Filing Summary
Company: Faraday Future Intelligent Electric Inc. Filing: Form 10-K for the fiscal year ended December 31, 2023, filed May 28, 2024. This is an annual report, not a standalone fourth-quarter earnings filing. The audited financial statements received an unqualified opinion, with an explanatory going-concern paragraph. The auditor did not audit internal-control effectiveness.
Business context
Faraday Future designs and manufactures electric vehicles, with the FF 91 as its only vehicle in production during the period. Production began in March 2023 and customer deliveries in August. At year-end, the company reported four vehicles sold and six leased. Its planned FF 81, FF 71 and last-mile delivery vehicles depend on additional funding. The company operates primarily in the U.S., with subsidiaries and business plans in China.
Financial performance and liquidity
Amounts below are in U.S. dollars; figures are for the years ended December 31.
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $0.8 million | $0 |
| Cost of revenue | $42.6 million | $0 |
| Gross loss | $41.8 million | $0 |
| Operating expenses | $244.2 million | $437.1 million |
| Operating loss | $286.1 million | $437.1 million |
| Net loss | $431.7 million | $602.2 million |
| Cash used in operating activities | $278.2 million | $383.1 million |
| Cash used in investing activities | $31.1 million | $123.2 million |
| Cash provided by financing activities | $291.4 million | Cash used: $6.7 million |
Revenue was minimal relative to production costs, so the gross loss was substantially greater than sales. Operating expenses fell, principally as R&D and G&A costs declined. Net loss also narrowed, but results included a $89.9 million gain from fair-value changes in notes and warrant liabilities, partly offset by $217.0 million of losses on note settlements and $20.0 million on related-party note settlements.
At December 31, 2023, cash was $1.9 million and restricted cash was $2.1 million. Current assets were $91.4 million versus current liabilities of $261.2 million; negative working capital was $169.8 million. Total liabilities were $302.3 million. Notes payable had $118.9 million of unpaid principal and a $91.7 million net carrying value; related-party notes had a $9.8 million carrying value. All notes were classified as current. A $25.5 million sale-and-leaseback financing obligation was also recorded. The accumulated deficit was $4.0 billion.
Material changes versus 2022
- Vehicle production and initial deliveries generated $0.8 million in sales revenue; the company had no revenue in 2022.
- R&D expense decreased 56% to $132.0 million, largely because FF 91 development was substantially completed and cost-saving measures reduced personnel and professional-services expenses.
- Operating cash outflow improved by $104.9 million, but remained substantial. Financing cash flow turned positive, primarily from notes, common-stock issuance and a sale-and-leaseback transaction.
- Inventory increased to $34.2 million from $4.5 million as production began. The company recorded a $2.8 million inventory reserve.
Outlook, risks and unusual items
- Going concern and financing: Management concluded substantial doubt exists about the company’s ability to continue as a going concern for one year after issuance of the financial statements. FF says it needs substantial additional capital; without it, it may have to delay production, reduce operations or file for bankruptcy. The filing provides no reliable breakeven timetable.
- Funding access and debt: The company reported default on Secured SPA notes and said the related notes were current. It also reported a breach of a $4.5 million related-party loan, with interest increased to 18%. Further committed financing is conditional. The late 10-K filing made FF ineligible to use its S-3 registration and ATM program, which had been a principal liquidity source.
- Production and demand: Starting the third phase of FF 91 deliveries requires additional funding. FF reported 303 non-binding, fully refundable pre-orders at year-end; these are not binding sales commitments. The company’s future vehicle pipeline is contingent on financing, and 2024 production, cash use and revenue could differ materially from prior forecasts.
- Costs and operations: FF expects continued losses and may incur substantial production, warranty, service, R&D and selling costs. It disclosed overdue rent at leased properties, potential insurance noncompliance, and delayed supplier payments. The company warned that supplier disruptions could delay production.
- Governance, controls and reporting: Management found disclosure controls and internal control over financial reporting ineffective at year-end, citing multiple material weaknesses. FF had restated previously issued 2022 and interim financial statements. Remediation may extend beyond December 31, 2024. An SEC investigation and DOJ inquiry remain ongoing; the company says it is cooperating. The filing also describes governance disputes and related-party influence.
- Legal and other contingencies: Accrued legal contingencies were $21.6 million. A stockholder class action settlement was approved in March 2024 for $7.5 million, stated to be funded by insurers. In March 2024, FF settled its Palantir dispute for $5.0 million. Other supplier, employment and stockholder matters remain disclosed, with outcomes uncertain.
- Listing and dilution: Nasdaq issued a delisting determination in April 2024 for listing-rule deficiencies; FF appealed and obtained a stay pending a hearing. The filing warns of potential dilution from convertible notes, warrants and other equity-linked financing. A 1-for-3 reverse stock split took effect February 29, 2024, following an earlier 1-for-80 split.
- Subsequent events: The filing reports lapsed insurance coverage after year-end, additional short-term notes in default, and post-year-end note conversions into a large number of shares. These events further underscore liquidity and dilution risks.
Most important facts for investors to verify
- Current unrestricted cash, near-term payment obligations, and whether FF has secured financing that is actually available—not merely committed subject to conditions.
- Current status of debt defaults, landlord arrears, insurance coverage, and any risk to continued access to the Hanford facility.
- Post-year-end vehicle deliveries, binding orders, production pace, and the cash cost and gross economics per vehicle.
- Nasdaq hearing outcome and ongoing eligibility to raise capital through registered offerings or other financing channels.
- Progress remediating material weaknesses, reliability of restated financial information, and developments in the SEC and DOJ matters.
- Potential share dilution from outstanding convertible notes, warrants and subsequent conversions, including the share count after the reverse split.