Electric Car Maker Faraday Breaks Ground in Nevada
April 13 2016 - 7:41PM
Dow Jones News
By Mike Ramsey
NORTH LAS VEGAS, Nev. -- Nevada is officially in the car making
business.
Faraday Future Inc., an electric car startup financed by a
Chinese billionaire, started construction on a new assembly plant
in a dusty tract 25 miles north of the Las Vegas Strip.
The plot of land off Interstate 15 is surrounded by solar farms,
a fireworks factory, marijuana growing centers. But soon the walls
will go up on what state officials hope is an extension of the
outsize gamble the state already has made on electric cars by
backing Tesla Motors Inc.'s giant battery factory outside of
Reno.
Nevada signed off on a total of $1.6 billion in incentives for
the two projects, most of it for Tesla's factory. The plant from
Faraday, though, requires a leap of faith. Faraday has no announced
products and doesn't even have a public prototype. Nonetheless it
has hired 700 people in the U.S., and it has pledged to add more
than 1,000 additional people in California alone in the next four
years.
"This is special," said Gov. Brian Sandoval. "This is a great
opportunity for us to work together for a new beginning."
Faraday, based in Los Angeles, has promised to hire 4,500 people
at the plant and invest $1 billion.
Nevada officials aren't blind to the risk. The state treasurer,
Dan Schwartz, has refused to sell state bonds to finance
infrastructure until Faraday proves it can finance the $1 billion
project.
"We just want to go to sleep at night knowing they will follow
through," Mr. Schwartz said in an interview.
He has requested a $75 million bond to ensure the infrastructure
investments the state planned to make are paid. So far, Faraday
hasn't met the conditions the state has set out to obtain the
incentives. The infrastructure investments could be significant
because the remote site has limited access to water, Internet and
sewage.
The risk could prove its worth if it sets off a flurry of
development from suppliers to the plant. Faraday says it has lined
up 90% of the suppliers it needs to build its first cars -- though
it hasn't chosen a battery supplier.
"We are just kicking off the process; we are excited to be part
of the team," said Mervin Dunn, co-chairman of Futuris Group, a
automotive seat maker and interiors supplier that is scouting sites
nearby for a plant.
It would be easy to discount the Faraday, which has been working
in secret for nearly a year, except for its vigorous hiring of
dozens of people from Tesla and virtually every other auto maker in
the world. It took Tesla five years to produce the low-volume
Roadster using a Lotus chassis and an additional four years past
that to introduce the Model S.
Faraday's plan is to launch production next year, though that
would be a herculean effort given the start of construction on the
plant.
Faraday is testing its electric car technology by putting
batteries and motors into existing cars bodies. The company says
only it will debut its first prototype "soon."
Faraday plans to build an electric car with long driving range
and autonomous features. Executives have said the car might be used
more like a shared vehicle, where people pay by the mile.
While Faraday aims to build and sell a car in the U.S., it also
could be aiming to take advantage of China's fast-growing electric
car market. China's incentives favor domestic manufacturers, and
Faraday may qualify despite its Los Angeles headquarters address
because it is financed heavily by Jia Yueting, a Chinese
entrepreneur often compared with Tesla's Elon Musk.
Nevada has aggressively courted new businesses to diversify the
state's economy. It has one of the lowest percentages of
manufacturing employment in the nation. That could change with the
opening of Tesla's gigafactory, which Tesla says will employ 6,500
when finished.
The massive structure is being built in phases. Tesla says its
construction is ahead of schedule. The current building is large at
800,000 square feet, but below the 10 million square foot structure
initially envisioned. It will be expanded over time, the company
says.
Most of the incentives for the Tesla gigafactory are tied to a
sales tax reduction. Tesla, so far, has only claimed $9.6 million
in tax credits related to its investment in the site, according to
state records. It, along with Panasonic Corp., have invested $374
million through the end of 2015.
Write to Mike Ramsey at michael.ramsey@wsj.com
(END) Dow Jones Newswires
April 13, 2016 19:26 ET (23:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Sep 2023 to Sep 2024