Nearly every car company in the world is looking into electric vehicles (EV’s) or electric hybrids. And every time a new one is announced, the media exclaims, “Watch Out, Tesla!”
Recently, a new company has come forward with a new business model, different from those car companies who are adjusting their usual car design.
Faraday Future is a smaller startup, and it’s challenging Tesla as head-on as a new company can.
It is building a $1 billion factory in Nevada, nearby Tesla’s $5 billion Gigafactory, and it claims it can have an EV on the market by 2017.
What makes this company so much more unique than any of the traditional car companies, or even Tesla itself, is that it is not necessarily making these cars to sell individually.
It’s possible, based on the available details for its future business plans, that Faraday wants to create an Uber-like entity wherein its EV’s will be a service, not a consumer product.
However, it’s got quite a few challenges of its own to achieve before it can truly challenge Tesla.
First, the company has to create a working car. Unlike the established car companies currently making EV’s, Faraday is making its vehicle from scratch.
Even Tesla didn’t do that: its first car, the Roadster, was simple and outsourced some of its design.
What’s more, Tesla has had plenty of problems keeping its subsequent cars up to snuff, and has not been able to reach mass production yet.
And yet, Faraday will have to design its cars better and quicker to catch up to what Tesla has managed to produce.
Next, Faraday will need funding. The company is reportedly backed by a billionaire-owned company, Chinese LeTV, which is encouraging.
But that will likely not be the start-up’s only source of funding if it is to keep moving forward.
Then, of course, there has to be a market for Faraday’s EV.
Tesla is running on luxury and niche right now—with gas prices at multi-year lows, there is less incentive to switch from a regular fueled car to an EV.
The most likely push for such a market change will come from customers, like those who are ordering Tesla’s vehicles despite the low cost of gas. Popular opinion can change a market quickly, and Faraday has another year or so to get its name out and its car made.
Finally, the simplest and most difficult requirement for Faraday will be to actually execute its plans.
As I said above, even Tesla has had problems keeping up with the market. Unable to reach mass production right away, the company has delayed deliveries year after year.
But as proven by the fact that people are still ordering Tesla’s vehicles, people may not care. The wait may be worth it.
It will be up to Faraday to play on that idea, and perhaps even surpass Tesla’s production ability. If it can manage that, it may get the piece of the growing EV market it craves.
To continue reading about Faraday Future’s plans, simply click here for the Business Insider article.
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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