Greetings. Welcome to Faraday Future Intelligent Electric Inc. Fourth Quarter 2022 Earnings. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to Charles Hsieh, Investor Relations. Thank you. You may begin..

Thank you and welcome to Faraday Future’s fourth quarter 2022 earnings call. We issued a press release reporting our fourth quarter and annual 2022 results this afternoon, March 8, 2023.

Joining the call today from Faraday Future is our Global Chief Executive Officer, XF Chen; Matthias Aydt, Global SVP of Product Execution; and our Chief Accounting Officer and Interim Chief Financial Officer, Yun Han.

You can find a copy of the Q4 2022 press release now and a replay of this call later today in the Investor Relations section of our website, investors.ff.com. Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

These statements reflect our views only as of today, should not be relied upon as representative of views as of any subsequent dates. And we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC.

In addition, during today’s call, our management team will give their prepared remarks and answers to investors’ questions in English. A translator will provide simultaneous Chinese translation, which can be used accessed through investors.ff.com. All translations are provided for convenience only.

In the case of any discrepancy, management’s statement in English will prevail. With that, I will turn the call over to XF Chen, Global CEO of Faraday Future..

Thank you, Charles and thanks to everyone for joining us today. This is my first earnings call as FF Global CEO and I want to let you know that I plan to make it a priority to have consistent and open communications with investors moving forward. I would like to begin today’s call with what is FF.

FF is a pioneer of ultimate tech-luxury ultra-spire market in the intelligent EV area and a disruptor of the traditional ultra-luxury car civilization optimized by Ferrari and Maybach. FF is not just a EV company, but also a software-driving company of intelligent internet AI product.

Ultimately, FF aims to become a user company by offering here intelligent mobility ecosystem. We envision the growth of FF in three phases.

Our Phase 1 goal is to deliver to our global ultra spire users, the FF 91 Futurist alliance, FF 91 Futurist and FF 91 with high-quality and high product power thereby distributing traditional auto luxury brands like Ferrari, Maybach, Rolls-Royce and Bentley and ultimately become the top leaders in the global spire user market.

We are in the process of developing our 5-year business plan. The company’s goal is to create a profitable business with operating cash flow breakeven in 2025.

As we introduced more upcoming vehicle models, the user ecosystem will begin to take shape and we expect our hardware revenue will grow under equal revenues, which include internet APP software and sharing. We also grew as well. Our Phase 2 goal is to establish ourselves as a major player in the high value user market.

During Phase 3, FF intends to suspend the growth of its hardware revenue and equal revenue, which we believe will constitute an increasingly substantial portion of the overall profit. With this mid to long-term strategic plan, we aim to rapidly grow the company to become a $10 billion, then $50 billion, then $100 billion company in the future.

Let’s look at our brief company overview of where we stand today, our upcoming start of production milestone and our go-to-market plans, Matthias will then provide an overview of the FFI 91 Futurist and Yun will present a review of our financials, update to quarter one 2023, fundraising and the other actions we are taking to ensure a strong Faraday Future.

2022 was a tough year with several challenges for the company. But despite the challenges, our unwavering commitment to our reaching persisted, putting this past behind us. FF stands stronger today than ever.

We have also made significant improvements to our board to align with the stakeholder interests and abroad in new key management hires, such as Yun, our Chief Accounting Officer and Interim Chief Financial Officer; [indiscernible], our Interim General Counsel, as well as moving me from our China operations to now leading Faraday Future’s global business.

The new FF today is fully aligned from shareholder level to employee level, all for the betterment of the company and shareholder interest. Over the past 3 months, I have seen the unparalleled dedication of the FF team and the hard work they put into the company.

We are excited to introduce FF 91 Futurist in the coming months, which marks significant milestone in Faraday Future’s goal to become a revenue-generating company this year.

Now, I would like to take a few moments to talk about our manufacturing efforts being undertaking at our Hanford factory, or the ieFactory, California, as we refer to it, which is the foundation for the ultimate intelligent tech-luxury FF 91 Futurist.

This factory covers areas spanning 1.1 million square base and we will have an initial production capacity of 10,000 cars annually. On the staff side, we are intensifying recruitment and training, which will support our style of production.

We have also setup our launch team consistent of cross-functional colleagues, who will be temporarily moved to Hanford to support the manufacturing and provides immediate assistance for only a particular issue.

Back in September of 2021 we highlighted six milestones needed to reach the start of production of the FF 91 Futurist at our manufacturing plant in Hanford.

Since then, the FF team has worked intelligent to complete all six of the necessary production milestones, including the initial installation of our pilot equipment, the completion of factory foundation construction to most recently finalizing major construction and installation in our SOP vehicle manufacturing aerial.

In addition to the aforementioned production milestones, we are confident to reach our first start of production milestone number seven by March 30, 2023 assuming company’s receipt of funds from our investors, which we will talk about more lately. We will host the FF 91 Futurist final launch event on April 26.

And we look forward to your participation. Building such an innovative car is no small task. We are in closing communication with our parts suppliers. We strive to maintain a high level of quality assurance throughout our production stage.

Furthermore, we seek to actively engage with suppliers and other strategic partners to capitalize on their expertise in optimizing the supplier process and ensuring that our vehicle meets their highest standard.

Internally we are having initiated the supplier champion’s project, where we have assigned one of our Vice President for each supplier relationship to ensure our alignment.

I want to take the opportunity to thank all our suppliers for their continuous commitment and support as we prepare to commerce deliveries by end of the April assuming company receipt of funds from our investors and it is meeting our supply chain requirements. I also want to talk a little bit about our go-to-market strategy.

FF focuses on co-creation in our go-to-market strategy, redefining how user and partners interact with companies to generate higher efficiency, higher value and bridging user to our mobility ecosystem. We have started inviting early adopters to experience the wake-up performance through the Futurist Product Officer Program.

FPOs are invited to experience that FF 91 Futurist and the pro rate directly referred back to FF team and improved future we go through the co-creation progress. FPOs were enjoying value sharing based on the quality of their feedback and ideas on the product.

We are reaching out to candidates to join FF Spire Club, which is a group of units who share the same mission vision with FF and who would like to co-create value in the FF mobility ecosystem through exclusive tech-luxury branding and show events, social media sharing and we are taking on their referral programs.

Spire Club members will share the benefits of creating a new mobility ecosystem by leveraging their circle of influence. We will launch FF 91 Futurist through our direct sales model, where users can place order online and are also able to experience our cars or the FX safe owned and a partner owned fuel rules and experiences.

FF auto sales and service platform allow partners to integrate seamlessly in our sales and service solution. With our direct sales model, FF cars have fulfilled the necessary direct sales licensing requirements to operate the leading outdoor luxury OEM.

We have started our flagship brand experience center project in Beverly Hills and looking forward to showcasing our car there soon. Through the operation of our own distribution network, FF can efficiently handle the customer relationship and the pro rate hopefully seamless and a transparent sales journey for our users.

Our retail strategy will be focused on establishing our presence in the top 20 cities across primary regions worldwide. Our initial Canadian history sales efforts will begin in the LA Metro region, followed by the San Francisco Bay Area and subsequently the New York Metro region.

In China, our initial sales efforts will begin with Shanghai and Beijing. Additionally, we are exploring potential opportunities to launch our product in Europe and the Middle East market as it aligns with our product positioning and customers to the growing demand for ultra luxury vehicles in their regions.

To help ensure exceptional service for our customers, we will be launching our fleet of mobile surveys once to provide concierge level of service. Additionally, surveys have located in current geographic area will provide a comprehensive network of warranty service and repair capabilities.

I take a great pride in acknowledging the commendable efforts put forth by the FF team. Their perseverance has enabled us to advance our strategic initiatives. Despite facing numerous challenges, I am eagerly anticipating the journey ahead as we continue to pursue our growth path and strive towards intense stockholder value.

Now I would like to turn the call over to Matthias..

Thanks, XF. I would like to take a few moments to elaborate on our innovative product the FF 91 Futurist. The FF 91 Futurist provides unsurpassed user experience and offers industry leading performance metrics.

The FF 91 Futurist has bespoke electric drive units, with a fully integrated design, active oil cooling and offering independent rear-axle drive and 2050 horsepower propulsion system is driven by FF in-house developed software and control algorithms, optimizing the performance, stability and safety.

The cars also boast an EPA certified range of 381 miles of range, which is almost 50 to 70 miles more than our direct competitors in a comparable priced category. The FF 91 can go from 0 to 60 miles per hour in a blistering 2.27 seconds. In addition to performance, the FF 91 Futurist has true mobile connectivity, which is unrivaled in the industry.

You can think of FF 91 Futurist as a smart device on wheels, a game changer in the automotive industry that sets a new benchmark for both the driver and passenger experience.

The FF 91 Futurist offers a rear intelligent internet system and the revolutionary user experience designed to create a mobile connected intelligent and luxurious third internet living space and user mobility ecosystem platform.

It’s interior cabin features unique rear zero gravity seats inspired by NASA offering the largest rear legroom area in the industry and can recline up to 60 degrees for maximum comfort, it also offers a revolutionary and immersive driving experience coupled with an unsurpassed passenger experience, a total of 100 plus inches across 11 displays, including a 27-inch ultra light rear display to deliver a portal to passengers in every seat.

Rear seat passengers in the FF 91 would be able to lower and raise industry leading rear presenter display with a simple voice command. Once the RST is done, passengers will now also be able to conduct in-vehicle videoconferencing to allow them to continue their work while on the road commuting.

The FF 91 will have additional advanced features including touch less entry, voice control for navigation input, and self parking capabilities in most normal environmental conditions. Our dedicated R&D team has undertaken intensive extensive product testing and validation to ensure product readiness of the FF 91 Futurist.

These tests include safety and regulation tests, extreme weather and durability testing, and final customer use case testing on public roads. We have tested the FF 91 Futurist in cold weather conditions under sub-zero temperatures and extreme desert heat environments and we are pleased with the results.

Additionally, we recently sent our first vehicle to China for market testing and validation, including charging and infrastructure compatibility along with other hardware and software applications.

This shipment is a further step in our planned promotion of our U.S-China dual home market strategy, which calls for production and sales in both the U.S and China, the two leading global markets for electric vehicles.

We are pleased to report that our safety testing is proceeding as planned and that the results are exceeding our virtual validation targets by significant margin. In addition to our product testing, we are proud to announce the completion of generational enhancement, which we have identified as Product and Technology Generation 2.0.

This consists of significant upgrades of systems and car components for both the vehicle and I.A.I areas. I.A.I is our advanced core, which stands for internet, autonomous driving and intelligence.

We updated 26 major systems and components with 13 key upgrades through our power train, battery, charging, chassis and interior areas as well as 13 key upgrades from computing, sensing, communication, user interaction to the newest technology from I.A.I. These updates have resulted in a significant performance improvement to the FF 91 Futurist.

We look forward to sharing more detailed highlights of the car at our final launch event ahead of deliveries. So what does this all mean for our users? Specifically, it means they are getting the following upgrades to name a few.

The new dual Qualcomm chip that powers the infotainment center, 8 megapixel interior and exterior cameras, ultra-wideband sensors for faster data transmission speeds compared to conventional Bluetooth and a cutting-edge LiDAR system with the capability to detect up to 500 meters in any weather conditions.

We look forward to sharing more at our upcoming final launch event on April 26. Now, I will turn the call over to Yun who will go over the financials..

Thank you, Matthias. I am excited to be working with the entire Faraday Future team.

I would like to begin by providing a financial overview, followed by a discussion on our funding effort, cost-cutting strategy and our focus on ensuring that all the SEC filings are up-to-date as well as our plans in place to address weaknesses in internal controls over financial reporting.

First, I would like to summarize our financial results for 2022. Faraday Future reported an operating loss of $451 million for the full year 2022 as compared to operating loss of $354 million for the full year 2021. Operating expenses for Q4 2022 were $84 million compared to $121 million for Q4 2021.

The overall increase in operating expenses for the year was mainly due to the increase in research and development expenses. The decrease in operating expenses for Q4 2022 in comparison to Q4 2021 are mainly due to timing as the significant research and development expenses were incurred in the first 9 months of the year.

Net loss increased to $552 million for the full year in 2022 as compared to $517 million for the full year in 2021.

The increase is mainly due to the increase in research and development expenses and the non-cash mark-to-market changes of certain notes payable and warrant liabilities in 2022 compared to a one-time loss on conversion of certain notes payables in connection with the closing of the business combination in 2021.

Net loss for Q4 2022 was $154 million compared to $84 million for Q4 2021.

The increase is mainly due to the increase in non-cash changes in fair value measurement of certain notes payable and warrant liabilities in 2022 and again of settlement on certain notes payables compared to a one-time gain on forgiveness of company’s payroll protection loan during Q4 2021.

Turning to our balance sheet, total assets on December 31, 2022 were $510 million compared to $907 million of total assets as of December 31, 2021. Total liabilities were $328 million versus $340 million on December 31, 2021.

Since the inception, the company has incurred cumulative losses from operations and negative cash flows from operating activities and the company’s cumulative deficit was approximately $3.5 billion as of December 31, 2022. Net cash used in operating activities for 2022 was $383 million compared to $340 million in 2021.

Capital expenditures were $123 million for the full year 2022 compared to $96 million for the full year 2021. Net cash used by financing activities for the full year 2022 was $7 million compared to net cash provided by financing activities of $967 million for the full year in 2021.

Cash as of December 31, 2022 was $19 million, including restricted cash of $2 million. The decrease in cash from December 31, 2021 to December 31, 2022 was mainly due to our significant research and development spend and the equipment purchases. Research and development accounted for 69% of total operating expenses in 2022.

As of March 3, 2023, our cash position was $38 million, including restricted cash of $2 million. Our remaining cash on hand together with expected funding to be received in March and April is expected to provide us sufficient funding to produce our FF 91 Futurist product and get into the hands of customers.

Now, I would like to provide a funding update. On December 15 of last year, we announced that we expect to start production of a FF 91 Futurist at the end of March 2023 subject to timely availability of $150 million to $170 million of additional funding and timely stockholder approval over authorized share increase.

Since then, we have been diligently working towards that goal. On February 5, we announced that we secured $135 million in new financing commitments, pending FF’s stockholder vote to increase the authorized shares outstanding and approval of the financing and certain other closing conditions.

At the February 28 Special Meeting of Stockholders, we received sufficient votes that were in favor of the increase in authorized shares. Additionally, we scheduled another Special Meeting of Stockholders on March 30, 2023 to vote on approval of this transaction as it exceeds 99% of shares outstanding.

You should have received voting instructions by now. Please vote now to approve the $135 million in new financing commitments. If you have any questions with regards to voting, please refer to our voting guide at ff.com/vote. Please see the definitive proxy statement that the company filed with SEC for more information.

Since December 15, 2022, we have received $112 million gross funding and secured $10 million scheduled to be received in Q1 2023.

$55 million is scheduled to be funded within 5 business days of effective registration statement for shares underlining the secured convertible notes and the stockholders approval of the issuance of shares at the upcoming Special Meeting of Stockholders, which we just spoke about as well as certain other conditions.

We also expect that we will receive additional $9 million from our existing investors by the end of March, which will be funded at investors’ options.

Additionally, we have entered into a standby equity purchase agreement with Yorkville Advisors, which allows the company to draw funds in exchange for share issuances for up to $350 million at the company’s discretion. We will be very strategic and careful in using this facility in a manner most beneficial to stockholder value.

Access to the full amount of this equity credit line is subject to certain conditions and shared press threshold is being met. Subject to certain conditions, $20 million of additional capital has been committed by one of our current investors and some of our existing investors have the right to commit up to $160 million of additional funds.

It is always our plan and expectation that we should raise additional funds to move beyond the initial launch of FF 91 Futurist. We have just begun a $50 million raise to have better liquidity to support our production ramp and have already received indications of interest from investors for nearly the full amount.

We would like to offer this investment opportunity to all existing stockholders that are accredited investors to consider. We will send out an investor letter shortly after this earnings call. For those current accredited investors stockholders with interest, please e-mail us at ir@ff.com.

We will continue to explore various debt and equity financing possibilities and we believe that after FF 91 Futurist delivery and as companies start to generate revenue we will have better access to a lower cost of capital.

Finally, since I joined the company, we have implemented several cost-cutting initiatives that have enabled us to focus on our budget on core items that are essential to delivering the FF Futurist and maintain strong relationships with key suppliers.

Also, I am happy to say that our team has kept our SEC filings up to date since Q1 2022 and we will expect it will continue to stay current. Additionally, I have worked with the team to evolve business and system processes and we are implementing internal controls to strengthen our corporate governance as well as financial reporting.

We have recently hired several key accounting positions as well as Compliance Officer, who will also serve as our Deputy Legal Counsel. We are also engaging a third-party consulting firm to help us build our internal audit function. With that, I’ll hand it back to XF..

Thank you, Yun. FF appreciates the trust shown by investors and would like to thank them for their loyal and ongoing support of the recent governance structure, Board of Directors and management. We are looking forward to the upcoming SOP milestone at our Hanford facility. And we will be delighted to have you visit us in the coming months.

Thank you for your time and interest in Faraday Future. And I look forward to providing you with the further updates as we move closer to launch..

Operator, we are ready to take questions..

Thank you. [Operator Instructions] Our first question is from Michael Ward with Benchmark. Please proceed..

Thank you. Good evening, everyone and thank you for doing the call. Maybe just starting with a big picture question and then getting a little more specific on the cash side.

First of all, on the big picture side, has your definition of your market changed? How are you defining like your key customers? Are you still assuming you are going to go down and produce the 81 and 71 or is something shifted?.

Okay. This is XF I guess I am probably top of the facility. But so, sorry, could you repeat your question, because I got a little bit of trouble..

No problem.

Just a big picture type thing as you define your market and your key customers, has – what are the key things you are looking at? Has it changed? Are you still looking out at coming out with the 81 and also the 71? What do you – how would you define your market the way you are seeing it over the next 2, 3, 5 years?.

Well, okay, it’s a very good question. FF, we are designing our product as a very high-end premium product. First of all, that will be our FF91 Futurist. We designed auto tech-luxury vehicles and we are aimed at the top segment of the market.

That’s our first product we want to bring into the market this year, but for the development for the 3-year, 5-year this kind of a cycle plan or this kind of mountain plan as a company have also to consider how we apply it – how we apply the platform technology and our mobile advanced AI technology into the FF81, FF71, because we do think FF has a very unique design and we will build very strong brand and with our very strong performance of the car as much as just introduced.

So, we will get to the FF91 as the first strong brand position for the higher – very high segment in the market. And then we will get the price does their position down to meet they plug as a premium brand segment and also they enter premium segment to provide that kind of similar experience to our diverse level of customer.

So, this is our another strategy. We are still working on that. Did that answer your question? Sorry..

Yes, it does very much. Thank you. And then now it sounds like do you have full approval to sell the vehicle in the United States? And it sounds like you are still waiting on final approval in China.

Is that right?.

Well, first of all, we have got a plan to launch a car by end of this month. And in parallel, with that kind of funding raising arrived. We got the plan and the opportunity to deliver the car by end of – that’s right, we have a plan to launch the car by end of March, actually this month, end of this month.

And there was that kind of a condition, once we got the funding raised, and also we got the supplier deliver our value requirement, we will deliver the 91 Futurist by end of April, next month..

So, you have all Federal approvals in the U.S., it’s met all the regulatory approvals?.

Not 100%, because some of the testing is still ongoing, and the result will be available by end of this month, and some of them will be early next month. But people – and our people wait to the start of delivery in America by the end of next month, or all the FMVSS, the U.S. National requirements have to be finished. So, that’s our current plan.

And we do have a very robust plan and a high confidence for that one. In parallel for your question about the China market, as I stated in my NASA speech, I think right after the U.S. delivery to the customers, we will accelerate the delivery for China market, that’s the biggest EV market in the world.

To the credit seminar sales, we also have a plan to take over the China communication and regulation related application. We have had a very good relationship with one of the China agency and we will go through all of this kind of technical detail and have a very robust plan.

During – in the coming months we will plan – we plan to ship the car to China to do this kind of testing for the general market. As a result, this and also February, or late February, we are getting one car to China to do some of the charging system performance testing. So, you can say that right after the U.S.

market delivery, we will no doubt accelerate our China strategy..

Okay. And what kind of cadence do you expect for deliveries in the U.S.

and China as we go through 2023?.

Well, this one, because internally, we do not pull this as disclosure information yet. So, I really like your question, but I probably cannot answer..

That’s fine. No problem. On the cash side, I just wanted to see if I because there were a lot of different commitments in dollars thrown about. So, I want to see if I got this right. You have mentioned I think you ended the year with about $18 million in cash. And now you have $38 million.

And so was some of the – it sounds like in the first quarter, you have received $10 million in the first quarter, but the $112 million in gross proceeds. Did some of that come into the first quarter, into January, February, I guess you are ending March at like $38 million, I am sorry, beginning of March is $38 million, right? Okay..

Yes. So, this is Yun. I can take this one. Yes. So we, in the beginning of March, we had about $38 million on hand. And we are through March and April, we are expecting to get additional committed funding.

So, with the committed funding, we have another $10 million coming in March, and then also $55 million upon the effectiveness of the registration statement. And then amount, other things, we are still – we scheduled the second special stockholders meeting to approve the cap of 90%, 99% and that to be scheduled by the end of the March..

Okay. So, what’s the….

Go ahead..

Is the $135 million in new commitments, is that in addition to the $150 million to $170 million, you announced back in December?.

We announced $150 million to $170 million. And with the $135 million, they will get us used, enough through SOP and as well as SOP. And we are currently finalizing the span of the remaining of the year. So, we can’t tell you the remaining, but at least with the $135 million that get us through SOP.

And then as you know, we also have access to HELOC, that is up to $350 million. But we got to be very careful on how we use it. That’s for the certificate holders and then we also have $150 million, that’s at option of investors, so that is also likely to come. So, we have a few things going on. And we are currently consulting….

Okay. I just want to make sure I got this straight. So, there are four different parts to it. In December, you announced $150 million to $170 million of funding, right. Now, on February 5th, you announced an additional $135 million.

And then you have additional funding, it sounds like, different raises and from investors and from – it looks like another $50 million or so from investors. And then you have the equity purchase agreement the $350 million.

So, it looks like it – just on paper, it looks like, if you get to start of delivery, you get those vehicles delivery, the cash flow, then you have the capital flexibility to get through this year to push them into ‘24 and ‘25.

Am I reading that correctly?.

Well, I just want to clarify that $150 million to $170 million is the fund we need to get into SOP. That’s the announcement….

Okay. Got it. Okay. That’s what you said you needed. I thought that was a commitment you received. That’s what you are looking for..

That’s what we are looking for as subsequently we got $135 million. And so now, obviously, we also get from other fundings, and that will get us through SOP..

Got it. Now I understand that. Thank you. That’s where I was confusing. Okay. So, that’s getting you through SOP, and then the next steps as needed. And hopefully, you will start – the cash will start coming in the door as well..

Yes. We have strengthened our capital market group, hired more people. We also have hired more experienced consultants, financial advisor. So, we are working hard on getting more funding in the future..

Getting the product out the door is the first step, right?.

Yes. And offer value to our funding will be, hopefully we will have access with a lower cost of capital..

Alright. I really appreciate it. Thank you for your time. Thank you very much..

Thank you, Mike..

Thank you. This will conclude today’s question-and-answer session. And this will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation..