One of the first start-ups to be hailed as a "Tesla killer" is finally going public.
California-based Faraday Future said on Thursday that it has agreed to merge with a special-purpose acquisition company (SPAC), Property Solutions Acquisition (PSAC), in a deal that values the combined companies at about $3.4 billion.
In a statement, Faraday CEO Carsten Breitfeld said that the deal will give the company sufficient funds to launch its FF 91, a luxury battery-electric vehicle first shown in 2017 that has been positioned as a rival to Tesla's upscale Model S and Model X.
Faraday's FF 91 is an upscale electric vehicle intended to rival Tesla's top offerings. Image source: Faraday Future.
The deal's structure follows the pattern of other recent SPAC mergers. Property Solutions brings about $230 million in cash; a so-called PIPE (for private investment in public equity) funded by outside investors adds another $775 million. Faraday is expected to net about $750 million after fees and expenses.
Faraday and Property Solutions said that the PIPE is fully funded by investors paying $10 per share. Those investors include a "top three Chinese automaker," reportedly Geely Automobile Holdings, and an unnamed Chinese city's investment fund.
The FF 91 will be built in two locations: in Faraday's factory currently under construction in Hanford, California, and under contract by Korean manufacturer Myoung Shin. A third location, with a factory owned by a joint venture between Geely and the Chinese city, is under discussion, according to tech news website The Verge.
Faraday first emerged as a potential Tesla competitor in 2016, when its presentation at the Consumer Electronics Show wowed analysts and pundits. The company presented a prototype of the FF 91 at the show a year later, but its momentum stalled after co-founder Jia Yueting, immersed in debt related to business interests in China, declared bankruptcy.
The parties expect the SPAC merger to close by the end of June. Faraday expects to have the FF 91 in production in about a year.
