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Beleaguered EV Startup Faraday Future in Talks To Go Public Through SPAC Merger

October 6, 2020 9:55 am

Beijing (PingWest)—Faraday Future aims to close a deal soon to go public through a reverse merger with a special-purchase acquisition company (SPAC), Reuters reported.

“We are working on such a deal ... and will be able to announce something hopefully quite soon,” Carsten Breitfeld, CEO of the EV startup, said of the possibility of a SPAC deal.

The CEO declined to say who Faraday is negotiating with or when a deal would close.

A SPAC is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years.

The soaring stock market, driven by the Federal Reserve, makes startups eager to go public, and SPACs have emerged as a quick route to the stock market. In mid-September, the home buying and selling unicorn OpenDoor announced that it will be listed in the stock market by merging with blank-check company Social Capital Hedosophia II.

Faraday Future, headquartered in Los Angeles, was founded by the notorious Chinese entrepreneur Jia Yueting, who finalized his personal bankruptcy filing in June. The founder’s bankruptcy application was criticized by the media because multiple sources disclosed that he and his family still own a large amount of assets.

Jia is well known for creating Leshi, a streaming media platform in China. But since then, the company began to expand into the manufacture of mobile phones, TVs, and even electric cars, which led to heavy debts. 

The EV company has exhausted all $2 billion or so that Jia and Chinese real estate giant Evergrande put in over the years. Breitfeld has said that it needs $850 million in order to get to production. However, according to The Verge, at the end of July 2019 (the most recent data shared in Jia’s bankruptcy filings), Faraday Future had just $6.8 million in cash.

The CEO said Jia no longer owns stock in Faraday, which is more than half-owned by employees through an executive partnership and an employee stock ownership plan.