FARADAY FUTURE INTELLIGENT ELECTRIC INC. (FFIE)·Q2 2023 Earnings Summary

Executive Summary

• FFIE reported no revenue in Q2 2023, a gross loss of $6.6M due to production costs expensed ahead of any deliveries, and materially lower operating loss year-over-year; net loss improved to $124.9M vs $141.7M YoY as operating expenses fell post-FF 91 development completion .
• Management did not provide quantitative production guidance; they emphasized brand-building in H2 2023 and a volume ramp in 2024, with operating cash flow breakeven targeted for 2025 .
• Liquidity remained constrained: cash and restricted cash were $19.4M at quarter-end, with $171.3M gross committed funding not yet funded and a $350M ELOC subject to conditions; financing joinders and reverse split authorization were detailed in the 10‑Q .
• Key post-quarter catalyst: FF officially delivered the first FF 91 2.0 Futurist Alliance on August 12 and launched Phase‑2 Developer Co‑Creation; press releases were furnished via 8‑Ks on August 14 and August 1 .

What Went Well and What Went Wrong

What Went Well

• First FF 91 2.0 Futurist Alliance delivery to an “industry expert developer” occurred August 12; Phase‑2 Developer Co‑Creation commenced, marking entry into revenue stage narratives .
• Operating loss decreased sharply YoY ($56.0M vs $137.5M) as R&D costs normalized after substantial completion of FF 91 development and cost-cutting measures took effect .
• Manufacturing and product milestones: SOP achieved Mar 29; first production car off the line Apr 14; Hanford plant positioned for capacity ~10,000 units/year; AI/tech stack and vehicle specs reiterated (381‑mile EPA, 142 kWh pack, 1,050 hp) .
  • Quote: “We finally delivered a vehicle… one of the key milestones in building a successful, profitable business” .

What Went Wrong

• No revenues recognized in Q2; cost of revenues created a $6.6M gross loss given inventory NRV adjustments and pre-revenue production costs under GAAP .
• Liquidity strain and financing dependencies persisted: low cash balance and funding subject to stringent closing conditions; going-concern substantial doubt disclosed .
• Lack of specificity on delivery volumes and breakeven levels raised analyst concerns; management declined to provide numeric guidance until later quarters .

Financial Results

YTD cash flow and capex:

KPIs and operating milestones:

Segment breakdown: FF operates a single segment (intelligent EV design/manufacturing) .

Guidance Changes

No quantitative guidance on revenue, margins, OpEx, or tax rate was provided on the call .

Earnings Call Themes & Trends

Management Commentary

• “I couldn’t be prouder… we accomplished significant milestones… first FF 91 2.0 came off the line… first delivery… developer co‑creation festival” — Xuefeng Chen .
• “Operating loss… reduction… due to completion of R&D… cost-cutting… Net loss… partially offset by higher noncash mark‑to‑market and note settlements” — Jonathan Maroko .
• “We believe Hanford capacity ~10,000 vehicles/year… long‑term value driven by product‑market fit and margin improvement” — Jonathan Maroko .
• “FF stands at the forefront of automotive AI integration… leveraging ChatGPT and GPT‑4” — Matthias Aydt .

Q&A Highlights

• Production guidance: Management declined numeric delivery targets for 2023; emphasized curated customer experience and brand amplification; indicated more detailed guidance likely in Q4 .
• Breakeven volumes: Management acknowledged internal targets exist but withheld disclosure; reiterated 2025 operating cash flow breakeven goal .
• Internal controls: Improvements across preventive/detective categories; restatements issued for 3Q’22, FY’22, 1Q’23; aiming to remediate material weaknesses by early 2024 .
• After‑sales/service: Concierge mobile service, 5‑year roadside assistance, home/public charging ecosystem, $1,000 public charging credit .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue could not be retrieved due to missing CIQ mapping for FFIE in our S&P Global integration; therefore, estimate comparisons are unavailable at this time [SpgiEstimatesError].
• Given absent consensus, near‑term estimate revisions will likely hinge on execution of Phase‑2 deliveries and clarity on 2024 production cadence conveyed in future updates .

Key Takeaways for Investors

• Execution milestone achieved post‑quarter: first FF 91 delivery and Phase‑2 Developer Co‑Creation start validate product readiness; monitor conversion of co‑creation engagements into repeatable deliveries and cash receipts .
• Operating discipline improved: substantial YoY OpEx reduction drove operating loss improvement; sustained cost control will be critical until scale is reached .
• Liquidity remains the central risk: low cash balance and conditional funding commitments; going‑concern disclosure underscores urgency of capital access and dilution management .
• Guidance narrative is qualitative: no 2023 volume or margin targets; the stock’s near‑term path is tied to tangible delivery counts, margin per vehicle, and 2024 ramp clarity from upcoming communications .
• Strategic focus on AI techluxury positioning and curated user experience may limit early volumes but aims to enhance pricing power and brand equity; track AI differentiation and customer satisfaction metrics .
• Internal control remediation and completed restatements reduce reporting risk; progress toward remediation by early 2024 should be monitored .
• Financing toolkit is broad (joinders, SEPA, ELOC, reverse split); but execution and terms matter—watch for dilutive outcomes and covenant conditions in subsequent 8‑Ks and 10‑Qs .

Source Documents Read

• Q2 2023 earnings call transcript: Aug 21, 2023 – –.
• Q2 2023 10‑Q: Aug 21, 2023 (financials, liquidity, legal, financing) –.
• Press releases via 8‑K: Phase‑2 Developer Co‑Creation launch (Aug 1) –; first FF 91 delivery (Aug 14) –; FF 91 2.0 launch and pricing (May 31) –; first production vehicle off the line (Apr 14) –.
• Prior quarters’ transcripts: Q1 2023 (May 11) –; Q4 2022 (Mar 8) –.