Faraday puts up $75 million bond to reassure Nevada on factory

Faraday Future

Faraday Future

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Following its successful bid for the Tesla lithium-ion battery "Gigafactory," Nevada landed a second electric-manufacturing project as well. it's the proposed Faraday Future factory in North Las Vegas.

But Nevada lawmakers have since expressed concern over Faraday's ability to meet the financial requirements of a deal meant to enable the manufacturing of electric cars in the suburb of Sin City.

Now Faraday has put up a $75 million bond, and set aside $13 million in an escrow account, to show that it can meet its financial obligations.

DON'T MISS: Faraday's Future bumpy; Nevada nervous, first car 'no Tesla'

The bond was required under a $215 million tax-incentive package approved by Nevada lawmakers in December, according to the Las Vegas Review-Journal.

And it reportedly became a concern for Nevada Treasurer Dan Schwartz, who questioned whether Faraday and Chinese backer Jia Yueting really had the financial resources to build the factory.

Faraday previously said the factory will cost $1 billion, and it plans to start production of electric cars "within two years."

Faraday Future FFZERO1 Concept, unveiled at 2016 Consumer Electronics Show, Las Vegas

Faraday Future FFZERO1 Concept, unveiled at 2016 Consumer Electronics Show, Las Vegas

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So far, the company has shown a flashy concept car called the FFZERO1, and detailed a platform for future vehicles, but there is still little indication of what its first production model will be.

Trading in shares of LeTV--widely known as the "Netflix of China," and one source of billionaire backer Jia Yueting's wealth--was suspended on December 7.

ALSO SEE: Faraday Future Shows FFZero1 Concept, But What Did We Learn?

Schwartz visited China during the Lunar New Year with his wife (who is a Chinese national), and came away with "doubts" about the company's ability to finance Faraday.

Shares in LeTV were originally set to resume trading March 7, but that date has now been pushed back again, to May 7.

Faraday Future Variable Platform Architecture

Faraday Future Variable Platform Architecture

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The bond money will be released back to Faraday once it has built at least 1.6 million square feet at the North Las Vegas site and, more significantly, earned actual revenue from selling cars.

In addition to the bond, Faraday said it will deposit $3 million into an escrow account by mid-March, and another $10 million by mid-May.

MORE: Faraday Future Chooses Nevada For Electric-Car Plant (Dec 2015)

That money will be used for Faraday's share of the construction of utilities and other supports at the site, which Nevada officials hope to develop into an industrial park that can host other companies.

To qualify for the $215 million in tax breaks approved by lawmakers, Faraday must also invest $1 billion over 10 years, and meet other criteria that include hiring and wage standards.


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