Faraday Future Intelligent Electric Q3 2024 Earnings Report

Faraday Future Intelligent Electric EPS Results

• Actual EPS: -$2.86
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Faraday Future Intelligent Electric Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Faraday Future Intelligent Electric Announcement Details

• Quarter: Q3 2024
• Date: 11/7/2024
• Time: After Market Closes
• Conference Call Date: Wednesday, November 6, 2024
• Conference Call Time: 8:00PM ET

Faraday Future Intelligent Electric (NASDAQ:FFIE) Inc (NASDAQ:FFIE) is an American mobility technology company specializing in the design, development and manufacture of premium electric vehicles. Founded in 2014 and based in Los Angeles, California, Faraday Future focuses on next‐generation automotive solutions that integrate high‐performance powertrains with advanced connectivity and energy-management systems.

The company’s flagship vehicle, the FF 91, is a luxury all‐electric SUV built on its proprietary Variable Platform Architecture (VPA). This scalable platform supports multiple vehicle segments, enabling rapid development of future models. The FF 91 showcases Faraday Future’s in‐house battery management, powertrain technology and software-defined approach to vehicle functionality.

Faraday Future operates a research and development center in Southern California and is developing an advanced manufacturing campus in Hanford, California, intended to support serial production of its electric vehicles. While its initial market focus is North America, the company has outlined ambitions to expand its global distribution network and pursue strategic partnerships to accelerate growth.

The company’s leadership team brings together expertise in automotive engineering, software development and operations management. Founder Jia Yueting, known for his background in consumer electronics and digital media, continues to shape Faraday Future’s emphasis on a software-driven user experience. The executive team and board of directors are guiding the company through its transition from development to commercial production in the competitive electric vehicle landscape.

Faraday Future Intelligent Electric Q3 2024 Earnings Call Transcript

Key Takeaways

• Faraday reduced operating expenses 92.6% year-over-year to $3.8 million and improved its loss from operations to $25.2 million from $66.4 million in Q3 2023.
• The company delivered only two FF 912.0 vehicles in Q3, bringing total deliveries to 14, underscoring a slow production ramp-up.
• Faraday secured $30 million in new financing commitments (net proceeds ~$28.5 million), regained full Nasdaq listing compliance, and completed a reverse stock split.
• The new dual-brand strategy launched the FX line targeting mass-market segments with two planned models (FX5 at $20,000–$30,000 and FX6 at $30,000–$50,000) to leverage economies of scale.
• The quarter ended with a cash balance of $7.3 million, which may raise concerns about near-term liquidity.

Presentation

[Operator]

As a reminder, this conference is being recorded. It is now my pleasure to introduce John Schilling, Global Director of Communications and Public Relations. Thank you. You may begin.

[John Schilling, Global Director of Communications and Public Relations at Faraday Future]

Welcome, everyone, to Faraday Future's third quarter 2024 earnings. My name is John Schilling, Faraday Future's Global Director of Communications and Public Relations, and I am joined by Faraday Future's recently appointed CFO, Koti Meka, our Global Chief Executive Officer, Matthias Aydt, and Max Ma, Head of Product and Mobility Ecosystem and Head of Corporate Strategy here at FF. Today, we will be sharing details from our third quarter 2024 results. The press release, as well as today's presentation, will be available on the Investor Relations section of our website at investors.ff.com. A replay of this call will also be posted there later this evening. Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

[John Schilling, Global Director of Communications and Public Relations at Faraday Future]

These statements reflect our views only as of today, should not be relied upon as representative of views as of any subsequent date, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. With that, I'll turn the call over to Faraday Future's Global CEO, Matthias Aydt.

[Matthias Aydt, Global CEO at Faraday Future]

Thank you, John, and thank you, everyone, for joining our earnings call. Let me outline the key areas I'll cover in today's discussion. First, I'll review our organizational transformation and recent leadership appointments. Second, I'll discuss our corporate initiatives and operational progress, including our FF 91 2.0 deliveries. Third, I'll provide details on the launch of our recently announced FX brand and market strategy, which plays into our FF Dual brand strategy. Finally, I'll update you on our international expansion, particularly our progress in the Middle East. During the third quarter, we continued our transformation from a project-driven organization to an operation-driven organization, with heavy emphasis on cost optimization, quality improvements, and operational efficiency. Notably, we made significant progress in our strategic roadmap while achieving a significant reduction in operating expenses. We believe this cost discipline, combined with our strategic shift, positions us well for our next phase of development.

[Matthias Aydt, Global CEO at Faraday Future]

To help support this next phase of growth, we have strengthened our leadership team with several key appointments. Koti Meka recently was promoted to Chief Financial Officer, replacing Jonathan Maroko, who remains on us as a consultant. Aaron Ma was elevated to Acting Head of EV R&D, and Tin Mok was appointed Head of FF UAE, where he is leading our business development and strategic financing efforts in the region. Now, let me share some key developments from the quarter. In terms of corporate progress, we successfully completed several important initiatives. First, on the financing front, we secured $30 million in new financing commitments from investors across the Middle East, United States, and Asia. This included $7.5 million in previously funded amounts and $22.5 million in new investments.

[Matthias Aydt, Global CEO at Faraday Future]

Notably, this financing included participation from Master Investment Group, led by Sheikh Abdulla Al Qassimi, of Ras Al Khaimah. The net proceeds we received were approximately $28.5 million. Of this amount, $20 million were received in Q3, and $8.5 million was received after September 30 and prior to today. In addition, I'm pleased to report that we regained full Nasdaq listing requirements compliance, completed our previously announced reverse stock split, and increased our authorized share count to support potential future growth opportunities. We also successfully worked with our existing noteholders to restructure certain convertible notes with the goal of reducing future cash obligations. On the operational front, we delivered two FF 91 2.0 vehicles during the third quarter, including one to Wei Gao, our Head of Global Communication and Community Sales.

[Matthias Aydt, Global CEO at Faraday Future]

Our other delivery was to Born Leaders Entertainment, expand our B2B initiatives, and develop co-creation of the program. This brings our total deliveries to 14 vehicles to date. We've implemented several manufacturing improvements, including bringing certain vehicle body and interior component production in-house, which has reduced interior costs by half. Our FF ieFactory in California continues to demonstrate its potential as a cornerstone of our manufacturing strategy. We continue to enhance our product quality. A manufacturing-related warranty improvement process was put in place. There's a comprehensive synergy between factory quality and PDI, resulting in a comprehensive CCA audit. Our first inspection Customer Craftsmanship Audit score has seen improvement of 25%.

[Matthias Aydt, Global CEO at Faraday Future]

We have made continued efforts to improve the FF 91 software, AI, and human-machine interaction with recent multiple software improvements that include expanded voice controls, improved route guidance, and improved display interface updates, to name a few, all created in the effort to make the lives of our users more connected, more engaging, and more effortless. A significant milestone this quarter was the announcement of our second brand, Faraday X, or FX, which took place at our Global Automotive Industry Bridge launch event on September 19th. This initiative represents our planned return to a dual-brand strategy, with FX being developed to target mass market segments. We envision two initial models, the FX5, which we are planning to position in the $20,000-$30,000 range, and the FX6, which we expect to offer between $30,000 and $50,000.

[Matthias Aydt, Global CEO at Faraday Future]

Subject to securing necessary funding and approvals, we intend to offer both range-extended AIEV and battery-electric AIEV powertrain options. We believe the market opportunity for range-extended AIEVs is particularly compelling in the United States, where charging infrastructure continues to develop. Based on our analysis of market data, while the U.S. EV penetration rate remains below 20%, we've observed that range-extended AIEVs have shown strong adoption in other markets, particularly in addressing range anxiety concerns. We believe this represents a potential opportunity for our planned FX product lineup. Our Global Automotive Industry Bridge strategy aims to leverage existing technologies and potential manufacturing synergies between our premium and mass market segments. Thus far, we have entered into preliminary agreements with four OEMs, including two strategic framework agreements and two MOUs, though these discussions remain subject to final documentation and various conditions.

[Matthias Aydt, Global CEO at Faraday Future]

Turning to our Middle East expansion, we have made great progress in establishing our presence in the region. We recently announced a co-investment agreement with Master Investment Group, led by Sheikh Abdulla Al Qassimi, to establish our future regional headquarters in Ras Al Khaimah. To our Ras Al Khaimah-based entity, Faraday Future Middle East Free Zone LLC, we have signed agreements with the Ras Al Khaimah Economic Zone, RAKEZ, for both current operations and a nearly completed 108,000 sq ft facility. Earlier this year, we established a sales entity in Dubai, marking a key milestone in our expansion. This entry into the Middle East supports our third pole strategy, complementing our dual home markets of the U.S. and China. Looking ahead, we are focused on three key areas: strengthening our core operations, advancing our dual brand strategy, and pursuing strategic partnerships that support our growth objectives.

[Matthias Aydt, Global CEO at Faraday Future]

We believe our engineering capabilities, combined with our planned dual brand approach and the potential international partnerships, position us to address both the premium and mass market segments of the evolving AIEV market. I now want to turn it over to Max Ma for an important update on our FX strategy.

[Xiao Ma, Head of Corporate Strategy, Product, and Mobility Ecosystem at Faraday Future]

Hello, and thank you for joining us today. Max Ma, Head of Product and Mobility Ecosystem and Head of Corporate Strategy. I just returned from China after completing this business trip for the FX strategy to China, and I can't wait to share it with everyone. We achieved all the set objectives for this trip, kicked off the internal next step meeting on Monday, and will provide further updates as we reach our new milestone in the near future. Sheikh Abdulla Al Qassimi, our Middle East investor, also held in-depth discussions with FX partners in China. We have already initiated the activities to achieve first milestones according to our production program for the first vehicle model, which targets to roll off the line by the end of 2025, subject to securing the necessary funding.

[Xiao Ma, Head of Corporate Strategy, Product, and Mobility Ecosystem at Faraday Future]

The product is currently in the first phase of vehicle development, with related work underway to achieve the first phase milestones. FF has begun hiring for key positions for the second brand, Faraday X. Job openings for FX include Production Planning Director, Quality Planning Director, Head of FX Vehicle Engineering, and Head of FX EV R&D. I'll now turn it over to Koti Meka for a review of our financial results.

[Koti Meka, CFO at Faraday Future]

Thank you, Max. Great to hear things are progressing steadily on our FX brand and strategy, and hello to everyone on the call. I'll start with our third quarter financial performance, discuss our balance sheet, and close with comments on our capital raising efforts. As Matthias noted, I'm pleased to report that Faraday has been successful in its efforts to reduce costs. During the third quarter of 2024, our operating expenses declined 92.6% to $3.8 million compared to $50.9 million in the prior year's quarter. This reduction reflects our ongoing cost control initiatives, as well as a non-recurring gain of $14.9 million from the settlement of previously accrued research and development costs. However, even adjusting for that gain, operating expenses would have still declined 63.2% from the prior year period.

[Koti Meka, CFO at Faraday Future]

Third quarter loss from operations improved to $25.2 million compared to a loss of $66.4 million in the prior year quarter. Our loss before income taxes was $77.7 million compared to $78 million in the prior year quarter. Turning to the balance sheet, as of September 30th, 2024, our preliminary financial position included total assets of $449 million, total liabilities of $292.3 million, and book value of $156.7 million. We ended the quarter with $7.3 million in cash. During the first nine months of 2024, our financing activities provided net proceeds of $55.7 million. Looking ahead, we will continue to look for opportunities to improve operational efficiencies and reduce costs while maintaining disciplined investment in our strategic growth initiatives. We continue to explore various financing alternatives, including non-dilutive options, to support our operational needs and growth initiatives.

[Koti Meka, CFO at Faraday Future]

While access to capital continues to be a key consideration for our production plans, we believe our streamlined cost structure positions us to utilize any new capital more efficiently. With that, I will hand it back to Matthias.

[Matthias Aydt, Global CEO at Faraday Future]

Thank you, Koti. Let me provide you with a look ahead for the company. Our main focus remains on stabilizing and strengthening our operation, continuing to attract strategic investors, maintain and grow FF 91 2.0 production, and develop the FX brand and products moving into 2025. Our main goal is to achieve profitability and become self-funding in the shortest possible time. To be able to achieve a higher market penetration in the future, we are exploring multiple avenues and scenarios. Our dual brand strategy is allowing us to leverage our high-value traditional FF brand with four Chinese OEMs, providing the potential to gain economies of scale. We have already entered into two strategic framework agreements and two memoranda of understanding, and we are working toward finalizing definitive agreements with each. Importantly, FF has submitted FX trademark registrations in both China and U.S.

[Matthias Aydt, Global CEO at Faraday Future]

Since our 919 event, we have had over 200,000 views on live streaming, received over 70 questions in our Q&A section, and garnered over 2 million impressions across our social media platforms. After the 919 launch event, Max Ma, our Head of Global Strategy and Product, along with investor Sheikh Abdulla Al Qassimi, engaged in in-depth discussions with potential FX partners in China, achieving positive progress. FX has already launched a vehicle development project for the target models, with the first vehicle potentially rolling off the line by the end of 2025, subject to our securing the necessary funding. The project is currently in the first phase of vehicle development, with related work set to begin to complete the first phase milestones of this vehicle project. Additionally, we would like to address questions regarding last week's S-1 filing.

[Matthias Aydt, Global CEO at Faraday Future]

This filing primarily corresponds to our $30 million convertible notes financing round in September 2024. Of the total 29.7 million shares registered in the S-1, the 25.3 million shares registered in the S-1 covering shares issuable upon conversion of the notes is based on conversion floor price of $1.048 per share. The number of shares actually issued is independent of the number of shares being registered. The actual conversion price is variable and linked to the market price. For example, if the conversion price were $2 per share and the full $30 million in convertible debt were converted at this price, approximately 15 million shares would be issued. These shares would then be added to our total shares outstanding. For more information, please check our recent S-1 disclosure. FF appreciates the trust shown by investors and would like to thank them for their loyal and ongoing support.

[Matthias Aydt, Global CEO at Faraday Future]

Thank you for your time and interest in Faraday Future, and I look forward to providing you with further updates as significant events unfold. Thank you, everyone.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Participants

Analysts

• Xiao Ma, Head of Corporate Strategy, Product, and Mobility Ecosystem at Faraday Future
• John Schilling, Global Director of Communications and Public Relations at Faraday Future
• Matthias Aydt, Global CEO at Faraday Future
• Koti Meka, CFO at Faraday Future