It doesn’t seem Faraday Future Intelligent Electric (NASDAQ:FFIE) has long for this world. Faraday Future stock is down to 35 cents, revenue remains negligible and losses extend for as far as the eye can see.
Yet the luxury electric vehicle maker may have plans in store to become something other than an auto manufacturer. This may be its Plan B to continue operating if (or when) Plan A finally collapses. But it is still not something investors should jump into.
A Plan to Survive the EV Market
Faraday Future said in the next month or two it will lay out a plan to turn the luxury EV company into “a bridge between U.S. and Chinese automotive industries through industrial coordination and collaboration.”
Details were scarce, so we’ll need to wait for the eventual presentation if it ever comes. Faraday is in discussions with global OEMs and suppliers to leverage U.S. car market with Chinese automotive companies and supply chains. Included would be the use of its factory in Hanford, Calif.
Faraday called it its dual-home-market strategy. Faraday may use its technology to help Chinese car manufacturers sell vehicles in the U.S. and enter the Chinese market. It is going to be a hard sell either way.
Becoming the Chinese EV Middleman
It would make sense. Faraday says it is a return to its earlier two-brand setup. The company posted to its website a speech CEO YT Jia gave at the China Auto Blue-Book Forum 2024 last week outlining this so-called bridge strategy.
Jia said Faraday Future could leverage the technology it puts into its FF91 EV into mass market vehicles while essentially loaning Chinese EV companies its manufacturing plant.
“With appropriate modifications, it may be possible to enable large-scale localized production of mass-market vehicles,” Jia said.
The facility would offer a production team, quality control and systems to ease product compliance certification and market entry. Basically, Faraday would help lower the barriers to entry for Chinese EV manufacturers.
Jia acknowledged Faraday doesn’t sell many cars and it has financing issues. But he said the EV maker was seeking strategic investors to finance the strategy. Ultimately, he said “the goal is to provide U.S. consumers with the same high value that Chinese consumers enjoy.”
The Bottom Line on Faraday Future Stock
Jia also alluded to the day Faraday Future might introduce a second brand into China. That’s wishful thinking.
China’s EV market is much more robust and competitive than the U.S. Even Jia said alt-fuel adoption in China exceeded 50% when including hybrid vehicles while standing at about 8% in the U.S.
Jia promised to reveal more details next month but he is looking for Chinese EV makers to have a global outlook.
Using Faraday Future Intelligent Electric as a conduit to break into the U.S. market it could help them achieve that goal.
I think potential partners of the EV maker would have to surmount a high wall of doubt about the company’s ability to survive let alone succeed.
It can’t sell it’s own cars so how will it sell others vehicles? Lower prices are just one variable in the equation, even at the $20,000 to $30,000 price range Jia envisions.
With the continued existence of Faraday Future stock up in the air, it might be cheaper to buy Jia’s intellectual property in bankruptcy than partnering with the company on this wild-eyed plan.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
