Several suppliers are bracing for Faraday Future to go belly up.
“We’re aware that they may go out of business, but we hope for their success,” said one account executive at a current Faraday supplier, who did not want to be named because the company is still seeking a past-due payment and is seeking to continue doing business with Faraday.
Electric autonomous vehicle manufacturer Faraday Future was supposed to produce vehicles at Apex Industrial Park in North Las Vegas in 2018, but the company signaled Monday that production may or may not end up happening, at least in Nevada, amid a web of financial troubles.
For many suppliers, especially those with past-due payments, the question now is: How much more business should be done with Faraday as companies know they may not recoup those costs?
For the California-based software analysis services company, it’s a question of endurance.
“It’s a large amount of business potentially on the table,” the account executive said. “It’s a relatively small investment on our part to keep them afloat. At the same time, there comes a point — and that point is probably pretty soon — where it doesn’t make sense anymore.”
The executive added that his company is “in the same situation that I think most suppliers are: with some very old unpaid invoices. We’re trying to be as patient as possible to get them up and running again.”
Sam Abuelsamid, a senior analyst for the market research firm Navigant, said it’s reasonable to assume that there are still several suppliers working with Faraday who have past-due payments.
That would not bode well if Faraday were to go bankrupt.
“Suppliers would be fairly low down the chain on creditors that would get paid in the event of a bankruptcy, which seems increasingly likely by the day,” Abuelsamid said. “They might get a few cents on the dollar back, but most likely if Faraday went belly up, they would be out of luck.”
‘Just in case’
Larger companies that are working with Faraday will likely hang in for as long as possible “just in case” Faraday can pull through, he said, as is the case for the account executive.
“I don’t think things are going to work out for them. But based on the size of the business that we have been doing with them, at this point we do need to kind of drag out the last one or two months to try to figure out what’s going on,” he said. “If we just leave it all now, we definitely aren’t going to recoup costs and we aren’t going to have an opportunity to do future business.”
Smaller suppliers will likely have to cut their losses, Abuelsamid said.
Faraday Future is seeking $1 billion in financing to move the company forward.
A spokesman for Faraday Future declined to comment.
A spokesan for AECOM, the general contractor that was slated to build the manufacturing plant at Apex, said, “We look forward to additional opportunities to work with them again.”
Contact Nicole Raz at firstname.lastname@example.org or 702-380-4512. Follow @JournalistNikki on Twitter.