On January 28th, when the financing news of Faraday Future was finally settled, FF and Property Solutions Acquisition Corp (PSAC) announced that they had reached a final agreement on a business merger that would be listed on Nasdaq through a special purpose acquisition (SPAC) under the ticker symbol "FFIE".

The news that FF is going to be listed backdoor has been buzzing for almost a week. For a while, there are all kinds of voices in the community. Some say that cars are built with PPT. Is accountant Jia going to cheat money again?

Some people say that Jia Yueting can "return to China next week" as soon as possible by building new energy vehicles. There are all kinds of things, indiscriminate spending is becoming more and more attractive, and the onlookers are ready to go to the theatre and eat melons, so is there really a future for Faraday?

This article will explore whether FF is really valuable from four aspects:

1. Faraday's future timeline combed. 2. Performance analysis of FF91 electric vehicle. 3. The influence of FF on PSAC stock price. 4. Possible risks.

FF timeline carding

Combing through the timeline, we can find that the development of FF from its inception to the present is roughly divided intoThree stages。

At first, Boss Jia had the same scenery, but after he fled the United States, FF had no follow-up financial support, and the company's operations began to collapse, leading to a car shutdown.

Jia's own comments and credit made FF hit a brick wall everywhere in financing. After a thorough cut between FF and Jia Yueting in 2020, Boss Jia changed from a shareholder to a contemporary worker, with Bi Fukang, the former head of BMW I8 project, as CEO, once again making every effort to restart financing projects and product research and development, and the company's operation entered the third stage.

In fact, objectively speaking, it is a common phenomenon to burn money to build a new energy car brand from scratch.

Tesla, Inc. was founded in 2003 and did not make her first quarterly profit until 2013. At one point, Musk turned to Apple Inc for help to solve the cash flow problem.

He Xiaopeng also said that new forces need at least 30 billion yuan to build cars. It is conceivable that the start-up funds can not keep up slightly, the company is actually very easy to shut down, which itself is a difficult track.

What about FF91?

Let's first take a look at the peer comparison officially given by FF.

From the price point of viewFF91 first targets the luxury car market of more than 500000 or even millions, and its customers are high-income people.

Since 2020, there has been an obvious differentiation in the global new energy vehicle market, and the sales of A00-class cars under 100000 (such as Wuling Hongguang Mini) and B-class cars (such as Model 3) under 250000 have increased greatly. Although the sales volume of the luxury car market is not as good as that of the first two sections, it has been on an upward trend in recent years.

There was a black swan incident such as the COVID-19 epidemic in 2020, and the luxury brand market was able to achieve a 21% year-on-year increase in sales as soon as it returned to work in April last year, indicating that the black swan incident may not have much impact on high-income people. According to the data released by the Federation of passengers, more than 300000 of the models are luxury high-end cars, accounting for 4.7% in 2017 to 9.9% in the first 10 months of 2020. The market share has doubled and consumption has upgraded significantly, indicating that there is a lot of room for the luxury car market to tap.

On the three electricity systemTesla, Inc. Model X and NIO Inc. ES8, with a zero acceleration of 2.39 seconds and a range of 608 Km, coupled with 783Kw's high-power motor and 1050 horsepower, completed the 12.42mph climbing track in 11: 25.83s in FF91 as early as 2017, becoming the fastest EV in the Park Peak climbing Race and setting a new Model S record. It takes 25 minutes to charge from 20% to 80% of the battery, far more than NIO Inc. ES8's 60 minutes and only one minute more than Model S's 24 minutes.

If you look at the battery alone,FF official introduction, FF91 with LGC's 21700 NCA battery, NCA battery unit density can reach 300Kw/kg. Due to the high technical barriers of NCA materials, the current production capacity is mainly concentrated in Japan and South Korea, while the mass production in China is less.

The energy density of FF91's own battery with coolant is 173Wh/kg, and the energy density without coolant is 187Wh/kg, which is higher than that of Tesla, Inc. and NIO Inc..

On other interiors, FF91 has a luxurious smart cockpit, zero-gravity seats and 11 LCD screens. There is a lot of space in the car, so you can lie down by pulling out the back row. It is expected to match Mercedes-Benz S, BMW i7, Audi A8, or higher.

Output aboveSo far, FF91 has received 14000 + orders. Nine months after the fund-raising is completed, FF plans to take the lead in mass production of FF91 at the Hanford plant in California with an annual production capacity of 10, 000 units; to build a South Korean Gunsan plant with an annual production capacity of 270000 units in 2023; and to achieve a production capacity of 10-25 units through a joint venture with Geely in 2025. Coupled with the cooperation with Zhuhai State-owned assets Supervision and Administration Commission 2 billion at the end of 2020 to increase the production base in Zhuhai, the production capacity will be further released.

So FF91 has no shortcomings?

Yes, there is.

In the table for peer comparison, FF91 uses an autopilot system developed by I.A.I itself. Tesla, Inc. 's FSD system has accumulated a large number of customers' real road driving data, resulting in greater synergy with the increase in sales. There is no doubt that I.A.I has the disadvantage of latecomers. FF91 will not be produced in large quantities until 2023, and data accumulation is obviously not enough. Tesla, Inc. and NIO Inc. have long begun to pack self-driving bags and sell them to consumers in gear. The continuous upgrading of intelligent systems is the direction of the transformation of smart cars in the future, and FF obviously lags behind its peers in this respect.

Can it drive PSAC's share price?

Officials give Faraday a future equity value of $1.625 billion and existing debt of $671 million. Through the backdoor, SPAC will provide $230 million and superimpose PIPE to raise $775 million. Upon completion of the merger, FF will be valued at $3.37 billion and equity will be expanded to 337 million shares, equivalent to the issue price of $10 per share.

In terms of the post-transaction ownership structure, FF's original shareholders and creditors (through debt-to-equity swaps) will continue to own most of the shares of the company after the transaction, with an equity ratio of 68.3% (51.1% of the original shareholders and 17.2% of the original creditors through debt-to-equity swaps). In addition, 23% of the shares are held by PIPE investors, including Zhuhai SASAC and Geely, and the remaining 8.7% are held by PSAC shareholders.

Here is an introduction to the mechanism of SPAC. SPAC is the third way of listing which is different from the traditional "IPO listing" and "backdoor listing". Its innovation lies in that it is not to buy a shell for listing, but to build a shell first, raise funds, and then carry out mergers and acquisitions, and finally make mergers and acquisitions become listed companies. FF is listed backdoor using the SPAC platform, and PSAC is the equivalent of a subsidiary of FF, accounting for 8.7%.

According to the available data, let's do a simple calculation.

If more conservative, PSAC shares were trading at $16.59 and a market capitalization of $478 million as of the Nasdaq close on Feb. 3. Using 8.7 per cent, FF's market capitalisation is about $5.5 billion, up 63.2 per cent from the official own forecast of $3.37 billion.

If you are more optimistic, NIO Inc. has not been optimistic about his initial listing, but his market capitalization has reached more than US $10 billion after the closing price on the first day. That's three times as much as FF's $3.37 billion.

FF expects to sell 2400, 113300 and 301800 vehicles in 2022, 2024 and 2025, respectively, resulting in $504 million, $10.555 billion and $21.445 billion.

The company's EV/Revenue valuation multiple in 2024 and 2025 is 0.2x and 0.1x.

Horizontal comparison of other recent backdoor electric car companies, the multiple of Canoo is 1.3x, 0.8x, the multiple of Fisker is 0.2x, 0.1x, the multiple of XPeng Inc. is 0.7x, 0.6x. Even if the time is pushed forward, the valuation of Tesla, Inc. EV/Revenue valuation multiple 0.6x and 0.5x FF in 2014 and 2015 is within a reasonable range, and it is not exaggerated and touted.

So if FF can be successfully merged and listed, and FF91 can be successfully mass produced, the value of the company can be expected.

Possible risks

The period from 2020 to 2025 is the stage of rapid development of new energy vehicles.New forces continue to emerge, traditional car companies are also actively transforming, at this time to get a piece of the pie, the competition will only be fiercer and more brutal.

FF's car market has just started, and the development of the ultra-luxury electric car market may not be in line with expectations. The company's FF91 series will not be mass produced until 2023, with two or three years left in between, there is no guarantee that FF will be able to keep up with possible technological changes in the industry or lower peer costs.

Once there is a change, a blow is still a matter of money.

FF's autopilot system lags behind its peers, and there is a question mark over whether the company can make up for its shortcomings quickly. At the same time, the battery charging and heating and other old problems, only after the mass production of electric vehicles can we see whether the battery system is stable or not. Going around, it's still a matter of money.

Said that at the end,

Similar to the mobile phone industry at that time, the new energy automobile industry is undergoing iterative reforms between the new and the old, and the market competition is fierce. Apart from Boss Jia, FF actually has some strength, which can not be denied.

However, in the face of powerful opponents such as Tesla, Inc. and NIO Inc., there is not much time left for Faraday in the future. Don't get up early again and catch up for an evening episode.

Boss Jia does not represent the future of Faraday, he is just an "ordinary" beating worker like us, what officials need to do is to put aside their prejudices and wait for the opportunity!