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FF

FARADAY FUTURE INTELLIGENT ELECTRIC INC. (FFIE)·Q3 2023 Earnings Summary

Executive Summary

  • FFIE reported its first automotive sales revenue of $0.55M in Q3 2023, with cost of goods sold of $16.1M and a net loss of $78.0M; management framed the quarter as a milestone with initial deliveries and revenue generation .
  • Operating loss improved year over year to $66.4M from $80.0M in Q3 2022, driven by lower R&D after completing product development and focus on manufacturing and sales .
  • The company reiterated a target to reach Phase III (full co‑creation/general market deliveries) by end of Q1 2024 and to produce ~1,000 vehicles in 2024, contingent on capital, supply chain and permits; breakeven operating cash flow targeted as early as 2025 .
  • Liquidity actions included $61.8M raised in Q3 via converts, ELOC and ATM, and a sale‑leaseback unlocking up to $12M; cash was $8.6M at quarter‑end, emphasizing financing execution as a near‑term catalyst alongside production ramp disclosures and strategic investor negotiations .

What Went Well and What Went Wrong

What Went Well

  • “We are now a revenue‑generating company… we have delivered 7 vehicles and onboarded 10 new FPO co‑creation users,” establishing initial commercialization and brand‑building momentum .
  • Manufacturing quality KPIs improved: the final quality customer craftsman audit (CCA) score improved ~50% versus first measurement, with noted gains in fit, finish and functionality .
  • Strategic brand and market initiatives advanced: record lap times at Buttonwillow and Willow Springs, leasing program launch, Beverly Hills flagship store construction, mobile concierge service, and $1,000 public charging credits for owners .

What Went Wrong

  • Gross margin deeply negative due to early-stage inefficiencies and noncash depreciation burden ($10.4M of $16.1M COGS), highlighting low-volume cost absorption and parts costs .
  • Liquidity remains constrained: quarter‑end cash was $8.6M and execution requires continued financing; management acknowledged the need for additional capital and referenced investigations into market manipulation as stock price declined .
  • Production ramp bottlenecks tied to liquidity and supply delays; management noted factory not the bottleneck, but parts availability and funding drive ramp pace .

Financial Results

MetricQ3 2022 (oldest)Q2 2023Q3 2023 (newest)
Revenue ($USD Millions)$0.00 $0.00 $0.55
Gross Profit ($USD Millions)$0.00 -$6.61 -$15.58
Gross Margin (%)N/A (no revenue)N/A (no revenue)-2,828.9% (derived from -$15.58M / $0.55M)
Operating Income ($USD Millions)-$79.96 -$55.98 -$66.45
Net Income ($USD Millions)-$119.87 -$124.93 -$78.05
Diluted EPS ($USD)-$27.67 -$0.10 -$3.78
Cash & Restricted Cash ($USD Millions)N/A$19.40 $8.60 (cash; includes $1.9M restricted cash)
Total Assets ($USD Millions)N/A$567.49 $579.53

Notes:

  • Gross margin for Q3 2023 is computed from cited revenue and gross loss figures .
  • Q3 2022 cash not disclosed in the cited materials; Q3 2023 cash figure per management remarks .

Segment breakdown: FFIE operates a single segment (intelligent EVs), no segment revenue disclosed .

KPIs

KPIQ2 2023Q3 2023
Vehicles Delivered (Cumulative)Began Phase II; first FF 91 delivered Aug 12 7 vehicles delivered cumulatively
Co‑Creation (FPO) Users OnboardedDeveloper Co‑Creation launched; FPO/FTO programs described 10 FPO co‑creation users onboarded
Quality: CCA ImprovementProcedure established; facility optimization underway ~50% improvement vs first CCA measurement
Lap Time PerformanceN/A-7s lap time improvement at Willow Springs; records at Buttonwillow/Willow Springs

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Delivery Phase III (Full Co‑Creation/General Market)By end Q1 2024Q2 2023: guidance emphasized ramp in 2024, specifics TBD Aim to reach Phase III by end of Q1 2024 Increased specificity (timeline firmed)
2024 Production VolumeFY 2024Q2 2023: ramp expected in 2024; no numeric target disclosed Target ~1,000 vehicles, subject to capital, supply chain, permits New explicit volume target
Installed Capacity RampMid‑2024; end‑2024N/AMid‑2024: ~2,500 units/year (0.5 jobs/hr); end‑2024: 10,000 units/year (2 jobs/hr, 3 shifts) New detailed capacity cadence
Operating Cash Flow BreakevenAs early as 2025Q2/Q1 reiterated breakeven 2025 goal Breakeven operating cash flow as early as 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology InitiativesGenerative AI product stack; FF aiDriving; deep software/AI integration Reinforced AI features and in‑car experiences; AI positioning remains core Stable/ongoing execution
Supply Chain & ManufacturingSOP achieved; batch builds; adding shifts; readiness before deliveries Batch approach continues; parts availability and liquidity gating ramp; quality CCA up 50% Improving quality; ramp constrained by liquidity
Product PerformanceEPA 381‑mile range; 1,050 hp; differentiated ultra‑luxury positioning Lap records at Buttonwillow/Willow Springs; 7‑second lap time reduction Improving performance metrics
Regional StrategyDual home (US/China); early China entity steps Entry into Middle East via strategic agreements; aiFalcon limited edition Expanding geography
Regulatory/Legal & ControlsRestatements; remediation efforts; material weaknesses work; SEC/DOJ inquiries noted in filings No new call‑specific updates; continued focus on controls; shareholder intel on market manipulation Monitoring/ongoing
R&D Execution vs OpExR&D down as SOP achieved; cost‑cutting underway Operating loss y/y improvement; focus on cost optimization/material cost reduction and insourcing Cost discipline improving

Management Commentary

  • “With the initial delivery of the FF 91 2.0 Futurist Alliance, we are now a revenue‑generating company. Since then, we have delivered 7 vehicles and onboarded 10 new FPO co‑creation users” — Matthias Aydt, Global CEO .
  • “Cost of goods sold was $16.1 million… the bulk of this $10 million plus was noncash depreciation… higher COGS driven by early‑stage production inefficiencies and higher parts costs resulting from low volume” — Jonathan Maroko, Interim CFO .
  • “We aim to reach Phase III Co‑Creation delivery by the end of Q1 2024… the company targets producing approximately 1,000 vehicles next year, subject to capital and supply chain” — Jonathan Maroko .
  • “We remain resolute in our mission… aiming for breakeven operating cash flow as early as 2025” — Management .

Q&A Highlights

  • Production ramp cadence: mid‑2024 installed capacity ~2,500 units/year (0.5 jobs/hr) moving to 10,000/year by end‑2024 (2 jobs/hr, 3 shifts); batch builds transitioning to inline as materials/quality stabilize .
  • Financing mix: ATM use partial in Q4; evaluating IP‑based lending (IP portfolio last valued ~$1B in 2019) with potential meaningful capital in 1Q 2024; intent to move away from dilutive converts .
  • Deliveries clarification: cumulative deliveries at 7; confirmation of share count and ATM timing from slides/Q .
  • Strategy context: ultra‑luxury “blue ocean” positioning; lower volume needed for breakeven vs some peers, aiding 2025 breakeven ambition .

Estimates Context

  • S&P Global/Capital IQ Wall Street consensus estimates were unavailable via our tool for FFIE this quarter; as a result, we cannot benchmark reported revenue/EPS against consensus. Values retrieved from S&P Global were unavailable due to mapping limitations, so estimate comparisons could not be made.
  • Given limited coverage and FFIE’s commercialization stage, we expect sell‑side models to adjust for: large negative gross margins from early production, operating loss trajectory improvement vs Q3 2022, and production cadence disclosures (Phase III timing and 2024 volume target) .

Key Takeaways for Investors

  • Commercialization milestone: first revenue ($0.55M) and 7 deliveries validate product readiness; near‑term focus is scaling efficiently and reducing per‑unit costs .
  • Cost structure optimization is central: noncash depreciation drove COGS; management’s insourcing and supplier value‑stream work aim to materially lower material/manufacturing costs through 2024–2025 .
  • Ramp depends on capital: with cash at $8.6M and $61.8M raised in Q3, additional financing (including IP‑backed debt and strategic investors) is pivotal; funding disclosures are key trading catalysts .
  • Production/Delivery guideposts: Phase III targeted by end‑Q1 2024 and ~1,000 vehicles in 2024; mid‑2024 capacity ~2,500 units/year trending to 10,000/year by end‑2024 as factory line transitions from batch to inline .
  • Geographic expansion: Middle East entry and aiFalcon limited edition broaden addressable ultra‑luxury EV demand; watch execution and potential regional partnerships .
  • Narrative drivers: demonstrable performance (track records), brand‑building via co‑creation, and AI‑centric in‑car experience continue to differentiate; execution on quality/throughput and financing will likely drive stock reaction .

Additional Source Documents Reviewed

  • Q3 2023 Form 8‑K (Item 2.02) with Exhibits 99.1 (press release), 99.2 (shareholder letter), 99.3 (investor presentation) .
  • Q3 2023 earnings call transcript (Nov 14, 2023) .
  • Q2 2023 earnings call transcript (Aug 21, 2023) and Q2 2023 Form 10‑Q financial statements for trend analysis .
  • Q1 2023 earnings call transcript (May 11, 2023) for context on SOP/AI roadmap and initial funding/cost trajectory .
  • Other relevant press releases: earnings timing (Oct 23, 2023) ; Middle East entry (Nov 23, 2023) .