Okay, thank you for joining us for the next session. Happy to get going. Once again, I'm Ryan Brinkman, U.S. Automotive Equity Research Analyst at J.P. Morgan, with Yash Beswala on my team. We're happy to welcome to the stage Jerry Wang, the Global President of startup battery electric vehicle manufacturer Faraday Future Intelligent Electric Inc. Jerry is going to walk us through a presentation, including some exciting videos, and then we'll engage in a chat. Thank you, Jerry, for coming to the conference.
Thank you very much, Ryan. Good afternoon, everyone. My name is Jerry. I'm the President of Faraday Future Intelligent Electric Inc. We're a California electric vehicle company, and we're doing amazing cars, which I'll share a little bit more in more detail. Let's start with two videos. This is our first flagship vehicle called FF 91, and we're introducing our second vehicle. Here's some more information.
I'm not the most resourceful. I'm not the fastest. I'm not the one in the spotlight. I won't stop. For our dreams, I'll take the harder road. For what we love, we stand our ground. In the quiet rhythm of repetition. In the small hours when no one is watching. Through silence and doubt, we try again. One, two, three, four. No applause in the new spotlight. Just the ones we're not among. Every effort to light up the screen again and again.
Because the light lives here inside our hearts. Not to impress others, but to become who we've always dreamed of being. That's why we keep going. Taking every moment to better ourselves. To do a little more. To push a little further. To show up every chance, every stone. I ride. I never give up, never give in. FX Super One for those who refuse to back down.
Yeah, this is our second vehicle, FX Super One. A little bit on the company itself. We are founded in 2014 in California, Los Angeles, by our founder, YT Jia, who is a very successful technology series entrepreneur who built the best-selling smartphone and smart TV in China. He was thinking that if he can build the best-selling phone and best-selling TV, why not make cars smart? He has this vision and founded Faraday Future Intelligent Electric Inc.
We become a public company on Nasdaq starting 2021. Historically, we have raised more than $3 billion into this company. You spend most of the funds into the technology development of our vehicle as well as the operating system. Our headquarters is in Los Angeles, and we have two brands. Basically, it's a dual-brand strategy similar to Volkswagen and Porsche. They're under the same group, but one is more premium called Faraday Future or FF. The second one is more mass volume, more like, you know, into the mainstream of the vehicle market, which we call it Faraday X or FX. We have more than 600 patents filed globally, validated by Roland Berger. We have a 1 million square foot manufacturing facility in Hanford, California. This is the overall market segment and the opportunity that we're pursuing.
As we can see in here, for the first brand, Faraday Future, we are targeting the top of the pyramid, carving from everything starting $100,000 all the way up to $300,000. For the second brand, FX, we're carving more mass market volume, capturing something starting with $20,000 - $25,000 all the way up to $100,000. This is the product portfolio under Faraday Future, the first brand. There's only one car called FF 91. For the second brand, we have a series of products, including FX Super One, FX9, which will be a hypercar performance, as well as Future 8 or 7, which will be more SUV or sedan type of car, you know, very on the affordable side. This is FF 91, our flagship product. It's a very powerful car. As we can see, the horsepower is 1,050. 0 - 60, it's only 2.27 seconds.
Mileage per charge, almost 400 miles per charge. It has a tri-motor powertrain system that can support the best vehicle performance. On the user experience side, it's pretty premium as well, very unique. For example, it has 60° reclining angle zero gravity seats. It has a 27-inch ultra-wide screen Full HD. Basically, you can watch live sports, live games, live events, Netflix, ChatGPT, Zoom, basically do whatever you want inside of the vehicle. We can run ChatGPT. We're the first car that can support Zoom and ChatGPT. Powered by our own AI technology, both on the computing system, hardware, and the software, and operating system. For example, we have two Qualcomm 8155 chips and one NVIDIA Orin to support the autonomous driving. We're the first automotive company that is partnering with NVIDIA to use their chip and to launch our autonomous driving function. The operation system is based on Android.
We fully developed it ourselves, and we invest lots of money and spend lots of time to build everything by ourselves. The car is a pretty large vehicle on the more premium segment. The wheelbase is 3.2 meters. The length is 5.3 meters. Basically, slightly larger than a Rolls-Royce. It's selling between $100,000 entry level all the way up to $300,000. Here are some more photos and product features of the vehicle. This is the interior. We're quite proud. This is a very unique digital ecosystem user experience here. For example, there's a 27-inch foldable display. You can enjoy all of your content since we do the operation system. The car knows you very well. Basically, if you are a sports fan, it will automatically recommend the game that you like. If you're a big movie guy, it will come up with the content favoring your preference.
This is some benchmark of the vehicle that we are competing with for our product. I will not go into detail, but basically, not only on the performance side, but also on the user experience, AI, software, digital ecosystem, we are among the best. It competes with other electric vehicles. We're selling at a slightly higher price compared to some of them, but it's the same. No matter on the driving performance, as well as the internet connectivity ecosystem experience, we're among the best. Who are the owners? We already sold approximately 20 of the vehicles. For example, we're co-creating, or the owners are including Chris Brown. We're partnering with Mariah Carey. We're partnering with Jason Oppenheim, Justin Bell, Kevin Sherman.
Basically, the top celebrities, they're kind of looking for a car that is unique, but also can meet their expectations or kind of a unique product that they are looking to purchase. Everyone has a Rolls-Royce, everyone has a Bentley. What will be a unique vehicle that fits what they are looking for? FF 91 really offers them this great and unique product experience. This is our manufacturing facility in Hanford near Fresno. We invested over $300 million already. We outsource stamping, but we have the full body shop, we have the full paint shop, and we have the assembly line as well. This can support up to 10,000 annual capacity for FF 91 and up to 30,000 annual capacity for FX, the second vehicle. This is the key leadership team, the founder, YT Jia, who is the Co-CEO. We have another Co-CEO, Matthias Aydt.
He has 40-year automotive industry experience coming previously from Porsche and Magna. Our CFO, Koti Meka, has more than 20 years of FP&A experience in Ford. Most of the team in here has been working together for around 10 years. The team has been really, really robust, and it has great execution capability. Some further insight, I just covered the first brand. Like all the vehicle companies, for them to scale and create value, they have to go into a mass volume market. Tesla did it. Tesla first introduced Roadster, then introduced Model S and Model X. The high-volume vehicle that really gave them lots of revenue and profit are Model 3 and Model Y. Similar to us, we are introducing our second brand and the second vehicle, which is a more affordable mass market product, right? We're doing it in a very, very efficient way.
For example, this is the slide that I find very, very interesting. Basically, if we start from the right-hand side first, as we know, China is the largest automotive market globally, selling 25 million vehicles per year, right? China has a very heavy competition automotive market as well. For example, as we can see, Tesla Model Y and Model 3, Tesla is the best-selling car, but there are other cars that are selling similar to Tesla volume. You have multiple brands, for example, BYD, you have Xiaomi, Li Auto, NIO, Xpeng. You have lots of players in this field that are building great products that can compete with Tesla. That's on the right-hand side, which is the China market. On the left-hand side is the United States market. As we can see, this is the second largest automotive market globally, selling 15 million vehicles per year.
Actually, the electric vehicle penetration rate is very low, only 10%. Also, Tesla is the best-selling car, Model Y and Model 3. There are no other real competitors giving them a challenge, not similar to the right-hand side. For example, those cars in the blue bar, 17 out of the top 20 vehicles are not selling in the United States, right? One obvious idea would be, why not, you know, why need to reinvent the wheel? Why not partner with some of them, bring one or two products from this list to here? Because it's already, you know, proven in a mature or heavy competition market, and try to capture like 1% or even 0.1%. You will have 1% of the 15 million vehicle market would be 150,000. Even 0.1% is 15,000, it can create tremendous value. That's what we're doing right now. I will skip this slide.
Basically, we are using this method. We're partnering with two very large China OEMs, and each of them manufactures millions of cars already. We are tapping into the blue ocean market in the United States. For example, we're not only bringing the full electric vehicle, but also we're bringing the range-extended hybrid vehicle. We're giving the best AI cabin experience on the digital ecosystem. We're targeting sub-$40,000 AI EVs. Basically, if you only have like $30,000 - $35,000 budget, there's no good electric vehicle that you can purchase inside of this market. We're capturing the luxury MPV or luxury minivan market as well. This is the FX Super One that we launched several weeks ago. We already received more than 10,000 paid reservations. The market loves this product a lot. It competes with Cadillac Escalade. The selling price is only approximately half of the price.
It's a full-size SUV, and we call it MPV, super comfortable, luxury, both the interior and the exterior, and giving a very good user experience. Those are the two editions of the vehicle. Here are some more designs. We're introducing an EAI Super Face. Basically, you can choose to have it or not to have it. You can demonstrate the video or any photo that you'd like, since that's a very unique feature. This is the interior space. As you can see, there are four-seater, six-seater, and seven-seater versions. It can fit lots of real-case user needs. Both the second row and the third row are captain chairs, so very super comfortable and offer zero gravity function as well. This is the production roadmap or the key milestones of what we are doing for the Super One. We have already received more than 10,000 reservations.
We plan to launch by the end of Q3 or early Q4 in UAE, in the Middle East first, since we have a manufacturing facility, a small manufacturing facility. Their homologation requirement is more friendly compared to the United States. By the end of this year, we're doing homologation already for this vehicle. We already got homologation complete for the first vehicle, FF 91. We're doing it for the second vehicle, FX. We plan to have the first vehicle rolled off the manufacturing facility by the end of this year. This is some financial slides. We're basically, we're still a very small company, although the stock performance in the past few weeks has been pretty good. We're still very small, only $250 million in market cap. Not similar to other successful companies on this slide. One company that I'd like to highlight is Lucid.
If you're familiar with Lucid Financial, for example, last year, Lucid was selling less than 10,000 vehicles. They have an operating loss of $3 billion. Their valuation is still like having $6 - $7 billion. The next similar company that we're familiar with is Rivian. They have a market cap of something around $15 - $20 billion. Faraday only has $200, $250 million. Right? If we can successfully pull this one off and just capture 0.1% market share of the overall automotive market opportunity in the United States, we firmly believe that we can really create some significant value or at least offer some very unique product features to the U.S. consumers. We are running our business very efficiently. This is the 12 months cash burn in the year of 2024. As we can see in here, some of the vehicles or some of the companies are no longer existing.
We are running our business very efficiently, burning only less than $80 million for the full year. This is our stock performance. We have lots of retailers following us. Last year, it was quite an amazing experience. The stock was up 100 times in 10 trading days. For this year, when we do the announcement, as well as continue to introduce more developments of the second brand or the second vehicle, the market reactions are very, very positive and the volume is quite high. The single daily peak trading volume was $3 billion. Right now, it's stable at around $60 - $100 million per single trading day. That's it on the company introduction. Happy to take questions. Thank you.
Thank you so much, Jerry. I'll start off with a few questions. First of all, I think it's very interesting.
Thank you.
Over the past year or so, a lot of articles in the U.S. in mainstream publications have said the best EV that you cannot buy, highlighting various different Chinese EVs and talking about the price points. I think Americans who are aware have been sort of shocked that you can buy in China an EV that goes 500 miles and costs $30,000 and looks like a Ferrari.
Absolutely.
Maybe referring to Xiaomi's SU7, YU7 now too. I think it's interesting. It seems to be contingent, though, upon the regulatory environment. You and I were just chatting before you took the stage about the tariff rate that is applied to semi-knocked down or completely knocked down vehicles coming from China, because the tariff on Chinese vehicles is 100%.
100%.
I think that would be untenable. Maybe you can just talk about what's giving you the confidence. You say you're importing vehicles right now paying 5%.
Yeah.
As your attention is raised, do you become a target? What's sort of your confidence that you might be able to pay this reasonable rate?
That's a great question. I think we're following the industrial development train that is very highly supported by the current administration, basically to promote the high-end manufacturing coming back to the United States. One of the largest high-end manufacturing industries is definitely automotive, building cars, right? We are a California company. We're hiring hundreds of people, and we are expanding our facility to capture this great opportunity. We are creating jobs, we're creating value, and we are bringing good, affordable products to the United States and make it available for consumers to choose, right? Overall, we think that we are creating meaningful value and following the development direction that the current government is promoting. Actually, we had a quite successful event in DC several weeks ago.
We met with Congress members and introduced what we're doing, brought two vehicles there, and all of them spoke highly of the business and really wanted us to expand more facilities in their state. In general, we feel that the tariff situation will be slightly eased. Basically, the different rate from the complete vehicle and automotive parts will be there.
Yeah, I think it's a strong argument. I just say I think that the fair and logically sound argument does not always win the day when it comes to politics. I wanted to ask too on your willingness to potentially consider not branding the vehicle under your own brand. I imagine there might be some automakers in China that would like to sell their vehicles in the U.S., but maybe control the brand still. Is that something that you would ever consider, essentially being like a contract CKD assembler in the way that Magna's Magna Steyr is for complete vehicles?
Yeah, that's a great question as well. I would slightly pivot that. We are definitely open for opportunities, that's for sure. Actually, when I introduce those vehicles that are selling very well in China, why are they not able to bring it to here? At least three hurdles. They're not able to do it by themselves. They have lots of money. For example, BYD, they can open a facility, spend billions of dollars building in here, and then bring vehicles in here. Why are they not doing it? The market is just great, right? There are at least three reasons that really differentiate Faraday Future. First, we already discussed, you need to have a manufacturing facility. No matter how much or how less that you're doing manufacturing, the car needs to be built in here in order to enjoy a favorable tariff treatment. That's one thing.
It takes us 10 years, $300 million to build a facility in California. It takes a lot of money and takes a lot of time. Second is on the vehicle software. The current administration is banning China vehicle software starting from 2027, and all the players are trying to figure it out, how to handle it. My point is that even, for example, BYD built a facility, spent billions of dollars, they need to develop their own software all in the United States as well. This will take them lots of time and lots of money to do so. The third, you're capturing very, very right, is the brand sale after sale service and user operation, right? For those large OEMs, they're coming into here. They want to capture, definitely want to capture some meaningful volume.
Probably, the best way of them doing it is to create their own brand instead of using their existing brand and introduce a China vehicle to the United States, especially given the current political environment right now.
Would you say that you ironically benefit from the scrapping of the $7,500 U.S. federal consumer tax credit because that was widely seen as a non-tariff trade barrier that you would not have qualified for? It evened the playing field a bit, would you say?
Yes. The $75,000, as long as you are building cars in here, you can enjoy half of that. If you are purchasing batteries from here, you can enjoy the other half of that. Yeah.
I wanted to ask about homologation costs.
Of course.
Firstly, you have gotten one of your FX vehicles through homologation. You should be familiar with this. Obviously, the more vehicles that you sell, the more you can amortize those homologation costs. When people would push back, you really wouldn't be able to buy a $30,000 Chevy because of all the transportation costs, then you throw in the homologation. One thing that I think your brand offers that's very interesting is the zero gravity seat, which the American consumer does not have experience of. It's like flying business class, you know, but in your car. There is some concern even in China about that needing new regulations and whatnot. Some of our seating and airbag companies are working on solutions for that. It's a little bit out and kind of expensive. I'm just curious if that would be possible to sell in the U.S.
and what your discussions with the regulators around homologation for that vehicle with the zero gravity seats may be.
Absolutely. Yeah. First, the answer is yes, we are able to do it. In fact, we are selling zero gravity seats in FF 91 as of now, and it's completely past the homologation. We already did it and we understand how to do it. That's an excellent question. Passing homologation for zero gravity seat is very, very difficult. We spend lots of money and we spend lots of time trying to get that done. For example, not only the safety belt, but the buckle, like the structure that supports the safety belt. We failed at the first time because of the crash test, and because of the unique design of the seat, the buckle went loose. We did not pass at the first time. We changed another design and fit in a stronger material in order to completely pass all the homologation requirements. The homologation requirement under the U.S.
is the most strict around global. It takes lots of effort and lots of know-how and knowledge to go through it. Basically, once you get it done, you know how to do it. The more important thing is that this will offer consumers the most safest product and experience that they can have on driving the car. It's definitely worth it.
One thing I kind of like about your business model is it is de-risked in a way that Fisker was not. I mean, at all massive cost overruns, Lucid. You see they lose so much money. You know, the vehicle cost is, you know what it is. You know what I'll say Great Wall Motors is charging you for this van. You know what the tariff costs are and the homologation. You know what your assembly costs are in any market. What kind of, starting with that $60,000 price and what the van would be sold to you for, and considering your semi-assembly fees, what kind of margin would you target there?
Yeah, that's a great question. We're targeting something around 15% contribution margin. We think it's definitely very much achievable, and here's why. In general, for the same vehicle, the cost or the MSRP in China or the MSRP in the U.S., kind of similar standard vehicle, is double compared to the MSRP in China. That's how strong competition China is. That's how advanced the electric vehicle supply chain is and how cost-efficient the manufacturing and supply chain is in China. Basically, you have 100% room for margin. If you take 25% off from the tariff on the automotive parts, you take another 25% off from the shipping logistic cost, and so on and so forth. Basically, your distribution and your dealer margin, and so on and so forth, is another 20%. You still have a very healthy around 30% margin room for execution.
You are taking some of your marketing, promotion, maintenance, cost of warranty, cost of. Basically, a 15% gross contribution margin target is very much achievable under this model.
Now, you said that you're working with two large Chinese OEMs. You also said that they currently sell millions of vehicles. One, we know to be Great Wall Motors. The other is not Great Wall Motors. Li Auto, which sells plug-in hybrids, does not sell millions of vehicles. There's a pretty short list here. If you say you're going to sell for $40,000, if you're going to have a 15% gross margin, that means you need to buy it. Your total cost needs to be about $35,000. Considering that also includes the cost to assemble the vehicle, to transport the vehicle, really, the purchase price from the Chinese automaker might be like $30,000. I don't know, it sounds like a BYD vehicle to me. What kind of vehicle do you think, or would it be reasonable to assume that this is?
What kind of volume potential would a vehicle like that have in the U.S.?
Yeah. Basically, it depends on the MSRP range. For example, for the FX Super One, the large full-size SUV, we have like three versions: the entry level, the, let's say, the new mainstream one, as well as a more luxury one. It's all combined. We're targeting something around 50,000 - 100,000 volume, and we try to get there step by step. We're not trying to sell millions of cars in the next five or 10 years and become a second player following Tesla. That's not what we're trying to do. We want it to be efficient. We want it to be making steady progress step by step. Gradually, we're going to get there, but using very light assets or light investment. Think of that. The vehicle has already been built.
We're making it better by our software, by passing homologation, and there's a lot of design engineering change, but the core product is already developed. They're manufacturing and selling millions of vehicles right now, right? By partnering with those great partners, not only can we have a very robust product that is market-proven, but also we can enjoy their supply chain costs, right? We can enjoy their purchase price. We can enjoy their manufacturing costs. We can enjoy their quality control by making this product better using the capability that we are adding, using the value that we're adding on to that. Actually, there is a supply chain tax rebate. Basically, there is a 12% value-added tax in China. If you purchase from a local supplier and you sell the end product in China, they're paying 12%.
If the end product is not selling in China, you bring it outside, basically, there's a 12% tax rebate that the OEM can get. That's a very, even if they're selling those parts at the same cost of their manufacturing, they're getting 12% pure margin, pure profit. It's a very interesting business model for them to consider, especially considering the heavy competition that's going on in China, like Xiaomi, Huawei, BYD, everyone is launching their cars, and all the cars' products are amazing. Basically, their margin is relatively low. By partnering with guys like us, we can enjoy basically 12% by almost doing nothing. They're manufacturing millions of vehicles already. What does it make to manufacture another 50,000 or something? Yeah, very efficient.
Yeah. I wanted to ask you upon the UAE strategy that you laid out. Is there any particular partner that you've tied up with? Is the plant over there similar to the California Hanford plant
Yeah
with the semi-autonomous assembly? Are there any key advantages to choosing that market to go into first?
Of course, yeah. First of all, we're partnering with Ras Al Khaimah. This is a smaller emirate in the UAE. One of our strategic investors is Sheikh Abdullah Al-Qasimi from the ruling family. With his support, we already secured a manufacturing facility in the Ras Al Khaimah Economic Development Zone. The UAE is very much promoting manufacturing high-end AI technology automotive business there as well, right? They're giving not only great incentives and great support, but also they are slightly lowering the bar of the homologation requirement in that market. Basically, if you're selling less than 100 vehicles, more or less around less than 100 vehicles per product, you are not needed. As long as you manufacture in the UAE, there's no homologation or very light homologation requirement. That product is a mature product, right? We're going to make sure the quality is great, and then we start to deliver.
The speed and execution of delivering in the UAE is much faster, and the certainty is significantly high compared to passing the whole homologation in the United States. We're able to make it. We will make it. This takes slightly longer than starting manufacturing in the UAE.
Are there any questions from the audience? One thing that's interesting about UAE is it's not very big, so you can drive the vehicle from one part of the country to the other and find service. In the United States, it's a big country, and you'd almost have to, because of the fixed investment in the dealership, the distribution, you have to kind of limit yourself to a sub-geography. How do you plan to handle the distribution and be able to scale it in an efficient way? I almost wonder if a good alternative without investment distribution would be to sell to fleet customers. I don't know that a government would necessarily buy a Chinese-type rebranded vehicle, but a corporate, a rental, something like that where they're taking care of the refueling and service and the things of that sort.
Yeah, definitely. That's a great question. I think the key is the product performance, right? Are you really offering a product that is reasonably priced, but also offers premium exclusive features and experience, no matter from the driving side or from the seating side or from the digital ecosystem side? What kind of unique experience that you are offering with your product will determine whether a customer would like to buy it or not. We're targeting a 50 million vehicle market, which is a lot, right? On your sales and distribution, that's a great point as well. From our strategy, we're focusing mostly all the transactions are completely online. We're building our online platform to facilitate all the vehicle transactions. On the offline, we just built a very handful, a very few flagship stores, maybe two or three in the United States. We're not trying to create hundreds of stores.
It's very, very expensive. How we capture the offline, for example, sales activities or sales and maintenance activities, we're partnering with offline institutions or offline stores. Giving them a product that they can have users experience it. They can test drive the same common seat. Wherever the order that we're getting online, for example, it has a zip code. For some offline partners, we will direct those online interests to the region that you cover.
What kind of offline partners would these be? Like franchise and used car dealers?
Yeah, franchise dealers. Yeah, franchise dealers, some of the large automotive, no matter on the new car dealer or used car dealers. Some of them, for example, the first dealership that we signed, the dealership partner that we signed in New York, is a used car dealer. They have two stores. They're taking care of the maintenance as well. They signed for 1,000 FX vehicles. They try to develop their own fleet. They're saying that this product offers a very, very unique seating experience that no other product, similar product, at least similar to the price range, can offer. They're considering purchasing like 500, 700 of them and applying to, for example, Uber Black or something. It's a very healthy model that they can enjoy a slightly lower MSRP cost, but coming with steady cash flow.
I did ride from the Shanghai Pudong Airport to the Shangri-La Hotel in a Zeekr with a zero gravity seat.
Yeah.
Silent and smooth.
Yeah, very comfortable.
was very relaxing after my non-business class flight in Peshawar.
Yeah, great experience.
Executive transport.
Yeah.
Absolutely.
Yeah, I mean, you know, ordering premium vehicle experience in Uber is kind of expensive, like $100, $150, $200. Basically, as long as we can build the product and be able to start delivering and gradually scale up, there's tremendous opportunity.
We are over time. Please join me in thanking Jerry for the great call and insight.
Thank you.