Greetings, and welcome to the Faraday Future Intelligent Electric Third Quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jonathan Maroko, CFO. Thank you, Jonathan. You may begin.

Thank you, and welcome, everyone to Faraday Future's Third Quarter 2023 earnings call. We issued a shareholder letter, reporting our results and filed our quarterly report on Form 10-Q for the third quarter of 2023 this afternoon, November 13, 2023. Joining the call from Faraday Future is our Global CEO, Matthias Aydt, and myself, Jonathan Maroko, Interim CFO. You can find a copy of the Q3 2023 shareholder letter now, and a replay of this call later today on the investor relations section of our website at investors.ff.com. Please note that on this call, we will be making forward-looking statements based on current expectations and management assumptions. These statements reflect our views only as of November 13, 2023, and should not be relied upon as representative of views as of any subsequent date. Except as required by law, we undertake no obligation to revise, update, or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including the section titled Risk Factors in our latest annual report on Form 10-KA, and our quarterly reports for the second and third quarters of 2023 on Form 10-Q. In addition, during today's call, our management team will give their prepared remarks and answers to investors' questions in English. A translator will provide simultaneous Chinese translation, which can be accessed through ff.com. All translations are provided for convenience only. In the case of any discrepancy, management's statements in English will prevail. With that, I will turn the call over to Matthias Aydt, Global CEO of Faraday Future.

Thank you, Jonathan, and good day, everyone. I appreciate you joining our conference call. It is a great honor to be appointed Global CEO, and I'm excited to leverage my experience in product technology, research, and development to elevate Faraday Future. Today, I'll provide a brief update on our co-creation plans, production and delivery highlights, and an overview of our sales and service initiatives. Following my remarks, Jonathan will review our financials, covering topics like fundraising and measures we've implemented to strengthen Faraday Future. The third quarter has been significant for us, propelling our journey of innovation and growth. With the initial delivery of the FF 91 2.0 Futurist Alliance, we are now a revenue-generating company. Since then, we've delivered seven vehicles and onboarded ten new FPO co-creation users who provided invaluable feedback. We are focused on showcasing not just the vehicle but the entire vision behind Faraday Future, including connected mobility, co-creation, and the lifestyle of tech luxury. To strengthen our brand identity, we hosted the inaugural FF Developer Co-Creation Festival at Pebble Beach, which has become a gathering for automotive experts and enthusiasts globally. This milestone came after nine years of hard work and $3 billion in investments. We introduced an all-ability vehicle that combines sports car performance, sedan luxury, and SUV terrain handling, equipped with the latest technology. Now that we've reached our production and manufacturing milestones, our focus is on building our brand identity and scaling up production. Working closely with our co-creators has allowed us to refine our product to better meet user needs, enhance our visibility, and position ourselves in the ultra-luxury market. We also showcased the FF 91 2.0 Futurist Alliance's performance with record lap times in the SUV and crossover segments. Our operational initiatives are making progress as we ramp up production capacity, refining our manufacturing processes, and embedding a culture of continuous improvement. Our final quality customer craftsmen audit has seen a 50% improvement compared to initial scores, with significant enhancements in vehicle build quality. The team is working to optimize vehicle assembly, and I commend Mr. Ning, our Head of Manufacturing and Quality, for his excellent work with the factories. Looking ahead, we're focused on ramping vehicle production and cultivating our brand through co-creation, building a strong connection with our community. We've formed alliances with several industry leaders and partnered with notable personalities. The insights from our co-creation officers have been essential in shaping our brand strategy and user outreach. Co-creation goes beyond collaboration; it reflects our commitment to prioritize our users in all endeavors. We believe substantial value can be gained from these partnerships in aspects such as product development and brand marketing, setting us apart in the EV landscape. To support our brand-building efforts, our sales team has been enhancing our sales and service capabilities. Recently, we've initiated a leasing program for FF 91 2.0 Futurist Alliance owners, begun constructing our flagship store in Beverly Hills, activated our mobile service fleet for on-demand concierge service, and sponsored the Greater California Livery Association, among other initiatives. Owning a Bureau of Automotive Repair license demonstrates our commitment to high standards in vehicle maintenance and service. We've also launched a home charging installation program in alliance with Qmerit Electrification and a public charging program offering $1,000 in charge credits across major US networks. We are committed to paving the way for a future where luxury and sustainability converge. Looking ahead, we will host an FF Middle East strategy launch event during the Formula One Grand Prix in Abu Dhabi. The Middle East market presents exciting opportunities for smart and autonomous vehicles. We look forward to this being the first of many events and collaborations in the region. Now I will turn the call back to Jonathan to discuss the financials.

Thank you, Matthias. I would like to summarize our financial results for the third quarter of 2023. This quarter was significant as it marked our first instance of revenue generation. Although the revenue was a modest $0.6 million, it represents an important milestone for Faraday Future. The cost of goods sold was $16.1 million, with over $10 million attributed to noncash depreciation of tooling and machinery. The majority of the rest consisted of manufacturing overhead costs, followed by lower contributions from labor and material expenses. The increased cost of goods sold resulted from the typical inefficiencies associated with early-stage vehicle production, specifically initial manufacturing challenges and elevated parts costs due to lower volumes. The company is dedicated to minimizing manufacturing and material costs, and we see opportunities for significant reduction with increased vehicle production and improved supply chain optimization. We successfully decreased our operating loss to $66.4 million for the three months ending September 30, 2023, down from an operating loss of $80 million for the same period in 2022. This shift in operating expenses primarily stemmed from reduced research and development costs as we concluded product development and shifted our focus to manufacturing, production, and sales. Our net loss also significantly decreased to $78 million for the three months ending September 30, 2023, compared to a net loss of $119.9 million for the same period in 2022. This improvement was largely driven by lower operating expenses and a favorable adjustment in the fair value of notes payable and warrant liabilities, partially offset by a non-cash settlement of convertible notes recorded in the current quarter. As for our balance sheet, total assets on September 30, 2023, stood at $579.5 million, increased from $529.3 million on December 31, 2022. Total liabilities reached $317.7 million, in contrast to $228.3 million on December 31, 2022. Net cash used in operating activities for the nine months ending September 30, 2023, was $240.4 million, down from $355.1 million for the same period in 2022. Capital expenditures amounted to $10.8 million for the nine months ending September 30, 2023. Net cash from financing activities was $237.6 million for the same nine months, compared to a cash outflow of $40.9 million during the same period in 2022. Cash available as of September 30, 2023, was $8.6 million. During the third quarter, we raised $61.8 million through a combination of convertible notes, equity line of credit, and at-the-market financings. With the company maturing past the one-year mark as a regular filer, we now have access to improved, less dilutive financing through public markets. Additionally, we successfully utilized asset-based financing for the sale leaseback of our Hanford, California manufacturing facility, unlocking up to $12 million in non-dilutive capital earmarked for essential plant enhancements and developments critical for the production trajectory of the FF 91 2.0 Futurist Alliance. In this deal, we did not sell any physical assets; we simply changed landlords for the lease of the Hanford facility, and our operational capabilities remain unaffected. With the new capital, we've launched several facility projects at Hanford to prepare for the next production phase. To display our commitment to Faraday Future's vision, we introduced a new management stock purchase plan where senior leaders and key management team members are committing to use 50% of their three-month salaries to acquire FF's class A common stock directly from the company, pending shareholder approval. Looking forward, Faraday Future is committed to its three-phase delivery strategy. Since beginning Phase 2 co-creation deliveries on August 12, our efforts have shifted to scaling production of the FF 91 and furthering co-creation activities throughout 2023. We aim to achieve Phase 3 co-creation delivery by the end of Q1 2024. In conjunction with our ongoing factory improvements and production plans, we are targeting the production of around 1,000 vehicles next year, contingent upon capital availability, supply chain capacity and stability, and obtaining necessary permits. We have previously invested significantly in our factory and equipment, enabling us to scale efficiently. At our upcoming Investor Day on November 15 in Los Angeles, we will provide further details on our master plan aimed at solidifying the company’s stability. This strategic vision is designed to promote sustainable profitability while reducing reliance on external financing. Our immediate focus is on streamlining operational expenses and refining our organizational structure, which includes cutting down on overhead that does not directly support the FF 91 2.0 Futurist Alliance's production. We are also concentrating on optimizing costs associated with materials and production for the FF 91 2.0. To emphasize, we are currently in the second phase of our three-phase delivery plan and successfully delivered vehicles this quarter. In this phase, we are providing vehicles to users who are giving us invaluable feedback and assisting us in our sales and marketing initiatives. We believe these deliveries are extremely beneficial for Faraday Future, serving as a cost-effective approach to rapidly enhance vehicle quality and performance while promoting our brand. Thanks to input from our co-creators, we have improved the performance of the FF 91 2.0 Futurist Alliance, including a reduction in its lap time by seven seconds at Willow Springs International Raceway, making it faster than the Lamborghini Urus. Regarding funding, we have been able to raise capital as required, but due to what we perceive as an undervalued stock price, we have refrained from raising more than necessary for our immediate operations. Consequently, we have been gradually extending our runway, which we believe will position us to potentially secure a significant investment from a strategic partner. In terms of fixed costs, we launched a rigorous cost-cutting initiative in the third quarter, focusing on our general and administrative expenses. This effort is part of our ongoing cost-reduction strategy, and we anticipate that the benefits will be evident in our fourth-quarter results. Lastly, the performance of our stock will be addressed. Operationally, Faraday is at its most advanced stage in history. We are delivering vehicles, generating revenue, and steadily increasing production. Our new senior management team is both passionate and capable, committed to the success of Faraday Future. Team members have voluntarily accepted significant salary reductions and pledged to buy FFIE's stock, reflecting their belief in the company's future. We are also in discussions with strategic investors and partners to bring in meaningful and potentially transformative capital. However, our stock price has seen a significant decline, and we are taking measures to reverse this trend. Recently, we observed substantial failure to deliver data, which could indicate illegal naked short selling. We have contracted shareholder intelligence services to provide actionable insights on potential market manipulation and illegal short selling, and we will share an update on this before the year concludes. Reaffirming our strategic vision, we remain committed to advancing Faraday Future towards cash generation and profitability, targeting breakeven operating cash flow as early as 2025.

Thank you, Joe. I am once again impressed by the dedication and hard work of the FF team in reaching this crucial stage in our delivery timeline. I want to emphasize some key takeaways for investors from this earnings call. Faraday Future has become a revenue-generating company, with vehicles on the roads of Southern California. We are concentrating on showcasing our vehicle and building our brand, much of which is achieved through co-creation partnerships that have greatly benefited FF. Co-creation has not only expanded our reach but has also played a vital role in enhancing our product, improving every aspect of the vehicle, including design, features, and technology. The vehicle that users will receive during our final Phase 3 delivery will be a stronger product thanks to their input. We plan to increase our production. The factory is prepared to produce more, but our liquidity constraints are causing some supply delays. Jonathan and the team are actively pursuing additional financing, and we have a clear outlook on potential investments from those interested in long-term partnerships with us. Finally, we are eager about the opportunities ahead, including our upcoming events in Abu Dhabi alongside the Formula One Grand Prix, and we look forward to sharing more with the public in the months to come.

Our first question is from Michael Ward with Benchmark.

Thank you very much. Good evening everyone. Jonathan, first off, on page 33 of the handout, I just wanted to clarify the timing of some of the financing. I think you mentioned September 2 that $90 million of Class A common stock was issued. I assume that closed after the end of the quarter?

That's correct.

Okay. So the new share count is $57.4 million from what I can read on the Q on page 1? That's right?

That's correct.

Okay. Second thing in the letter, you mentioned seven deliveries, and I was just curious if that was Q3 or was that year-to-date? And I wonder if you can clarify how many were in Q2 in the revenue number?

Sure. And so I think you misspoke in Q2, zero. In Q3, cumulative there were seven. So that's correct.

Okay.

Okay.

Now, I think, when I look at the landscape, virtually every EV manufacturer has struggled to meet production targets, even Tesla when you go back over the last 10 years. What I'm curious about is what is Faraday specifically doing that gives you confidence that you can get to 1,000 units next year and then eventually get back closer to capacity of 10,000?

And Mike, before I answer that, can you just repeat the question? You had on the ATM. I want to make sure I answered it correctly.

Which one?

Regarding the ATM.

On slide 33, it said on September 27, you entered into the ATM. Offered to sell up to $90 million Class A common stock. Did you sell that stock and did it close after the end of the quarter? So we're going to see a cash infusion?

Yes, that's correct. We disclosed the amount in the 10-Q. We still have a lot more to go on that program, and most of it actually took place in the fourth quarter.

Okay.

As for your question, I'll let Matthias Aydt handle that.

Yes, Michael, I think if you look at what we have set up for our operations, we have a plant which has finally installed capacity of 10,000 units per year. And if you compare that with 1,000 vehicles for the first year of full production, then this is only 10%, which allows us to ramp up according to, on one hand, getting the necessary liquidity into the company, and on the other hand, to achieve the right level of maturity with the product as well. So we are not on this journey by ourselves. All our supply base has to come with us preparing for the ramp up to go to 10,000 units per year volume. And we are focusing on getting that within the coming years settled. So we are foreseeing not an issue to achieve 1,000 vehicles production volume this next year. We are still in the process of figuring out how many vehicles we will be able to deliver to the market as we have to look into the build-out of our sales and distribution network.

Okay. And maybe Matthias, you could provide a little detail of your background, and what that adds to the equation with Faraday, and what your experiences in the past can help to get to those targets?

So I'm not the person to really brag about myself, so I'm handing that over to Jonathan.

Matthias has a lot to be proud of, and I'll share some insights about his background for everyone's understanding. I want to express my gratitude to XF for his critical role in getting the company to its current position, guiding us through the beginnings of production and vehicle deliveries. We are eager for him to advance our initiatives in China and support our dual home strategy in the US and China. Regarding Matthias, he has been with Faraday for over seven years, holding many roles including a position on the Board and most recently overseeing product execution. He has also led product definition, mobility ecosystems, and business development, earning immense respect within the organization. With 40 years in the automotive industry, he has worked with high-end brands like Porsche, Ferrari, Cadillac, and Volkswagen Group, and has a strong understanding of the quality standards needed for Audi and VW products. He was significantly involved in the development of the Bentley Azure, giving him extensive knowledge in producing high-quality vehicles for consumers. I believe he is the ideal leader for FF at this point in our delivery cycle. He is deeply committed to the company, its employees, users, and investors. Personally, during my short time here, I’ve observed that he truly embodies the perfect leadership qualities we need. While we might be perceived simply as an automotive manufacturing company, we are also a high-end vehicle manufacturer and an innovative software company. Matthias has successfully unified our hardware and software teams and is greatly respected. Additionally, he has clarified our company's direction, quickly outlining a master plan and setting five-year strategic goals shortly after becoming CEO. These are objectives we all support and that you will learn more about at our Investor Day on Wednesday.

I really appreciate that. Thank you.

Of course.

Our next question is from Stephen Gengaro with Stifel.

Thanks. Good evening, everybody. Thanks for taking the questions. I think, first, I was fortunate to be able to go down to Hanford and see the facility, and I got at least a pretty good glimpse of what was going on. But you've been producing, I believe thus far kind of in batches. That's helped with your manufacturing capabilities. But can you talk a little bit about how you what you need to do as far as equipment and maybe even capital to kind of get to that mass production levels to start to really ramp production?

I believe it's important to view our mass production plans realistically. We are targeting an installed capacity of 10,000 units per year. Initially, in the middle of next year, we will have a lower installed capacity of 2,500 units due to the use of a shortened assembly line. By the end of next year, we plan to increase this to 10,000 units annually, which will require two jobs per hour across three shifts. Currently, we are finalizing the production processes in our body shop, closures assembly, and paint line. We have started painting our first vehicles in the rework area, and we are nearing completion of our fully automated paint facility. Our supplier is wrapping up their final tasks there. With these preparations, we are well-positioned to transition from batch production to continuous build. The batch production has allowed us to adhere to a normal manufacturing schedule, but we need to align our output with the availability of parts and allocate time to ensure quality through final inspections on the vehicles. We have implemented additional incoming inspections on top of those from our suppliers. All these factors are being integrated into our manufacturing process currently, which is why it is taking time. Once we achieve a more stable flow of materials and quality, we will be ready to shift to in-line production, which will enable 0.5 jobs per hour by mid-next year.

Great. That's very helpful. And then just one more as it relates to manufacturing and on the cost side. Any color you can you can add as far as how you how you optimize cost, particularly when we're talking about the materials side?

Our first step is to finalize our manufacturing optimization, which will initially lead to cost reductions. Given the current low volume, our costs are quite high, and as Jonathan noted, we are burdened by overhead expenses. Once we achieve more stable operations, we expect these costs to decrease without any additional material cost increases. Next, we are focusing on our most expensive systems and we have begun the process of in-sourcing these systems to lower costs. This approach will also help us reach breakeven cost coverage relative to the manufacturer's suggested retail price. Following that, we will collaborate with our supply partners to analyze the value stream and optimize the entire process together to achieve cost reductions while increasing plant capacity. We expect to see reasonable material costs from our supply base over the next year. Additionally, in the past nine years, our focus has been on delivering this car, which hasn't always led to cost-effective design solutions. We plan to review what needs to be optimized from both a design and construction standpoint to enable us to implement cost reductions by modifying existing designs. Lastly, we face a dual market opportunity that not only involves selling cars but also allows us to significantly reduce material costs, a process that will take some time but is part of our plans over the next two years.

Great. Thank you for the details, John.

Our next question is from Laura Li with Deutsche Bank.

Hi. Well, thank you for your time. So my question will be about financing. I think you already talked a little bit about this, but are there other non-equity financing you are considering?

Sure. Yes, we certainly are. We're continuing to look to finance the company in a least dilutive way possible. So one, as we mentioned, was the indirect sale leaseback of Hanford. And that was helpful for freeing up capital to fund tenant improvements that are required to help us scale our production. But more significantly, we've been in discussions with potential IP-based lenders. And based on these talks, we think we can raise a meaningful amount of capital hopefully sometime in 1Q 2024. This would be subject to revaluation of our intellectual property portfolio, which was last valued in 2019 by an independent third party at about $1 billion. So we're optimistic on this.

Okay. Well, thank you for that color. So I'm also thinking about the convertible notes. I saw you stopped issuing the new ones. Do you have any plan to restructure the current convertible notes?

Sure. Yes. That certainly ties into moving away from dilutive financing. And so we're doing whatever we can to move away from these existing converts. We're always looking to improve financing options and terms. With these specific existing ones, we're in talks to either restructure or to limit the impact of those conversions.

Okay. Well, okay. Thank you so much.

Of course.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for closing comments.

I'd like to come back to a question, Michael, you raised in regards to how to hit the volumes we are targeting in next year. I think if you look at into our setup, we are in a very unique situation with Faraday. On one hand, we are focusing on a market segment which is very unique. It's close to being a blue ocean market, with the product we are placing. So we are not facing a lot of competition as potentially Lucid and Rivian are facing in the approach they have chosen. And the other element which comes to play is if you look into size of the operation we have chosen to execute in the beginning of our company, it is small enough to be very fast coming to cash flow break-even. So if you look at Lucid and Rivian, they have they have decided to invest into far bigger operations, which need a lot of volume to get to a point that they can generate profits. And as everywhere in the business, it's basically the last days or the last months of the year deciding about the money you're making. And the rest is just to cover the cost. So covering our costs is based on a far lower volume, which we can achieve in 2025, at the latest two, let's say, in beginning of 2026 to have a breakeven. And that gives me a very positive look forward that we are in a very favorable situation at the end of next year and then through 2025. There's even studies out there from companies like McKinsey that exactly this market segment is the one which is growing over the next years in comparison to other markets.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.