Shares of Faraday Future (NASDAQ:FFIE) stock, a struggling electric car company, rose 11% overnight on news it is beginning production of its FF 91 Futurist electric car.
The gain was small in absolute terms, about $30 million. Faraday Future opened at 40 cents per share. The company says it will produce the FF 91 in Hanford, a town in California’s central valley.
Faraday Future was one of a host of American “Tesla killer” luxury electric companies raising cash from investors last decade. It still had high expectations at the height of the tech market. FFIE stock traded at over $18 per share in January 2021.
But the company wasn’t able to raise enough from American investors to go into production.
Faraday admitted in November it had doubts about remaining a going concern. It had just $31.75 million in cash at the end of September. Production was delayed four times by lack of capital.
In November, CEO Charles Breitfeld was replaced by Chinese executive “XF” Chen. A Chinese headquarters has been established in Hubei province, where 2.1 million cars were produced last year.
There also remain questions about the car’s competitiveness.
The FF 91 was sold as a high-end, futuristic electric with a range of 381 miles, able to get from zero to 60 mph in 2.7 seconds. Those were leading-edge numbers when they were announced. They have since been exceeded by rivals like Lucid (NASDAQ:LCID), which is producing cars in Arizona and plans a plant in Saudi Arabia. The Faraday car, with only 399 refundable deposits in hand, is reportedly due to retail for $250,000.
What Happens Now?
If you’re buying Faraday stock, you’re buying a Chinese start-up, not an American one.
That may be the best news to come from Faraday’s recent moves, as China has the infrastructure needed to produce electric cars in quantity.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.