In-depth review: Evergrande's support for FF 91 mass production still has variables

There have always been two major myths in the industry about new car-making forces. First, why hasn't Tesla gone bankrupt yet? Second, why is there always someone to take over Jia Yueting? No matter how much you argue, the world will always unfold in a way you can't imagine, allowing you to experience the rich wonders.

Yes, Tesla has not gone bankrupt, and Jia Yueting has been taken over by someone else. Sun Hongbin chose to spend 237 days at LeTV, and Evergrande Health invested HK$6.746 billion to heroically save Faraday Future (FF). This article will discuss the whole process of Evergrande taking over FF, and whether FF 91 can be successfully mass-produced after Evergrande took over.

LeEco is a company that has been embroiled in too much love, hate, and hatred, and its founder Jia Yueting is an extremely complex and dramatic figure. Most people no longer believe that there is any hidden story behind any capital operation related to Jia Yueting, and everyone will bring in their own judgments and opinions when talking about projects related to Jia Yueting.

■ Let’s talk about money first

Let’s start with FF Automobile, which is invested by Evergrande Health.

On June 25, Evergrande Health announced that it had acquired 100% of the shares of Hong Kong Shiying Company for HK$6.746 billion, indirectly acquiring 45% of the equity of Smart King and becoming the company's largest shareholder. After that, Smart King's equity structure became: Evergrande Health 45%, Jia Yueting 33%, and the company's management 22%. The company uses AB shares to exercise voting rights, with Jia Yueting holding 10 rights for 1 share and Evergrande holding 1 right for 1 share. Jia Yueting still has the largest voting rights.

A more noteworthy detail is that the announcement also disclosed that Hong Kong Shiying Company and FF's original shareholders signed an agreement on November 30, 2017, and have invested US$800 million so far, with another US$1.2 billion to be paid in two installments before the end of 2019 and 2020. The HK$6.746 billion of Evergrande Health converted into US dollars is exactly 860 million, which is equivalent to the actual amount of money invested by Shiying. As for the US$1.2 billion that Shiying mentioned in the announcement, whether it can be invested after the equity has been completely transferred is still a question mark.

If the 45% stake is calculated at $2 billion, Smart King is valued at $4.44 billion. Smart King wholly owns FF USA and FF Hong Kong, while FF Hong Kong wholly owns Guangzhou Ruichi Automobile and holds 95% of the shares in FAW-Ferrari Automobile (China) Co., Ltd. (hereinafter referred to as FAW-Ferrari China), which means that Smart King is almost completely equal to all FF businesses. The current valuation is disappointing.

At the same time as Evergrande Health released the announcement, FF's official account also released a message that the company had obtained US$2 billion in financing and had been approved by the US government, which took half a year. From the perspective of the time period, the US$2 billion financing transaction refers to the transaction between FF and Hong Kong Shiying Company, not the transaction between Evergrande Health and Hong Kong Shiying.

To sum up, the actual investment amount of Evergrande Health this time is US$860 million, in exchange for 45% of the equity of Hong Kong Shiying, which was expected to invest US$2 billion. This money will be paid in cash in one lump sum on or before July 3, 2018. Hong Kong Shiying agreed to invest US$2 billion, and has actually invested US$800 million, with US$1.2 billion yet to be paid.

After Evergrande acquires 100% of Hong Kong Shiying's equity, Hong Kong Shiying will become a wholly-owned subsidiary of Evergrande Health. Evergrande Health will continue to bear the $1.2 billion that Hong Kong Shiying has not yet paid.

■ Let’s talk about cars again

What kind of car is FF making? Many people may not have much doubt about this question, because the first thing that comes to your mind is FF 91.

Yes, an SUV model that costs around two million, accelerates from 0 to 100 km/h in 2.59 seconds, has an EPA range of more than 480 kilometers (smaller than the NEDC comprehensive range, but closer to the actual range), and is equipped with a liftable laser radar.

Regardless of the price, the FF 91 vehicle itself has received a lot of praise from the industry, and the FF project has attracted a number of high-profile executives and business backbones in the industry, pushing this project onto the star-studded stage.

But, is LeEco's only car FF 91? Not really.

According to former LeEco employees, LeEco had planned different high-end, mid-end and low-end brands in the early days, including the ultra-luxury and high-end car brand Faraday Future, the mid-to-high-end brand LeSEE and the low-end brand Diancha. Let's use the elimination method to see what FF has now.

First, the Diancha brand was repurchased by Zhang Hailiang and other former management, and the project is now independent. Second, LeSEE, the original LeTV supercar brand, planned the LE90 as the flagship model of the LeSEE brand, which is now almost in cold storage. As for the remaining Faraday Future, the Chinese brand name is Faraday Future, which has planned two models, one is the well-known FF 91, and the other is the FF 81 model that has only been reported by some media in the past two months.

The above-mentioned source revealed that when LeSEE was still in the concept stage, FF 81 had already completed its appearance design. It is a five-seater crossover SUV that competes with BBA, which is what the media calls the simplified version of FF 91.

FF America is responsible for the development of the FF 91 model and mass production at the Hanford plant in the United States. FF China, the R&D company located in Anting, Shanghai, will continue to complete the development of the FF81 model and produce it at the Nansha plant of Guangzhou Ruichi Automobile. At present, the recruitment plan launched by FF in China is also mainly responsible for the implementation of the FF 81 project.

According to another source from France-France-China, France-France-China's current project is indeed a mass-produced model with a lower positioning than the FF 91.

■ Let’s talk about the team

Is there really any progress for FF in the United States?

After FF suffered a major blow in the United States, a large number of employees did leave, especially middle and senior management, and suffered heavy losses. According to Evergrande Health's announcement, as of June 2018, FF had nearly 1,400 employees worldwide, of which more than 1,000 were cutting-edge technology professionals in new energy vehicles, computer algorithms, the Internet, information systems, artificial intelligence, etc. It is worth noting that this data is the number of employees worldwide, not the number of employees in the United States. Among the new car companies established after FF, many companies have employees of thousands of people. Take NIO as an example. According to its official introduction, the total number of employees worldwide has exceeded 6,000.

After receiving financing from Hong Kong Shiying Company at the end of last year, FF's American employees began to return to the company. According to sources in FF America, some of the middle-level employees at the director level have returned, while the VP-level management has not yet returned.

Why do employees choose to return to a company after it has gone through a major ordeal?

The source said that first, FF's business in the United States involves a relatively complete layout from vehicle research and development to autonomous driving, and it chooses to mass-produce vehicles locally. Companies like NIO North America mainly focus on autonomous driving, which is not an option for everyone.

Second, FF has a good corporate culture and its employees are relatively united. The internal strife that occurred previously was mainly the negative impact of the power struggle between internal forces led by CFO Stefan Krause and Jia Yueting. Many negative news were deliberately leaked by Stefan Krause, hoping to influence Jia Yueting's control through public opinion. In fact, most employees do not have strong opposition to Jia Yueting.

On the day Evergrande Health released the announcement, I received a PDF document of FF's company introduction with a watermark of "For investors' reference only". The document was circulated in more than one group. Five months ago, an internal project evaluation report of FF 91 was also made public in major media. Surprisingly, it was a detailed document on the project development progress and cost, which was a very high level of leak.

The internal code name of FF 91 in the report is DF91. The report shows that the material cost of a single DF91 vehicle is US$96,000 and the expected selling price is US$122,000. Due to the lack of payment from suppliers, the project progress has stalled.

Stefan Krause left FF in November last year, having worked there for less than a year. During the time when Stefan Krause joined FF, FF was facing the most serious financial crisis. In an interview with the media, Stefan Krause revealed that some investors did want Jia Yueting to leave, but this was not his idea.

At the end of December 2017, Stefan Krause founded a new electric car company, EVELOZCITY, with several FF executives and employees, which led to a lawsuit between FF and the company. The FF 91 project evaluation report was leaked after Stefan Krause left the company and during the lawsuit. We cautiously speculate that the internal document leak may be related to the resigned employees.

According to all the information we have received so far, apart from the Jia Yueting incident, FF is a vehicle project that is indeed in progress. It once had a more splendid executive team than other new car companies, leading product definition and design capabilities, and actual mass production plans and time nodes. Today, looking at all new car companies, FF 91 is still a relatively eye-catching product.

■ Finally, let's talk about progress

In this introduction document about FF, FF 91 was originally scheduled to complete the construction of more than 30 Gamma cars and factory buildings in the first quarter of 2018, obtain the official factory license and complete equipment installation in the second quarter, the first trial car will roll off the assembly line in the third quarter, and the factory will officially start construction in the fourth quarter.

According to previous media reports, there were at least 20 vehicles under test when the FF 91 engineering vehicle was tested in 2018. In other words, except for the factory, the original vehicle production rhythm was basically maintained.

In terms of the factory progress, on May 31 this year, FF's Hanford factory obtained a construction permit, and on June 7, FF announced that it had selected Bernards as the construction contractor for the US factory. According to media reports, FF installed and debugged the first batch of manufacturing equipment in March, which means that it is not far behind the original planned time node of FF.

The real problem is that the United States and China are preparing for the development and mass production of two models at the same time. In addition to the original outstanding debts, after the more than 800 million US dollars were received at the end of 2017, it will take two years in 2018 and 2019 to wait for the first 600 million US dollars to arrive. The time available for this 600 million US dollars is one year, and the second 600 million US dollars will not arrive until the end of 2020.

No one will deny that Jia Yueting is the biggest uncertainty in FF. In the announcement released by Evergrande Health, it is shown that if the management fails to perform its duties under the terms of the joint venture shareholder agreement, the original shareholder's voting rights will be withdrawn.

According to the bet agreement, FF 91 must complete all mass production preparations in 2018 and achieve mass production in the first quarter of 2019. If the goal is not achieved, Evergrande will obtain actual control and own 45% of the shares. The company owns a 601-acre manufacturing land in Nansha, Guangzhou, which was auctioned for 364.1 million yuan, and LeTV's previous 279 million yuan bid for the factory construction land in Moganshan, Deqing County, Zhejiang Province, but the ownership is currently unknown.

Some media speculated that Evergrande's investment in FF may be related to the acquisition of land. However, according to the requirements of the Nansha District Land and Resources Department, the land must be used for the research and development and manufacturing of pure electric vehicles, and it must be completed and put into production within 25 months of the acquisition of the land. Otherwise, the result is likely to be the same as LeEco's land in Moganshan, and fall into the issue of ownership.

In addition, according to the NDRC's "Automotive Industry Investment Management Regulations (Draft for Comments)", all shareholders of new independent pure electric vehicle investment projects will not withdraw their equity before the project is completed and the output reaches the construction scale. In other words, it is extremely difficult to convert this land to other uses. If the new independent pure electric vehicle investment project fails to achieve mass production plans, it will be cleared as a zombie enterprise.

In other words, regardless of whether Evergrande can obtain actual control, FF must achieve mass production in China as soon as possible. At this time, FF has neither a foundry plan nor domestic production qualifications. It seems that the first mass production should be the FF 91 in the United States. Unless the production qualifications are approved, the more effective use of more than 800 million US dollars is to first ensure the mass production of FF 91.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.