Faraday Future chairman, executives step down following internal preorder review
Its founder and CEO will both take a 25% salary reduction, as well.
We've been following the story of Faraday Future closely, ever since its action-packed debut at CES 2017. As the electric car startup continues to promise its first production car is just over the horizon, the results of an internal probe have prompted notable changes to the company's upper ranks.
Faraday Future Chairman Brian Krolicki is stepping down from his position following the company's internal review into whether or not it misled investors, the company said on Tuesday, as reported by Bloomberg. Representatives for Faraday Future did not immediately return a request for additional comment.
Vice President and General Counsel Jarret Johnson will also leave his position, and another vice president, Jiawei Wang, has been suspended without pay.
"The Special Committee did identify certain inconsistencies in statements to investors and certain weaknesses in its corporate controls and culture," Faraday Future wrote in a statement to investors posted on its website, which does not mention the departing executives. The EV startup's internal review focused on whether or not its preorder figures were used to mislead investors. The company claimed more than 14,000 reservations, but many did not involve down payments, and only "several hundred" actually involved a paid deposit, according to FF's 8-K filing.
To help shore up the gaps in its ranks, Faraday Future has appointed independent board member Sue Swenson, formerly president of T-Mobile, to the newly created position of executive chairperson. CEO Carsten Breitfeld will report directly to her. Additionally, Breitfelt and founder Jia Yueting will both take 25% reductions to their annual base salary, according to Reuters. The internal probe also looked at whether or not investors were misled regarding former CEO Jia's role in day-to-day operations.
That said, the review found that some allegations made in a short-seller report by J Capital Research in October last year, which prompted the investigation, were not backed up by its findings.
Faraday Future isn't the first EV startup to face allegations of inflating preorder numbers and giving a false impression of engineering progress in order to entice investment. Electric truckmaker Lordstown Motors acknowledged it was under investigation by federal prosecutors in July last year. And in December, electric semi startup Nikola settled its case with the Securities and Exchange Commission, agreeing to pay $125 million to resolve charges of fraud.
The last time we caught up with Faraday Future was in October of last year, when Roadshow sat down with Breitfeld to discuss the company's next steps. The automaker's current target for vehicle production is July this year, a figure that has been pushed back several times over the last five years. Having driven an early prototype around Las Vegas in early 2020, I was impressed with its ride quality and cabin space. Now it just needs to get built.
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