Faraday Future factory may be on hold as the company misses payments to key contractor

October 24, 2016

In April, start-up automaker Faraday Future broke ground on its first production facility--a 900-acre, $1 billion behemoth located in the Nevada desert. Now comes word that the company has yet to pay the lead contractor on that project, and work at the site could come to a grinding halt.

It wouldn't be the first setback for Faraday, which is backed by Chinese entrepreneur Jia Yueting. Though the company initially said that it would begin producing cars by 2018, mentions of timelines have become scarce in recent months. Because the construction of buildings hasn't yet begun--and isn't expected to until later this year or early next--it seems unlikely that anything driveable will roll off Faraday's assembly line before 2019 at the earliest. 

More recently, on October 10, construction firm AECOM sent Faraday a letter referencing some $58.1 million in bills that have yet to be paid. Of that sum, $21 million is a deposit that was due in September. The balance is for work in October and pre-payments for November.

The letter gave Faraday until October 20 to cough up the $21 downpayment. If it doesn't comply, work at the site could be suspended.

Following media inquiries about the letter and the missing payments, Faraday and AECOM issued a joint statement that reaffirmed their "strong" working relationship. Faraday has said that there would be no work stoppage at the site, though notably, AECOM hasn't stated as much.

Our take 

Faraday's troubles aren't entirely unexpected. America's most visible start-up automaker, Tesla, has had to face plenty of unforseen obstacles, delaying production and delivery schedules for all of its models. Even companies with decades of experience under their belts endure setbacks, so the fact that Faraday is dealing with issues of its own shouldn't surprise anyone.

No, it's the boldness of Faraday's gamble that makes a stumble like this noteworthy. It's one thing for General Motors or Toyota to hit a few snags: we know they'll recover. It's quite another for a company like Faraday Future--which has no history of producing cars and no consumer base to support its agenda--to plan a massive, billion-dollar facility to build its first all-electric supercar. 

It's a little like your neighbor's promise to construct a 14-car, high-tech garage with money he's supposed to inherit from a late aunt: a brash move that raises eyebrows and plenty of skepticism. In Faraday's case, that skepticism is magnified when problems like missed payments are reported in the media.

We'll keep you posted as construction progresses--or doesn't.

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