s mass production, and there is still too much uncertainty whether FF91 can make a big splash.

The noteworthy Evergrande Group

Among FF’s many disclosed and undisclosed investors, Evergrande’s Xu Jiayin is undoubtedly the most well-known. With the departure of the golden age of the real estate industry, China’s leading real estate company – Evergrande Group decided to transform.## New Energy Vehicles Industry, the Best Battlefield for Evergrande

The new energy vehicles industry is viewed by evergrande as the best battlefield to take over the real estate industry. And FF is the first station for evergrande to enter the new energy vehicles industry. At that time, Mr. Xu Jiayin, the chairman of evergrande, hoped to make FF91 the main body of his new energy vehicle business, by investing in FF and promoting its mass production, as well as obtaining the controlling power of FF.

However, things did not go as planned, and Jia Yueting was not willing to give up the company. After the dispute between the two sides, evergrande eventually withdrew. But evergrande obtained 32% of the preferred stock of FF as a return for its previous investment. According to the relevant data, before FF went public, evergrande still held 20% of its shares.

After losing evergrande’s investment, FF has been struggling in the doldrums. This situation did not change until the beginning of this year.

–On the one hand, Geely invested in FF and reported that its joint venture with Foxconn would produce cars for FF in China.

–On the other hand, Zhuhai City Government reported that it invested in FF and brought FF’s factory to Zhuhai. The endorsement from Geely, Foxconn, and Zhuhai City Government played a very positive role in FF’s successful SPAC listing and raising funds needed to produce FF91.

The Up and Down of Evergrande’s Car Business

After parting ways with FF, Evergrande Motors quickly acquired the production qualification from Gotion High-Tech and accelerated its expansion in the new energy vehicle market through acquisitions and collaborations with foreign car technology companies.

At the Shanghai Auto Show this year, Evergrande Motors even launched nine new cars at once, making the industry insiders awe-struck. Its market value has once surpassed HKD 670 billion, becoming the largest car company in China by market value. Both old carmakers like SAIC Motor and BYD, and new carmakers like NIO and XPeng Motors, are dwarfed by Evergrande Motors.

However, Evergrande has not yet launched any mass-produced models at that time.

But on July 19, GF Securities initiated a RMB 132 million asset preservation against Evergrande, once again raising public concern about whether Evergrande has the ability to repay various debts.Although Evergrande has once again faced life and death crisis, it has quickly resolved the related problems. However, this time the stock prices of Evergrande Group have suffered heavy losses. Especially, the closing price of Evergrande Auto on the 20th dropped to HKD 14.3, and its market value was less than HKD 140 billion, down nearly 80% from its peak.

Unexpectedly, at this moment, FF, which was once regarded by Xu Jiayin as having tricked him, announced that it will be listed on NASDAQ through SPAC on the 22nd. The stock price of Evergrande Group, which holds 20% of FF shares, has received a major boost and has risen significantly.

Will Evergrande and FF continue their relationship in the future?

If LeEco’s fund chain had not been broken and unable to support FF’s mass production at that time, FF would undoubtedly have been Tesla’s strongest competitor worldwide.

However, there are no ifs in this world, because the current market is no longer the same market as before. Tesla has already surged ahead and become the world’s largest car company by market value, leaving traditional car companies such as Volkswagen and Toyota far behind. In the US and Chinese markets, both traditional car companies and new forces are emerging like mushrooms after rain. Everyone has their own tricks. The electric vehicle market has long been a red sea market.

Therefore, $1 billion investment is only a drop in the bucket for FF today. The US listing is more to boost consumers’ confidence in FF.

As for Evergrande, after a period of car manufacturing, it should have realized that car manufacturing is not an easy task. Compared with real estate, it is difficult for new energy vehicles to obtain core competitiveness through the outsourcing of design and construction. However, as Evergrande has invested too much, it can only bite the bullet to maintain its new energy vehicle business.

If FF91 can achieve successful mass production and obtain good market feedback, we cannot rule out the possibility that Evergrande will use its 20% stake as a bargaining chip and seek greater cooperation with FF.From my perspective, after FF91 enters mass production, raising FF’s stock price and selling it might be the best outcome for Jia Yueting. After all, both FF and Jia Yueting are burdened with a massive amount of debt, especially with Jia’s complete lack of credibility in the domestic market. Under the fact that FF91 cannot achieve self-funding in the short term, any attempt to repay debt or invest in forward-looking technologies such as autonomous driving and intelligent connectivity is not realistic.

Finding a buyer like Evergrande is undoubtedly the best opportunity for Jia to extricate himself. In the business world, there are never permanent enemies, only permanent interests.

From another perspective, FF may also be Evergrande’s last chance for success in the automotive industry. The two parties once went from allies to adversaries, and perhaps in the not-too-distant future, they will renew their relationship.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.