What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 377 added, 551 removed, 162 unchanged (85% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references in this report to “FF,” the “Company,” “we,” “us,” or “our” mean Faraday Future Intelligent Electric Inc., together with its consolidated subsidiaries.

All references in this report to “FFAI,” the “Company,” “we,” “us,” or “our” mean Faraday Future Intelligent Electric Inc., together with its consolidated subsidiaries.

Unless the context suggests otherwise, references to “Faraday Future Intelligent Electric Inc.” mean the parent company without its subsidiaries.

The following discussion and analysis is intended to help the reader understand FF’s results of operations and financial condition.

This discussion and analysis is provided as a supplement to, and should be read in conjunction with FF’s Unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere in this quarterly report on Form 10-Q (this “Report” or this “Form 10-Q”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to FF’s plans and strategy for FF’s business, includes forward-looking statements that involve risks and uncertainties.

FF’s actual results may differ materially from management’s expectations as a result of various factors, including but not limited to those discussed in the sections entitled “Risk Factors” in the Company’s Annual Report on Form 10-K filed on May 28, 2024 (as amended, the “Form 10-K ”), “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Q1 2024 10-Q”), and “Cautionary N ote Regarding Forward-Looking Statements” below.

The objective of this section is to provide investors an understanding of the financial drivers and levers in FF’s business and describe the financial performance of the business.

Cautionary Note Regarding Forward-Looking Statements

The following discussion and analysis is intended to help the reader understand our results of operations and financial condition.

This discussion and analysis is provided as a supplement to, and should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere in this quarterly report on Form 10-Q (this “Report” or this “Form 10-Q”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

Our actual results may differ materially from management’s expectations as a result of various factors, including but not limited to those discussed in the sections entitled “Risk Factors” in the Company’s Annual Report on Form 10-K filed on March 31, 2025 and “Cautionary Note Regarding Forward-Looking Statements” below.

The objective of this section is to provide investors an understanding of the financial drivers and levers in our business and describe the financial performance of the business.

C autionary Note Regarding Forward-Looking Statements

This Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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Future developments affecting us may not be those that we have anticipated.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performa nce to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, those factors described under the section titled “ Risk Factors ” in the Form 10-K, as updated in the Q1 2024 10-Q.

Shou ld one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, those factors described under the section titled “Risk Factors” in the Form 10-K filed on March 31, 2025.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

We undertake no obligation (and expressly disclaim any obligation) to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

These risks and others described under the section titled “ Risk Factors ” in the Form 10-K, as updated in the Q1 2024 10-Q, may not be exhaustive.

These risks and others described under the section titled “Risk Factors” Item 1A in the Form 10-K, filed on March 31, 2025, may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.

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In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.

Availability of Information

We make available through our company website, free of charge, our company filings with the Securities and Exchange Commission (the “SEC”) as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.

The reports we make available include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, registration statements, and any amendments to those documents.

The website link to our SEC filings is investors.ff.com/financial-information/sec-filings.

We intend to use press releases, our Investor Relations website, investor.ff.com, and certain social media accounts as a means of disclosing information and observations about the Company and its business that may be of interest or material to our

investors, material, non-public information, and for complying with our disclosure obligations under Regulation FD:

Instagram, Facebook, X, LinkedIn, YouTube, FF App, WeChat, Weibo, Toutiao, Douyin, and Futu.

The information and observations we post through these social media channels may be deemed material.

Accordingly, investors should monitor the Investor Relations website and these social media channels, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts.

The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time.

The information contained on, or that may be accessed through, our website or social media channels, is not incorporated by reference into, and is not a part of, this Report or any other report or document filed with the SEC.

Any reference to our website in this Report is intended to be an inactive textual reference only.

The Company is a California-based, global, shared, intelligent, mobility ecosystem company is a global, shared, intelligent, mobility ecosystem company with a vision to disrupt the automotive industry.

The Company is a holding company incorporated in the State of Delaware on February 11, 2020, conducts its operations through the subsidiaries of FF Intelligent Mobility Global Holdings Ltd.

(“Legacy FF”), which was founded in 2014 and is headquartered in Los Angeles, California.

Our Class A Common Stock and Public Warrants trade on The Nasdaq Capital Market (“Nasdaq”) under the ticker symbols “FFIE” and “FFIEW,” respectively.

FF designs and engineers next-generation intelligent, connected, electric vehicles.

We manufacture vehicles at our production facility in Hanford, California (the “FF ieFactory California”).

We have additional engineering, sales, and operational capabilities in China and are exploring opportunities for potential manufacturing capabilities in China through a joint venture or other arrangements.

Since our founding, we have created major innovations in technology, products, and a user-centered business model.

We are a California- based, global, shared, intelligent mobility ecosystem company founded in 2014 with a vision to disrupt the automotive industry.

Our Class A Common Stock and Public Warrants trade on The Nasdaq Capital Market (“Nasdaq”) under the ticker sym bols “FFAI” and “FFAIW,” respectively.

With headquarters in greater Gardena, California, we design and engineer next-generation intelligent, connected, electric vehicles.

We manufacture vehicles at the FF ieFactory California production facility in Hanford, California.

We have additional engineering, sales, and operational capabilities in China, and we are exploring opportunities for potential manufacturing capabilities in China through a joint venture or other arrangements.

Additionally, we have established an entity in the UAE to manage the assembly and sales support of FF 91 series vehicles, further expanding our market presence in the region.

Since our founding, we have created major innovations in technology and products, and followed a user-centered business model.

We believe these innovations will enable us to set new standards in luxury and performance that will redefine the future of intelligent mobility.

We believe the following combination of capabilities of our products, technology, the upgrade to FF Product and Technology Upgrade Generation 2.0 (PT Gen 2.0), team, and business model distinguish us from our competitors:

• We have designed and developed a breakthrough mobility platform — our proprietary Variable Platform Architecture (“VPA”).

• Our propulsion system provides a competitive edge in acceleration and range, enabled by an expected industry-leading inverter design, and propulsion system.

• Our advanced Internet Artificial Intelligence (“I.A.I.”) technology offers high-performance computing, high speed internet connectivity, Over-the-Air (“OTA”) updating, an open ecosystem for third-party application integration, and an advanced autonomous driving-ready system, in addition to several other proprietary innovations that enable us to build an advanced, highly-personalized user experience.

• Since inception, we have developed a portfolio of intellectual property, established our supply chain, and assembled a global team of automotive and technology experts and innovators to achieve our goal of redefining the future of the automotive industry.

As of September 30, 2024, we have approximately 660 active patents globally.

Company Overview & Global Strategy

• Dual-Home Market Strategy:

We have implemented a dual-home market strategy, integrating U.S.-based technological innovation and vehicle development with China’s supply chain and production capabilities.

• Third Pole Strategy:

We have begun implementing a "third pole" strategy with an operational facility in the UAE, complementing our U.S.

and China market approach.

Technology & Innovation

• Our Proprietary VPA:

We have designed and developed a breakthrough mobility platform—our proprietary VPA, which enables scalable vehicle development across multiple segments, including the new FX Series.

• Propulsion System:

Our propulsion system provides a competitive edge in acceleration and range, enabled by an industry-leading inverter design and a propulsion system integrated with our AI-powered user experience.

• I.A.I Technology:

Our advanced I.A.I technology offers high-performance computing, high-speed internet connectivity, OTA updating, an open ecosystem for third-party application integration, and an advanced autonomous driving-ready system.

• Intellectual Property & Supply Chain Development:

Since inception, we have developed a portfolio of intellectual property, established its supply chain, and assembled a global team of automotive and technology experts.

As of March 31, 2025, FF has been granted approxima tely 660 patents global ly.

Product & Launches

• FF 91 Launch:

We believe that the FF 91 Futurist (the "FF 91," "FF 91 Futurist," or "FF 91 2.0 Futurist Alliance") is the first ultra-luxury electric vehicle to offer a highly-personalized, fully-connected user experience for driver and passengers.

We started production on the first FF 91 Futurist and delivered the first FF 91 2.0 Futurist Alliance in 2023.

• Our planned B2C passenger vehicle pipeline includes the FF91 series, the FF81 series, and the FF71 series.

• Subject to future financing, we plan to produce and deliver our second passenger vehicle, the FF 81, which is expected to be designed to be a premium, mass-market electric vehicle positioned to compete against the Tesla Model S, Tesla Model X, the BMW 5-series, the Range Rover Sport and similar vehicles.

• Subject to future financing, we plan to develop a mass-market passenger vehicle, the FF 71.

We expect to start production and deliveries of the FF 71 subsequent to production and deliveries of the FF 81.

The FF 71 is expected to be designed to integrate full connectivity and advanced technology into a smaller vehicle size and is positioned to compete with vehicles such as the Tesla Model 3, Tesla Model Y, and the BMW 3-series.

• Subject to future financing, we plan to develop a Smart Last Mile Delivery (“SLMD”) vehicle to address the high-growth, last-mile delivery opportunity, particularly in Europe, China and the U.S.

Our modular VPA facilitates entry into the last-mile delivery segment, allowing us to expand our total addressable market and avenues of growth.

• We have updated our corporate strategy to include a China-U.S.

Automotive Bridge Strategy (the “Bridge Strategy”).

The Bridge Strategy marks a return to our earlier two-brand strategy, which seeks to distinguish between the spire segment (FF brand) and mass market segment (second brand) of the EV industry.

We intend to seek to establish a second mass market-focused brand by working with one or more China-based OEMs and parts suppliers (“Bridge Strategy Partners”) and to procure quasi-complete components and parts that we would enhance by adding AI and Vehicle Software technology and product R&D found in our flagship FF 91 brand.

This could create a compelling value proposition to consumers in the AI EV mass-market, which is a market that currently has limited offerings.

Via the Bridge Strategy, there is the potential to materially accelerate the production timeline for a mass-market AI EV.

While the mechanical platform of the mass-market product would be from Bridge Strategy Partners, we intend to seek to utilize a component mix sufficient to reach part level duty by fulfilling the criteria for part supplier and manufacturing requirement.

For a discussion of material risks relating to the Bridge Strategy, please see Part II, Item 1A., Risk Factors – “Our latest business strategy, which we refer to as the Bridge Strategy, is subject to numerous risks and uncertainties” in t he Q1 2024 10-Q.

All FF vehicles are expected to be available for sale in the U.S., China and the Middle East, with potential expansion to European markets.

• Vehicle Pipeline:

Our planned B2C passenger vehicle pipeline includes the FF 91 series, plus the new FX Series (FX 5, FX 6, and FX Super One).

Manufacturing & Distribution

• FF Series Manufacturing:

The FF 91 Series is currently being manufactured in FF ieFactory California.

• FX Series Manufacturing:

Certain models of FX Series are planned to be manufactured in FF ieFactory California.

• Global Availability:

All of our vehicles are expected to be available for sale in the U.S.

and the Middle East, with potential expansion to China and European markets.

Recent Developments

From January 1, 2025, through the filing date, we achieved key operational and financing milestones.

Below is a summary of significant events by category.

Strategic Operations and Product Development

• In January 2025, we unveiled the FX Super One concept, an AI-powered MPV, expanding our FX lineup, which also includes th e FX 5 and FX 6 targeting $20,000–$50,000 segments.

We targeted initial production by year-end 2025, contingent on funding.

• In March 2025, we plan to launch our first FX vehicle by year-end 2025 with refundable orders starting in Q2.

We benchmarked our second FX vehicle against the Toyota RAV4 and shipped two FX 6 prototypes to the U.S.

• In March 2025, we hosted FF Open AI Day and unveiled our Personalized AI and Bespoke AI systems.

These innovations are part of our All-AI Mobility Ecosystem.

Personalized AI is designed to learn and adapt to user preferences across vehicle controls, comfort, and interaction styles.

Bespoke AI delivers co-created, premium user interfaces and intelligent services tailored for luxury users, acting as a digital concierge.

Both systems are built on large-model AI architecture and are planned for integration into the FF 91 and FX series.

• In March 2025, Future AIHER AI Hybrid Extended-Range Electric Powertrain System Inc.

was incorporated in the State of Delaware as a subsidiary of the Company.

This subsidiary focuses on the design and development of AI hybrid extended-range electric powertrain systems.

• In April 2025, we initiated a comprehensive company-wide organizational and governance overhaul aimed at enhancing execution efficiency and value creation.

The initiative, publicly launched through a company-wide town hall, was designed to eliminate historical inefficiencies, increase strategic clarity, and improve performance across operations, amid ongoing external uncertainty and market pressure.

• In April 2025, our FX CEO and team drove the FF 91 to Washington, D.C., for policy meetings with White House officials and showcased the FX Super One.

Capital Raising & Financing Agreements

• In December 2024, we secured approximately $30.0 million in cash financing commitments for the purchase of unsecured convertible notes (the “ 2024 Unsecured SPA Notes”) .

Each investor (the “ 2024 Unsecured SPA Investors”) also received a 2024 Unsecured Incremental Warrant to fund, at the 2024 Unsecured SPA Investor’s sole discretion, additional notes up to the original principal balance the of 2024 Unsecured SPA Notes purchased by such 2024 Unsecured SPA Investor .

These funds are intended to support our core business operations and the ongoing ramp-up of the FX strategy.

On January 28, 2025, we entered into a letter agreement with certain of the 2024 Unsecured SPA Investors.

Pursuant to the letter agreement, prior to our receipt of stockholders’ approval, for the issuance of the Unsecured 2024 SPA Notes, 2024 Unsecured SPA Warrants and 2024 Unsecured Incremental Warrants, such investors agreed not to convert any outstanding 2024 Unsecured SPA Notes at a conversion price less than $1.16, the initial conversion price of the 2024 Unsecured SPA Notes, and we agreed to issue, following receipt of such stockholders’ approval, to such investors who convert any U2024 Unsecured SPA Notes at the $1.16 conversion price prior to our receipt of stockholders’ approval, additional shares of Class A Common Stock as a true-up.

• In January 2025, we received $30 million in previously committed financing to support FF 91 deliveries and FX program development.

• In March 2025, we disclosed that our total capital raised since September 2024 exceeded $100 million, with positive net cash flow reported for Q3 and Q4 2024.

Stock Exchange Compliance & Stockholder and Corporate Actions

• In January 2025, we filed a filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (the “Series A Certificate of Designation”) with the Secretary of State of the State of Delaware.

The Series A Certificate of Designation designated one share of our Preferred Stock as Series A Preferred Stock, and established and designated the preferences, rights and limitations thereof.

The Series A Preferred Stock is not convertible into any other series of stock, but votes at a rate of 3,000,000,000 votes per share.

• In January 2025, we issued one share of Series A Preferred Stock to our Global Co-CEO, Matthias Aydt for the purchase price of $100.00.

• In March 2025, we formally changed our Nasdaq ticker symbol to 'FFAI' to reflect our company’s rebranding around AI mobility.

This symbol change reinforced our strategic emphasis on integrating artificial intelligence into

our product and business ecosystem.

• In March 2025, we disclosed that our total capital raised since September 2024 exceeded $100 million.

• In April 2025, we confirmed that we will not pursue a reverse stock split unless required to maintain Nasdaq compliance.

Corporate Governance

• In February 2025, the consolidated class action lawsuit filed in Delaware was dismissed with prejudice, resolving all litigation of this type.

• In March 2025, Jerry Wang was promoted to President of the Company.

At the time, he reported to the sole Global CEO.

Following the April 2025 appointment of Yueting Jia as Global Co-CEO (see below), Mr.

Wang now reports to both Global Co-CEOs as part of the Company’s current dual-CEO leadership structure.

His role continues to focus on overseeing day-to-day business operations and driving alignment across global functions.

• In April 2025, Yueting Jia, our founder, was promoted to Global Co-Chief Executive Officer (“Global Co-CEO”).

Jia will co-lead the Company alongside Matthias Aydt, our other Global Co-CEO, with a focus on advancing user ecosystem development, supply chain management, EV R&D, finance, legal, and our China and Middle East operations.

The appointment aligns with our broader strategic initiatives to enhance execution efficiency, strengthen our AI mobility leadership, and drive long-term shareholder value.

• In April 2025, we confirmed that we will not pursue a reverse stock split unless required to maintain Nasdaq compliance.

Supply Chain Exposure and Tariff Risk

As of March 31, 2025, a significant portion of the Company’s direct material purchases were sourced from suppliers based in China.

This concentration presents an ongoing risk given elevated U.S.

import tariffs on electric vehicle components.

While the Company’s cost of goods sold was not materially affected for the three months ended March 31, 2025, due to limited production volume and the use of existing inventory, continued reliance on China-based sourcing may result in higher input costs and materially impact the Company’s cost structure as production scales.

Segment Information

We operate in one operating segment and one reportable segment.

Our Global Co-CEOs, acting jointly serving as co-Chief Operating Decision Makers (“CODMs”), regularly evaluate our financial performance using consolidated financial information at the total-company level.

The CODMs receive regular financial and operational reporting that focuses primarily on our consolidated loss from operations, overall cash flows, liquidity, and strategic initiatives.

Management has identified Loss from operations, as presented in the Company's Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, as the primary measure used by the CODMs to evaluate the performance of the business and allocate resources.

This measure is critical for a going concern that must carefully manage its cash outflows, particularly given that the timing of its cash inflows is influenced by external investor decisions.

We define “significant segment expense” as controllable operating costs that are regularly provided to and reviewed by management, which include the expenses presented in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss as Cost of revenue, Research and development, Sales and marketing, and General and administrative.

Management closely tracks its expenditure on these key expense categories through regular reviews of cash balances, near‑term cash flow projections, monthly management reports, and project management reports.

The CODMs, work in close collaboration with our business leaders to establish critical operational targets, set project timelines, and adjust spending plans.

These leaders are responsible for implementing its strategic plans and revising targets and deadlines based on continuous internal communications and review meetings, thereby ensuring that any deviations from target spending or project timelines are promptly addressed.

This rigorous oversight supports our strategic objectives to focus business activities on production, sales, and leasing of its FF 91 vehicles, and the planned launch of the FX Series vehicles.

In addition, the Company defines “other segment items” as other operating expense adjustments that arise from lease or other impairments, gains and losses on the sale or disposition of its fixed assets, or other market‑driven factors that impact Loss from operations presented in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss and are not part of our recurring and controllable operating costs .

By segregating these “Other Segment Items” from “loss from operations,” we provide investors with a clear view of the expenses that management can directly influence versus those driven by external factors.

Other potentially reportable items, such as separate automotive sales and leasing revenues (currently immaterial), geographic information, depreciation expense, interest expense, or other segment-specific activities, are not separately reviewed by the CODMs.

Accordingly, these detailed segment components do not influence the CODM's decision-making or resource allocation processes and thus are not separately disclosed.

Emerging Growth Company Status

Section 102(b)(1) of the Jumpstart Our Business Startups Act (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies.

Any such election to not take advantage of the extended transition period is irrevocable.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

We expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.

This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Segment Information

On February 26, 2023, after an assessment by the Board of Directors (the “Board”) of the Company’s management structure, the Board approved our Chief Product and User Ecosystem Officer (Mr.

Yueting Jia, who is also FF’s founder) reporting directly to the Board.

In addition, the Board approved our product, mobility ecosystem, I.A.I., and advanced research and development (“R&D”) technology departments reporting directly to the Chief Product and User Ecosystem Officer.

The Board also approved our user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both the Chief Product and User Ecosystem Officer and the Global Chief Executive Officer, subject to processes and controls to be determined by the Board after consultation with our management.

Based on his responsibilities within the Company, the Board determined that Mr.

Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act.

We have determined that our co-Chief Operating Decision Makers (“co-CODMs”) are both our Global CEO and our Chief Product and User Ecosystem Officer.

We have determined that we operate in one operating segment and one reportable segment, as the co-CODMs review financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Substantially all of our consolidated operating activities, including our long-lived assets, are located within the United States.

Given our early-revenue operating stage, we currently have no concentration exposure to products, services or customers.

Recent Developments

During the three months ended September 30, 2024, these additional milestones and events took place:

• On September 22, 2024, we delivered an FF 91 2.0 Futurist Alliance to Born Leaders Entertainment in Hollywood, where Born Leaders also became a Developer Co-Creation Officer for us.

• On September 19, 2024, we officially launched our second brand, Faraday X (FX), specifically focused on producing affordable electric vehicles priced between $20,000 and $50,000 to capture a broader consumer market.

• On September 5, 2024, we entered into a Junior Securities Purchase Agreement (the “Junior Secured SPA”) with institutional investors for $30.0 million in commitments, consisting of $22.5 million in cash and $7.5 million converted from a prior loan (see Note 7, Notes Payable in the notes to the Unaudited Condensed Consolidated Financial Statements ).

The notes pursuant to the Junior Secured SPA have a 10% interest rate, are convertible into common stock, and were issued with warrants to purchase 5.7 million shares with an exercise price of $6.29 .

Each investor also received an incremental warrant to fund, at the investor’s sole discretion, additional notes pursuant to the Junior Secured SPA for amounts up to the original principal balance the investor funded.

• On August 16, 2024 after market close, the Company’s 1 -for- 40 reverse stock split became effective.

• On August 12, 2024, Wei Gao, Head of Global Communication and Community Sales, took delivery of an FF 91 2.0 Futurist Alliance, marking the second delivery in the Start of Delivery Second Phase (SOD2).

• On August 2, 2024, we entered into a Waiver Agreement with certain investors holding secured and unsecured convertible notes, allowing adjustments to the notes’ conversion price under specific conditions to reduce cash obligations, providing noteholders with the option to convert at a lower price while waiving accrued interest, and extending their right to purchase additional notes for one year.

• On August 1, 2024, we filed a Certificate of Amendment to increase authorized common stock from 463.3 million to 4.17 billion shares, bringing the total authorized shares to 4.18 billion (each on a pre-split adjusted basis).

Also on August 1, 2024, we filed a Certificate of Elimination to eliminate the designation of the Series A Preferred Stock classification, reclassifying it as authorized but unissued, following the automatic redemption of all outstanding Series A Preferred shares.

• On July 20, 2024, we held an interactive investor Community Day at our Los Angeles headquarters.

• On July 18, 2024, we unveiled our Automotive Bridge Strategy, reintroducing a two-brand approach to target both luxury and affordable EV markets, expanding our reach through the integration of advanced AI and software technologies.

• On July 11, 2024, we entered into a Master Lease Agreement with Utica Leaseco, LLC with respect to a collateralized loan arrangement (see Note 7, Notes Payable in the notes to the Unaudited Condensed Consolidated Financial Statements ).

In the period subsequent to September 30, 2024, these additional milestones and events took place:

• On November 1, 2024, we filed a Registration Statement on Form S-1 with the SEC.

This registration covers the issuance of Class A Common Stock that are contingently issuable under the terms of the Junior Secured SPA Notes (see Note 7, Notes Payable in the notes to the Unaudited Condensed Consolidated Financial Statements ).

• On October 24, 2024, we announced a co-investment agreement with Master Investment Group, led by Sheikh Abdulla Al Qassimi, to establish our future regional headquarters in Ras Al Khaimah, UAE, supporting Faraday’s Middle East expansion strategy.

Construction is set to begin by late 2024, with operations expected by late 2025 or early 2026.

Faraday Future signed agreements with the Ras Al Khaimah Economic Zone (RAKEZ) for both a current business location and a larger operational facility to strengthen its presence in the UAE’s strategic economic hub.

Recent Governance Developments

• We made senior leadership changes, appointing Koti Meka as Chief Financial Officer, effective September 23, 2024 and Aaron Ma as Acting Head of EV R&D, effective August 2024, to advance its dual-brand strategy.

• On September 22, 2024, we delivered an FF 91 2.0 Futurist Alliance to Born Leaders Entertainment in Hollywood, where Born Leaders also became a Developer Co-Creation Officer for us.

• On September 4, 2024, Nasdaq confirmed that we regained compliance with Nasdaq's listing requirements.

This followed a series of actions to address deficiencies in timely filing of the Form 10-K and the Q1 2024 10-Q and a minimum bid price deficiency.

On June 26, 2024, Nasdaq had granted continued listing, contingent upon meeting filing and minimum bid price requirements by July 31 and August 31, 2024, respectively.

On July 30, 2024, we met the periodic reporting compliance requirement by filing our Q1 2024 Form 10-Q.

Subsequently, in August 2024, we met the minimum bid price requirements following the August 2024 Reverse Stock Split.

• On August 27, 2024, we appointed Tin Mok as Head of FF United Arab Emirates (“UAE”), where he will lead business development and strategic financing efforts in the UAE and Middle East.

• On July 31, 2024, at the annual stockholder meeting, our stockholders approved proposals to increase authorized shares, approve a reverse stock split, reelect directors, and amend the 2021 Stock Incentive Plan, raising available shares by 88.3 million (on a pre-split adjusted basis).

Components of FF’s Results of Operations

Components of Our Results of Operations

Key Factors Affecting Operating Results

Our performance and future success depend on several factors that present significant opportunities but also pose risks and challenges including those discussed below and in the section titled “ Risk Factors ” in the December 31, 2023 Form 10-K and March 31, 2024 Form 10-Q.

Our performance and future success depend on several factors that present significant opportunities but also pose risks and challenges including those discussed below and, in the section, titled “Risk Factors” in Item 1A of the Form 10-K, filed on March 31, 2025.

Production and Operations

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interest expense from debt financing activities;

and selling and distribution expenses as we build our brand and market our vehicles.

and selling and distribution expenses as we builds our brand and markets our vehicles.

We may incur significant costs in connection with our services as we deliver at scale the FF 91 Futurist, including servicing and warranty costs.

Our ability to become profitable in the future will depend on our ability to successfully market our vehicles and control our costs.

Through September 30, 2024, we have sold a t otal of five and leased nine vehicles.

Through March 31, 2025 , we have sold six and leased eleven vehicles.

As a result, we will require substantial additional capital to develop products and fund operations for the foreseeable future.

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The particular funding mechanisms, terms, timing, and amounts are dependent on our assessment of opportunities available in the marketplace and the circumstances of the business at the relevant time.

Any delays in the successful completion of our FF ieFactory California will impact our ability to generate revenue.

For additional discussion of the substantial doubt about our ability to continue as a going concern, see Note 2,

Liquidity and Capital Resources and Going Concern in the notes to the Unaudited Condensed Consolidated Financial Statements and for further details on liquidity, see the “Liquidity and Capital Resources” section below.

Revenue Recognition

We began the production of our FF 91 Futurist in March 2023 and started making deliveries to customers in August 2023.

During the three months ended September 30, 2024, we did not sell any vehicles and leased out two vehicles.

Automotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services including home charger, charger installation, 24/7 roadside assistance, Over-The-Air (“OTA”) software updates, internet connectivity and destination fees.

We recognize revenue on automotive sales upon delivery to the customer, which is when control of a vehicle transfers.

Any delays in the successful completion of its FF ieFactory California will impact our ability to generate revenue.

For additional discussion of the substantial doubt about our ability to continue as a going concern, see Note 2, Liquidity and Capital Resources and Going Concern in the notes to the Unaudited Condensed Consolidated Financial Statements and for further details on liquidity, please see the “Liquidity and Capital Resources” section below.

Revenue and Cost of Revenue

Automotive Sales Revenue

We began the production of our FF 91 Futurist in March 2023 and started making deliveries to customers in August 2023 and have leased one vehicle during the three months ended March 31, 2025.

Automotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services including home charger, charger installation, twenty-four-seven roadside assistance, OTA software updates, internet connectivity and destination fees.

We recognize revenue on automotive sales upon delivery to the customer, which is when control of vehicle transfers.

Payments are typically received at the point control transfers or in accordance with payment terms customary to the business and as indicated in the sales contract.

OTA software updates are provisioned upon transfer of control of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer.

For obligations related to automotive sales, we estimate standalone selling price by considering costs used to develop and deliver the good or service, third-party pricing of similar options and other information that may be available.

For obligations related to automotive sales, we estimate the standalone selling price by considering costs used to develop and deliver the good or service, third-party pricing of similar options and other information that may be available.

The transaction price is allocated among the performance obligations in proportion to the standalone selling price of our performance obligations.

Vehicle contracts do not contain a significant financing component.

Revenue from promises to the customer that are considered immaterial are combined with the vehicle performance obligation and recognized when the product has been transferred.

Revenue from immaterial promises is combined with the vehicle performance obligation and recognized when the product has been transferred.

We accrue costs to transfer these immaterial goods and services regardless of whether they have been transferred.

We provide customers with a residual value guarantee which may or may not be exercised in the future.

Co-creation Arrangements

As part of our Futurist Product Officers (“FPO”) Co-Creation Delivery program that began in August 2023, we have entered into co-creation agreements with certain customers.

The arrangement leverages some of our sales and leasing customers to provide valuable driving data, insights, marketing and brand awareness of the FF 91 vehicle.

For the services performed, we compensate the respective customers through a monthly consulting fee payment or a discount on their monthly lease payment.

Management examined in detail the services provided by each respective customer in accordance with the co-creation agreement, established various data points, and rationally assigned a dollar amount that was deemed representative of the fair value of the services.

Co-creation payments that exceed the fair value of the distinct services performed by the customer are considered consideration paid to the customer and were treated as a reduction in revenue.

We have entered into and may continue to enter into co-creator consulting agreements with our customers under which customers share feedback, driving data, ideas, and experiences with our engineers, social media posts and other promotions in exchange for specified fees.

We consider these arrangements consideration payable to a customer.

In certain circumstances, we provide customers with a residual value guarantee which may or may not be exercised in the future.

The impact of such residual value guarantees was immaterial to our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 .

We have entered and may continue to enter into co-creator consulting agreements with our customers under which customers share feedback, driving data, ideas, experiences with its engineers, social media posts and other promotions in exchange for specified fees.

We consider these arrangements to be consideration payable to a customer.

The consideration paid to the customer relates to marketing and R&D services that are distinct and could be purchased by us from a separate third-party.

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Automotive Leasing Revenue

Operating Leasing Program

We have outstanding leases under our vehicle operating leasing program in the United States.

Revenue from Operating Leasing Program

We have outstanding leases under our vehicle operating leasing program in the U.S.

Qualifying customers are permitted to lease a vehicle for up to 36 months.

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We account for these leasing transactions as operating leases.

We record leasing revenues to automotive leasing revenue on a straight-line basis over the contractual term, and we record the depreciation of these vehicles to cost of automotive leasing revenue.

We record leasing revenues as automotive leasing revenue on a straight-line basis over the contractual term, and we record the depreciation of these vehicles as cost of automotive leasing revenue.

As of March 31, 2025, deferred lease-related upfront payments which will be recognized on a straight-line basis over the contractual terms of the individual leases were immaterial.

Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.

Sales-Type Leasing Program

Revenue from Sales-Type Leasing Program

We have outstanding leases accounted for as sales-type leases under accounting standards codification (“ASC”) 842, Leases (“ASC 842”).

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A customer qualifies under this program if the purchase option is reasonably certain to be exercised, and we therefore expect the customer to take title to the vehicle at the end of the lease term after making all contractual payments.

We recognize all revenue and costs associated with the sales-type lease as automotive leasing revenue and automotive leasing cost of revenue,

respectively, upon delivery of the vehicle to the customer when collectability of lease payments is probable at lease commencement.

We recognize all revenue and costs associated with the sales-type lease as automotive leasing revenue and automotive leasing cost of revenue, respectively, upon delivery of the vehicle to the customer when collectability of lease payments is probable at lease commencement.

If collectability of lease payments is not probable at commencement, we recognize the lease payments as deposit liability and do not derecognize the leased vehicle until such point that collectability of lease payments becomes probable.

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Our customers may reserve a vehicle and preorder certain services by making a customer deposit, which is fully refundable at any time.

Refundable deposits, for vehicle reservations and services, received from customers prior to an executed vehicle purchase agreement are recorded as customer deposits within Accrued expenses and other current liabilities on our Condensed Consolidated Balance Sheets.

When vehicle purchase agreements are executed, the consideration for the vehicle and any accompanying products and services must be paid in advance prior to the transfer of products or services by us.

Refundable deposits, for vehicle reservations and services, received from customers prior to an executed vehicle purchase agreement are recorded as customer deposits (Accrued expenses and other current liabilities).

Customer deposits were $3.0 million and $3.0 million as of March 31, 2025 and December 31, 2024, respectively.

When vehicle purchase agreements are executed, the consideration for the vehicle and any accompanying products and services must be paid in advance prior to our transfer of the products or services.

Such advance payments are considered non-refundable, and we defer revenue related to any products or services that are not yet transferred.

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date.

Deferred revenue related to products and services w as immaterial a s of March 31, 2025 and December 31, 2024.

Cost of Automotive Sales Revenue

Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, and reserves for estimated warranty expenses.

Cost of automotive sales revenues also includes adjustments to warranty expense.

Cost of Automotive Leasing Program

Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expense related to leased vehicles.

We provide a manufacturer’s warranty on all vehicles sold.

The warranty covers the rectification of reported defects via repair, replacement, or adjustment of faulty parts or components.

The warranty does not cover any item where failure is due to normal wear and tear.

The warranty does not cover any item that fails due to normal wear and tear.

This assurance-type warranty does not create a performance obligation separate from the vehicle.

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As we continue to manufacture and sell more vehicles we will reassess and evaluate our warranty claims for purposes of our warranty accrual.

Cost of Automotive Sales Revenue

Cost of revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, and reserves for estimated warranty expenses.

Cost of automotive sales revenues also includes adjustments to warranty expense.

Cost of services and other revenue includes costs associated with providing non-warranty after-sales services, costs for retail merchandise, and costs to provide vehicle insurance.

Cost of services and other revenue also includes direct parts and material.

Cost of Automotive Leasing Program

Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expense related to leased vehicles.

Operating Expenses

Research and Development

Research and Development (“R&D”) activities represent a significant part of our business.

Research and development activities represent a significant part of our business.

Our R&D efforts focus on the design and development of our electric vehicles and continuing to prepare our prototype electric vehicles to exceed industry standards for compliance, innovation, and performance.

R&D expenses consist of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for our employees focused on R&D activities, other related costs, depreciation, R&D services provided by co-creators, and an allocation of overhead.

We expect R&D expenses to decrease in the near future as we substantially have completed R&D activities related to the FF 91, offset by increases in R&D expenses related to FX Series vehicles.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for our employees focused on sales and marketing, costs associated with sales and marketing activities, marketing services provided by co-creators, and an allocation of overhead.

Marketing activities are those related to introducing our brand and our electric vehicle prototypes to the market.

Marketing activities are those related to

introducing our brand, our electric vehicles, and our electric vehicle prototypes to the market.

We expect Sales and marketing expenses to continue to increase as we bring our electric vehicles to market and seek to generate additional sales.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for our employees associated with administrative services such as legal, human resources, information technology, accounting and finance, other related costs, and legal loss contingency expenses, which are our

estimates of future legal settlements.

General and administrative expenses consist primarily of personnel-related costs, (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as legal, human resources, information technology, accounting and finance, other related costs, and legal loss contingency expenses, which are our estimates of future legal settlements.

These expenses also include certain third-party consulting services, certain facilities costs, and any corporate overhead costs not allocated to other expense categories.

Settlement on Accrued Research and Development Expenses

Settlement on accrued research and development expenses represents adjustments resulting from settling previously accrued R&D obligations at amounts lower than initially estimated.

This line item generally includes gains arising from negotiations or dispute resolutions with vendors, technology partners, or service providers, where the final settlement amount reduces the originally accrued expenses associated with R&D activities.

Lease Impairment Loss

Lease impairment loss includes impairment charges on right-of-use (ROU) assets for leased properties that we have vacated, abandoned, or plan to terminate.

This line item captures losses recognized when the carrying value of an ROU asset exceeds its fair value due to our exiting premises or terminating leases.

Impairment losses may occur when facilities, including retail, office, or research spaces, are vacated, and the remaining lease liabilities continue to be recognized on the balance sheet.

Lease impairment loss is not offset against lease termination gain, which is included in Other Income (Expense), net discussed below.

Loss on Disposal of Property, Plant and Equipment

Loss on disposal of property, plant and equipment relates to the abandonment of certain FF 91 Futurist program construction in progress assets, primarily vendor tooling, machinery, and equipment, due to the redesign of the related FF 91 components and implementation of our cost reduction program.

Charges associated with disposals are recognized within operating expenses.

Change in Fair Value of Earnout Liability

Legacy FF stockholders, as of the July 21, 2021 closing date of the Business Combination (as defined in Note 10, Commitments and Contingencies in the notes to the Unaudited Condensed Consolidated Financial Statements) until its fifth anniversary, are entitled to contingent consideration of up to 2,605 additional shares of Class A Common Stock in the aggregate in two equal tranches upon the occurrence of each earnout triggering event (“Earnout Shares”).

We recognized the Earnout Shares at fair value upon the closing of the Business Combination and classified them in Stockholders’ Equity since the Earnout Shares were determined to be indexed to our own stock and meet the requirements for equity classification in accordance with ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity .

From time to time subsequent to the closing of the Business Combination, the Earnout Shares may be classified as derivative liabilities under ASC 815, Derivatives and Hedging , due to us having insufficient authorized shares to fully settle the equity-linked financial instruments in shares.

The Earnout Shares reclassified as derivative instruments are recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification are settled or we have sufficient authorized, unissued shares to settle such contracts with shares.

We expect our general and administrative expenses to increase as we continue to grow our business.

Loss from Disposal of Property, Plant and Equipment

Loss (gain) on disposal on property, plant, and equipment relates to the abandonment of certain FF 91 Futurist program construction in progress assets, primarily vendor tooling, machinery, and equipment, due to the redesign of the related FF 91 components and implementation of our cost reduction program.

Charges associated with disposals are recognized within operating expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Non-operating Expenses

Change in Fair Value of (Related Party and Third Party) Notes Payable and Warrant Liabilities

Change in fair value measurements consists of the losses and gains as a result of fair value measurements of certain notes payable and warrant liabilities that we record at fair value.

Change in Fair Value of (Related Party and Third Party) Notes Payable, Warrant Liabilities, and Derivatives Call Options

Change in fair value measurements consists of the losses and gains as a result of fair value measurements of certain notes payable, warrant liabilities, and other instruments which we record at fair value.

Loss on Settlement of (Related Party and Third Party) Notes Payable

Loss on settlement of notes payable consists of losses resulting from the settlement of notes payable as part of our ongoing financing activities and losses incurred on modifications of our notes payable that qualify as an extinguishment pursuant to ASC 470-50, Debt–Modifications and Extinguishments .

Interest Expense

Interest Expense (Related Party and Third Party)

Interest expense primarily consists of interest on outstanding notes payable not marked to fair value, capital leases, certain supplier payables, and vendor payables in trust.

Related Party Interest Expense

Related party interest expense consists of interest expense on notes payable with related parties not marked to fair value.

Other Income (Expense), net

Other expense, net primarily consists of foreign currency transaction gains and losses and other expenses such as bank fees and late charges.

Other Expense, net

Other income, net consists of foreign currency transaction gains and losses and other expenses such as bank fees and late charges.

Foreign currency transaction gains and losses are generated by revaluation of debt and the settlements of invoices denominated in currencies other than the functional currency.

Other income, net primarily consists of lease termination gains.

We expect other expense to fluctuate as we continue to transact internationally.

Results of Operations

Comparison of results of operations for the three months ended September 30, 2024 versus the three months ended September 30, 2023:

Three Months Ended September 30,

Consolidated Statements of Operations

Three Months Ended March 31,

(in thousands) 2025 2024

Unaudited Condensed Consolidated Statements of Operations

Revenue $ 316 $ 2

Cost of revenues 21,453 16,131

Cost of revenue 21,381 20,687

Gross profit (21,065) (20,685)

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General and administrative 13,674 13,848

Settlement on accrued research and development expenses (14,935) —

Lease impairment loss 57 —

Loss on disposal on property, plant and equipment 2,582 —

Change in fair value of earnout liability — (67)

Loss (gain) on disposal on property, plant, and equipment 44 (87)

Total operating expenses 22,766 22,923

Loss from operations (43,831) (43,608)

Change in fair value of notes payable and warrant liabilities 8,287 17,571

Change in fair value of related party notes payable and related party warrant liabilities 654 4,726

Change in fair value of notes payable, warrant liabilities, and derivative call options 51,458 27,885

Change in fair value of related party notes payable, warrant liabilities, and derivative call options (277) (7)

Loss on settlement of notes payable (15,920) (11,403)

Loss on related party notes payable — (10,756)

Loss on settlement of related party notes payable (1,180) (14,295)

Interest expense (2,302) (2,225)

Related party interest expense — (5,094)

Other income/(expense), net 361 (1,624)

Other income, net 1,784 530

Loss before income taxes (10,268) (48,217)

Income tax provision 1 —

Income tax expense (10) —

Net loss $ (10,278) $ (48,217)

Three Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024 Amount %

Revenue $ 316 $ 2 $ 314 15700.0 %

Total revenue decreased by $0.5 million for the three months ended September 30, 2024 compared to the same period in 2023 .

Automotive leasing revenue was recognized during the three months ended September 30, 2024, though the amount was not material, and no automotive sales revenue was recorded.

In contrast, automotive sales revenue totaled $0.6 million for the

three months ended September 30, 2023 , with no leasing revenue during that period.

The 2023 sales revenue resulted from the initial delivery of our flagship luxury electric vehicle, the FF 91 Futurist.

Cost of Revenues

Three Months Ended September 30,

(in thousands) 2024 2023 Amount %

Cost of revenues $ 21,453 $ 16,131 $ 5,322 33 %

Cost of revenues increased by $5.3 million for the three months ended September 30, 2024 compared to the same period in 2023 .

This increase was primarily driven by depreciation expenses resulting from placing equipment into service to improve our production capabilities, in particular our paint and body shop, and an increase in corporate cost absorption into inventory and cost of revenues.

During the three months ended September 30, 2024 , we continued transitioning our production capabilities to include both luxury and more affordable electric vehicles.

This strategic shift, which is aligned with broader market demand, is expected to result in additional fixed cost allocations to cost of revenues as equipment is placed into service, while we continue to optimize our production efficiencies.

Research and Development (R&D)

Three Months Ended September 30,

(in thousands) 2024 2023 Amount %

Research and development $ 5,180 $ 21,593 $ (16,413) (76) %

R&D expense decreased by $16.4 million for the three months ended September 30, 2024 compared to the same period in 2023 .

This reduction was primarily attributable to a $10.1 million decrease resulting form headcount reductions and the reassignment of R&D personnel to production roles, as well as a $4.3 million decrease in engineering, design, and testing costs .

As we transition from an R&D focus to full-scale production, resources have been reallocated from R&D to manufacturing to enhance operational efficiency.

This shift supports the commercialization of completed R&D developments while enabling targeted innovation in key areas.

Strategic partnerships with technology providers and industry experts have also been established to sustain innovation with reduced internal costs.

We have also begun shifting our R&D focus towards the development of more affordable electric vehicle platforms, expanding our technology portfolio to address broader market demands.

This strategic shift ensures continued innovation across both luxury and more affordable segments, aligning with evolving industry trends.

Sales and Marketing

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Sales and marketing $ 2,601 $ 5,318 $ (2,717) (51) %

Sales and marketing expense decreased by $2.7 million for the three months ended September 30, 2024 compared to the same period in 2023 .

The reduction was primarily driven by a $1.7 million decrease in compensation expense, a decrease of $0.3 million in advertising costs, and a $0.2 million decrease in professional services expenses.

Despite a reduction in sales and marketing personnel, we continue to market effectively by leveraging our Co-Creation strategy, which involves partnerships with industry pioneers and influential personalities.

Through this approach, we amplify our brand by engaging high-profile figures and involving users in our product development and marketing processes.

Additionally, we host VIP events and participate in major industry showcases to provide customers and stakeholders with immersive experiences of our flagship vehicles, further enhancing customer engagement and brand visibility.

These efforts allow us to optimize our marketing reach and increase brand awareness while maintaining lower internal costs.

General and Administrative

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

General and administrative $ 8,278 $ 24,023 $ (15,745) (66) %

General and administrative expense decreased by $15.7 million for the three months ended September 30, 2024 compared to the same period in 2023 .

This decrease was primarily driven by a $6.5 million reduction in professional service fees, a $4.0 million decrease in general expenses, such as rent and insurance costs, and a $1.9 million reduction in wages and wage-related costs.

Additionally, there was a $1.9 million decrease in depreciation expense.

These reductions reflect our ongoing cost-cutting initiatives aimed at optimizing general and administrative expenses.

We have implemented measures to streamline operations, including renegotiating vendor contracts, consolidating office space to reduce rent, and restructuring our workforce to lower wage-related expenses, all while maintaining operational efficiency.

Settlement of Accrued Research and Development expenses

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Settlement on accrued research and development expenses $ (14,935) $ — $ (14,935) NM*

*NM = not meaningful

Gain on settlement of previously accrued R&D expenses increased by $14.9 million for the three months ended September 30, 2024 compared to the same period in 2023 .

This gain resulted from a settlement that resolved ongoing disputes over unpaid invoices due to Palantir Technologies Inc.

(“Palantir”) As of the date of settlement, we had accrued approximately $19.9 million of R&D expense .

Following arbitration, the parties reached a settlement in which we agreed to pay Palantir $5.0 million.

We paid $0.2 million in cash and fulfilled the remaining $4.8 million obligation with the issuance of Class A Common Stock.

On August 8, 2024, we issued Palantir 252,768 shares of Class A Common Stock valued at $2.4 million.

As of September 30, 2024, we had an obligation to pay Palantir the remaining $2.4 million.

We settled this obligation on October 1, 2024 through the issuance of 827,526 shares of Class A Common Stock.

We recognized a gain of $14.9 million , reflecting the difference between the accrued expenses and the final settlement amount due to Palantir.

Loss on Disposal on Property, Plant and Equipment

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Loss on disposal on property, plant and equipment $ 2,582 $ — $ 2,582 NM*

*NM = not meaningful.

We recognized a $2.6 million loss on the disposal of property, plant, and equipment during the three months ended September 30, 2024.

No comparable transactions were recorded during the three months ended September 30, 2023.

We dispose of equipment when the assets become obsolete, costly to maintain, or are replaced by more efficient technologies.

Change in Fair Value of Earnout Liability

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Change in fair value of earnout liability $ — $ (67) $ 67 NM*

*NM = not meaningful.

We did not have any earnout shares that were re-measured at fair value during the three months ended September 30, 2024.

As of August 25, 2023, upon an increase in our authorized shares of Class A Common Stock, we reclassified the earnout shares from liability classification to equity classification.

Once the number of authorized shares of our Class A Common Stock was increased, the earnout shares were determined to be equity classified under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity .

The $0.1 million decrease in the fair value of the earnout shares represents the change in fair

value of the earnout prior to its reclassification and was recognized as a Change in fair value of earnout liability during the three months ended September 30, 2023.

Change in Fair Value of Notes Payable and Warrant Liabilities

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Change in fair value of notes payable and warrant liabilities $ 8,287 $ 17,571 $ (9,284) (53) %

During the three months ended September 30, 2024, the fair value of our outstanding notes and warrants were revalued at lower fair values compared to the same period in 2023.

The decrease in the fair value of the notes and warrants during the period was driven by factors including:

(1) the decline in our stock price during the period;

(2) pursuant to the terms of the Waiver Agreement (see Note 7, Notes Payable in the notes to the Unaudited Condensed Consolidated Financial Statements ), interest payments due under the Secured SPA became due at maturity;

and (3) the elimination of the interest make-whole pursuant to the Waiver Agreement.

These gains were partially offset by $0.7 million in transaction costs during the period.

The change in the fair value of our notes payable and warrant liabilities also decreased during the three months ended September 30, 2024 when compared with the same period in 2023 due to a 46% decrease in notes payable outstanding that are remeasured at fair value.

Change in Fair Value of Related Party Notes Payable and Related Party Warrant Liabilities

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Change in fair value of related party notes payable and related party warrant liabilities $ 654 $ 4,726 $ (4,072) (86) %

During the three months ended September 30, 2024, the fair values of our outstanding related party notes and warrants were revalued at lower fair values compared to the same period in 2023.

This decrease was primarily driven by declines in our stock price during the period.

T he change in the fair value of our notes payable and warrant liabilities also decreased during the three months ended September 30, 2024 when compared with the same period in 2023 due to a 55% decrease in notes payable outstanding that are remeasured at fair value.

Loss on Settlement of Notes Payable

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Loss on settlement of notes payable $ (59,128) $ (21,357) $ (37,771) 177 %

The increase in the loss on settlement of notes payable during the three months ended September 30, 2024 was driven by an increase in the notes payable converted during the period compared with the same period in 2023.

During the three months ended September 30, 2024, noteholders converted $62.0 million of notes payable compared with $25.8 million during the three months ended September 30, 2023.

Additionally, during the three months ended September 30, 2024, we recognized a loss on extinguishment of $2.7 million resulting from the Waiver Agreement.

The increase was partially offset by a decrease in the loss on settlement per dollar of principal during the three months ended September 30, 2024.

Loss on Related Party Notes Payable

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Loss on related party notes payable $ — $ (10,756) $ 10,756 NM*

*NM = not meaningful.

There wer e no settlements of related party notes payable during the three months ended September 30, 2024.

During the three months ended September 30, 2023, a related party converted Unsecured SPA Notes with an aggregate principal balance of $6.6 million in exchange for 21,850 shares of Class A Common Stock.

We recognized a loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument.

Interest Expense

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Interest expense $ (1,442) $ (90) $ (1,352) (1,502) %

Interest expense increased by $1.4 million for the three months ended September 30, 2024 compared to the same period in 2023 .

This increase was p rimarily due to financial obligations associated with the Hanford, California manufacturing facility.

We pursued a sale-leaseback arrangement for this facility to generate liquidity for operational and facility enhancements.

However, due to conditions within the sale-leaseback agreement, the transaction was treated as a financing arrangement under U.S.

generally accepted accounting principles (“GAAP”), resulting in interest expense rather than lease expense.

This arrangement did not exist during the same period in 2023 .

Related Party Interest Expense

Three Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Related party interest expense $ (1,212) $ (69) $ (1,143) (1657) %

Related party interest expense increased by $1.1 million for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to interest expense due to our loan with Chongqing Leshi Small Loan Co., Ltd.

(“Chongqing”), a related party.

This increase was primarily due to our default on the related party note with Chongqing, in the first quarter of 2024, which triggered an increase in the interest rate as well as additional interest expense and penalties.

Since the default, we continue to accrue all relevant interest and penalties.

Other Income/ (Expense), Net

Three Months Ended September 30, Change

Revenue increased by $0.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

There was no automotive sales revenue for the three months ended March 31, 2025 and 2024.

Automotive leasing revenue was $0.3 for the three months ended March 31, 2025 compared to an immaterial amount for the same period in 2024.

Additionally, one vehicle was delivered during the three months ended March 31, 2025, compared to none for the same period in 2024.

Cost of Revenue

Three Months Ended March 31,

(in thousands) 2025 2024 Amount %

Other income/(expense), net $ 361 $ (1,624) $ 1,985 122 %

Other income was $0.4 million for the three months ended September 30, 2024, compared to other expense of $1.6 million for the same period in 2023.

The $0.4 million of other income for the three months ended September 30, 2024 and the other expense of $1.6 million for the same period in 2023 were primarily attributable to the revaluation of foreign currency transactions denominated in non-U.S.

currencies assessed at the end of each period.

During the three months ended September 30, 2024, the U.S.

dollar exchange rate to the Chinese currency CNY declined, resulting in a foreign currency transaction gain from the revaluation of foreign currency transactions, which was recorded as Other income.

During the three months ended September 30, 2023, the U.S.

dollar exchange rate to the Chinese currency CNY climbed up, resulting in a foreign currency transaction loss from the revaluation of foreign currency transactions, which was recorded as Other expense.

Comparison of results of operations for the nine months ended September 30, 2024 versus the nine months ended September 30, 2023:

Nine Months Ended September 30,

(in thousands) 2024 2023

Unaudited Condensed Consolidated Statements of Operations

Revenue $ 304 $ 551

Cost of revenues 63,110 22,744

Gross profit (62,806) (22,193)

Operating expenses

Cost of revenue $ 21,381 $ 20,687 $ 694 3.4 %

Cost of revenue increased by $0.7 million for the three months ended March 31, 2025, compared to the same period in 2024.

This increase was primarily driven by higher depreciation expenses as equipment and expenses related to FF ieFactory California lease agreement, which commenced in late 2023, and the Collateralized Loan financing, initiated in 2024.

During the three months ended March 31, 2025, we continued expanding our production capabilities to include both luxury and more affordable electric vehicles.

This strategic shift, aligned with broader market demand, is expected to increase fixed cost allocations to cost of revenues as new equipment is placed into service.

We remain focused on optimizing production efficiencies and preparing the FF ieFactory California facility for planned new product lines.

For the three months ended March 31, 2025, U.S.

tariffs on electric vehicle components imported from China did not have a material impact on the Company’s cost of goods sold.

This was primarily due to the Company’s low production volume and the utilization of existing inventory that was procured prior to recent tariff adjustments.

However, as production scales and the Company sources a greater volume of materials subject to current tariff rates, these duties may increase per-unit build costs in future periods.

Management continues to monitor trade developments and assess sourcing strategies to mitigate potential cost escalation.

Research and Development

Sales and marketing 6,857 18,082

General and administrative 39,327 67,598

Settlement on accrued research and development expenses (14,935) —

Lease impairment loss 7,673 —

Loss on disposal on property, plant and equipment 2,511 3,698

Change in fair value of earnout liability — 2,033

Total operating expenses 56,618 196,081

Loss from operations (119,424) (218,274)

Change in fair value of notes payable and warrant liabilities 28,927 90,030

Change in fair value of related party notes payable and related party warrant liabilities 315 5,110

Loss on settlement of notes payable (117,509) (204,885)

Loss on related party notes payable (14,295) (17,248)

Interest expense (5,386) (591)

Related party interest expense (7,812) (139)

Other income/(expense), net 599 (1,922)

Loss before income taxes (234,585) (347,919)

Income tax provision (3) (28)

Net loss $ (234,588) $ (347,947)

Nine Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Revenue $ 304 $ 551 $ (247) (45) %

Total revenue decreased by $0.2 million for the nine months ended September 30, 2024 compared to the same period in 2023 .

This decline was primarily driven by a $0.2 million reduction in automotive sales revenue and adjustments to leasing revenue, as certain co-collaborators did not meet their public engagement obligations.

Automotive sales in 2023 were largely attributable to the initial delivery of the FF 91 Futurist, which began in the third quarter of 2023 .

Nine Months Ended September 30,

(in thousands) 2024 2023 Amount %

Cost of revenues $ 63,110 $ 22,744 $ 40,366 177 %

Cost of revenues increased by $40.4 million for the nine months ended September 30, 2024 compared to the same period in 2023.

This increase was primarily due to higher depreciation expenses from placing equipment into service to improve our production capabil ities, an increase in corporate cost absorption into inventory and cost of revenues, and the fact that vehicle production only began in the latter part of the second quarter of 2023.

During the nine months ended September 30, 2024, we began transitioning our production capabilities to include both luxury and more affordable electric vehicles.

Research and Development (R&D)

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Research and development $ 6,419 $ 6,688 $ (269) (4.0) %

R&D expense decreased by $89.5 million for the nine months ended September 30, 2024, compared to the same period in 2023.

The most significant factor driving this reduction was a $51.6 million decrease due to headcount reductions and the transfer of R&D personnel to production roles.

Additionally, engineering, design, and testing costs declined by $24.9 million, and information technology-related expenses decreased by $3.2 million.

As we transition from an R&D focus to full-scale production, resources have been reallocated from R&D to manufacturing to enhance operational efficiency.

This shift supports the commercialization of completed R&D developments while enabling targeted innovation in key areas.

Strategic partnerships with technology providers and industry experts have also been established to sustain innovation with reduced internal costs.

We have also begun shifting our R&D focus towards the development of more affordable electric vehicle platforms, expanding our technology portfolio to address broader market demands.

This strategic shift ensures continued innovation across both luxury and more affordable segments, aligning with evolving industry trends.

R&D expense decreased by $0.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

The decrease was primarily driven by a $2.3 million reduction in salary and headcount costs, including the reassignment of R&D personnel to production roles, and a $1.6 million decrease in information technology expenses.

These reductions were partially offset by a $2.4 million increase in R&D expense due to less allocations to cost of revenue in 2025, resulting in more expenses remaining in the R&D category this year.

As we transition from an R&D-intensive focus to a greater emphasis on full-scale production resources are being reallocated from R&D to manufacturing to enhance operational efficiency.

This shift prioritizes the commercialization of past R&D advancements while enabling continued but more targeted innovation.

To sustain progress with lower internal costs, we have also established strategic partnerships with technology providers and industry experts.

Additionally, we are refocusing our R&D efforts on developing more affordable electric vehicle platforms, expanding our technology portfolio to meet broader market demands.

This strategic shift ensures continued innovation across both luxury and more accessible segments, aligning with evolving industry trends.

Sales and Marketing

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Sales and marketing $ 2,629 $ 2,474 $ 155 6.3 %

Sales and marketing expense decreased by $11.2 million for the nine months ended September 30, 2024 compared to the same period in 2023 .

This reduction was primarily driven by a $6.8 million decrease in compensation expense, a $1.4 million decrease in general expenses (such as rent, rent related expenses, and insurance costs), and a $1.0 million decrease in professional services expenses.

Through this approach, we amplify our brand by engaging high-profile figures and involving users in our product development and marketing processes.

Additionally, we host VIP events and participate in major industry showcases, to provide customers and stakeholders with immersive experiences of our flagship vehicles, further enhancing customer engagement and brand visibility.

These efforts allow us to optimize our marketing reach and increase brand awareness while maintaining lower internal costs.

Sales and marketing expense increased by $0.2 million for the three months ended March 31, 2025, compared to the same period in 2024 .

The increase was primarily driven by a $0.7 million rise in marketing expenses—largely related to the launch of the new FX line—and a $0.4 million increase in compensation costs, despite a reduction in sales and marketing personnel.

These increases were partially offset by a $0.5 million reduction in rent, a $0.2 million decrease in professional services, and a $0.1 million decline in sales and marketing consumables.

Despite a reduction in sales and marketing personnel, we continue to market effectively by leveraging our Co-Creation strategy, which engages industry pioneers and influential personalities.

Through this approach, we expand our brand by collaborating with high-profile figures and integrating users in our product development and marketing processes.

Additionally, we host VIP events and participate in major industry showcases to offer customers and stakeholders immersive experiences of our flagship vehicles and prototypes, further enhancing customer engagement and brand visibility.

These efforts enable us to optimize our marketing reach and increase brand awareness while maintaining lower internal costs.

General and Administrative

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

General and administrative $ 13,674 $ 13,848 $ (174) (1.3) %

General and administrative expense decreased by $28.3 million for the nine months ended September 30, 2024, compared to the same period in 2023.

This decline was primarily driven by a $14.8 million reduction in professional service fees, a $6.7 million decrease in general expenses, such as rent and insurance costs, and a $4.8 million reduction in wages and wage-related costs.

Additionally, there was a $2.8 million decrease in depreciation expense.

These reductions reflect our ongoing cost-cutting initiatives aimed at optimizing general and administrative expenses.

Settlement of Accrued Research and Development expenses

Nine Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Settlement on accrued research and development expenses $ (14,935) $ — $ (14,935) NM*

*NM = not meaningful

Gain on settlement of previously accrued R&D expenses increased by $14.9 million for the nine months ended September 30, 2024 compared to the same period in 2023 .

This gain resulted from a settlement that resolved ongoing disputes over unpaid invoices due to Palantir.

As of the date of settlement, we had accrued approximately $19.9 million of R&D expense .

Following arbitration, the parties reached a settlement in which we agreed to pay Palantir $5.0 million.

We paid $0.2 million in cash and fulfilled the remaining $4.8 million obligation with the issuance of Class A Common Stock.

On August 8, 2024, we issued Palantir 252,768 shares of Class A Common Stock valued at $2.4 million.

As of September 30, 2024, we had an obligation to pay Palantir the remaining $2.4 million.

We settled this obligation on October 1, 2024 through the issuance of 827,526 shares of Class A Common Stock.

We recognized a gain of $14.9 million , reflecting the difference between the accrued expenses and the final settlement amount due to Palantir.

Lease Impairment Loss

Nine Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Lease impairment loss $ 7,673 $ — $ 7,673 NM*

NM = not meaningful

During the nine months ended September 30, 2024, we recorded a $7.7 million impairment loss related to lease right-of-use (ROU) assets.

This loss resulted from moving out of a leased store facility, a leased research facility and an administrative facility in China, as we worked with landlords to negotiate the related lease terminations.

We have taken steps to optimize our operational footprint by reducing unnecessary overhead to align with current needs.

These initiatives, including lease terminations and renegotiations, have contributed to a more efficient cost structure and helped reduce ongoing lease obligations.

Loss on Disposal of Property, Plant and Equipment

Nine Months Ended September 30, Change

General and administrative expense decreased by $0.2 million for the three months ended March 31, 2025, compared to the same period in 2024.

The decrease was primarily driven by a $2.8 million reduction in insurance costs—mainly due to lower directors and officers’ insurance premiums, a $0.8 million reduction in allocation to cost of goods sold, and a $0.8 million decrease in information technology expenses.

These reductions were partially offset by a $2.6 million increase in compensation and a $1.3 million increase in professional service fees.

This net decrease reflects our ongoing cost-optimization initiatives aimed at improving the efficiency of general and administrative operations.

Key actions include renegotiating vendor agreements, consolidating office space to lower occupancy costs, and restructuring portions of our workforce.

These efforts have enabled us to reduce certain overhead costs, such as insurance and IT, while still supporting strategic investments in personnel and advisory services needed to execute on core business priorities.

Loss (gain) from disposal of property, plant and equipment

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Loss on disposal on property, plant and equipment $ 2,511 $ 3,698 $ (1,187) (32) %

Loss on disposal of property, plant, and equipment decreased by $1.2 million for the nine months ended September 30, 2024 compared to the same period in 2023.

In 2024, we recognized a $2.5 million loss on the disposal of property, plant, and equipment, while in 2023, there was a non-recurring write-off of $3.7 million, primarily related to construction-in-process assets that were not expected to be used as part of the start of production.

Loss (gain) on disposal on property, plant, and equipment $ 44 $ (87) $ 131 (150.6) %

Loss (gain) on disposal on property, plant, and equipment changed by $0.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

We dispose of equipment when the assets become obsolete, costly to maintain, or are replaced by more efficient technologies.

Change in Fair Value of Earnout Liability

Nine Months Ended September 30, Change

(in thousands) 2024 2023 Amount %

Change in fair value of earnout liability $ — $ 2,033 $ (2,033) (100) %

We did not have any earnout shares that were re-measured at fair value during the nine months ended September 30, 2024 .

As of August 25, 2023, upon an increase in our authorized shares of Class A Common Stock, we reclassified the earnout shares from liability classification to equity classification.

During the nine months ended September 30, 2023, we recognized $2.0 million as the change

in fair value of earnout liability for when the equity-linked instruments were classified as derivative liabilities from time to time.

Change in Fair Value of Notes Payable and Warrant Liabilities

Nine Months Ended September 30, Change

Change in Fair Value of Notes Payable, Warrant Liabilities, and Derivative Call Options

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Change in fair value of notes payable and warrant liabilities $ 28,927 $ 90,030 $ (61,103) (68) %

During the nine months ended September 30, 2024 and 2023, the fair value of our outstanding notes and warrants were revalued at lower values than in the preceding periods.

Our outstanding notes and warrants were remeasured at predominantly lower fair values due to pricing inputs that use the market price of our Common Stock and debt discount rate, which have experienced a decline.

The change in fair value during the nine months ended September 30, 2024 is smaller compared to the same period in 2023 due to a decline in the outstanding balance of notes payable during the nine months ended September 30, 2024 as compared with an increase in the outstanding balance of notes payable during the nine months ended September 30, 2023.

Change in fair value of notes payable, warrant liabilities, and derivative call options $ 51,458 $ 27,885 $ 23,573 84.5 %

The Change in fair value of notes payable, warrant liabilities, and derivative call options increased by $23.6 million for the three months ended March 31, 2025, compared to the same period in 2024.

Significant driving factor increasing the gain on the change in fair value year over year are (1) the SPA Portfolio Note warrants and (2) the issuance of the Incremental Warrants.

During the three months ended March 31, 2025 we recognized a $13.6 million gain from the change in fair value of the Incremental Warrants.

There was no comparable instrument outstanding during the three months ended March 31, 2024.

During the three months ended March 31, 2025 we recognized a $6.4 million gain from the change in fair value of the SPA Portfolio Note warrants compared to a $0.2 million gain during the same period in 2024.

This increase was largely driven by the year-over-year growth in the number of SPA Portfolio Note warrants outstanding.

Beginning in the second half of 2024, we began issuing SPA Portfolio Note warrants equal to 100% of the shares issuable upon conversion of the aggregate principal amount of the applicable SPA Portfolio Note, significantly increasing the number of warrants outstanding year over year.

As of March 31, 2025 there were 35,260,186 SPA Portfolio Note warrants outstanding compared to 13,968 outstanding as of March 31, 2024.

These increases are offset by a reduction in gain from the change in fair value recognized on our SPA Portfolio Notes and the recognition of losses upon the issuance of new SPA Portfolio Notes during the three months ended March 31, 2025.

The principal balance of SPA Portfolio Notes outstanding decreased from $96.6 million as of March 31, 2024, to $48.0 million as of March 31, 2025, contributing to the reduced gain from the change in fair value.

Change in Fair Value of Related Party Notes Payable and Related Party Warrant Liabilities

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Change in fair value of related party notes payable and related party warrant liabilities $ 315 $ 5,110 $ (4,795) (94) %

During the nine months ended September 30, 2024 and 2023, the fair value of our outstanding related party notes and warrants were revalued at lower values than in the preceding periods.

The change in fair value during the nine months ended September 30, 2024, is smaller compared to the same period in 2023 due to a decline in the outstanding balance of related party notes payable during the nine months ended September 30, 2024 as compared with an increase in the outstanding balance of related party notes payable during the nine months ended September 30, 2023.

Change in fair value of related party notes payable, warrant liabilities, and derivative call options $ (277) $ (7) $ (270) 3857.1 %

The Change in fair value of related party notes payable, warrant liabilities, and derivative call options increased by $0.3 million for the three months ended March 31, 2025, when compared with the same period in 2024.

Significant driving factors include (1) The issuance of the related party 2025 March Unsecured SPA Notes, warrants, and Incremental Warrants and (2) the recognition of day-one losses upon the issuance of related party 2025 March Unsecured SPA Notes and associated instruments during the three months ended March 31, 2025.

We issued $1.9 million of related party SPA Portfolio Notes in March 2025.

Upon issuance the Company recognized a loss of $1.1 million, as the combined fair value of the SPA Portfolio Note, SPA Portfolio Note Warrant, and Incremental Warrant exceeded the cash proceeds received.

These issuance-date losses were offset by gains from the remeasurement of related party notes payable, related party warrant liabilities, and related party Incremental Warrants as of March 31, 2025.

The fair value of our related party instruments declined during the period ended March 31, 2025, primarily due to a 53% drop in our Class A Common Stock price over the quarter, including a 13% decline during the three months ended March 31, 2025 when related party debt activity occurred.

There was not significant related party debt activity during the three months ended March 31, 2024.

Loss on Settlement of Notes Payable

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Loss on settlement of notes payable $ (15,920) $ (11,403) $ (4,517) 39.6 %

The decrease in the loss on settlement of notes payable during the nine months ended September 30, 2024 was driven by smaller losses on extinguishment resulting from the modification of our notes payable accounted for as an extinguishment pursuant to the guidance in ASC 470-50, Debt—Modifications and Extinguishments , and a lower conversion volume during the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, we incurred a loss on extinguishment of $2.7 million as a result of entering into the Waiver Agreement, and noteholders converted $96.3 million of notes payable.

During the nine months ended September 30, 2023, we incurred a loss on extinguishment of $11.4 million as a result of the Eighth Secured SPA Amendment, and noteholders converted $200.4 million of notes payable.

Loss on Related Party Notes Payable

Nine Months Ended September 30, Change

The $4.5 million increase in Loss on settlement of notes payable for the three months ended March 31, 2025, was driven by higher conversion activity compared to the same period in 2024, as well as a greater loss per dollar of principal converted.

During the three months ended March 31, 2025, noteholders converted $20.4 million of principal, compared to $18.3 million during the same period in 2024.

Loss on Settlement of Related Party Notes Payable

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Loss on related party notes payable $ (14,295) $ (17,248) $ 2,953 (17) %

During the nine months ended September 30, 2024, related party noteholders converted $0.7 million of related party notes payable into 1,324,292 shares of our Class A Common Stock, and we recognized a loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument.

In addition, as discussed in Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements , we also recognized a $14.1 million loss on related party notes from the recognition of interest and penalties and the increase of

principal due to our breach of the agreement with Chongqing Leshi Small Loan Co., Ltd.

There was no comparable related party loss in the comparable prior year period.

In May 2023, we entered into Unsecured SPA Notes with Metaverse Horizon Limited (“MHL”), who is a related party, and V W Investment Holding Limited (“V W Investment”) .

During the nine months ended September 30, 2023, MHL converted Unsecured SPA Notes with an aggregate principal balance of $18.7 million into 602,947 shares of Class A Common Stock, and we recognized a loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument.

Loss on settlement of related party notes payable $ (1,180) $ (14,295) $ 13,115 (91.7) %

During the three months ended March 31, 2025 a related party converted a $1.5 million note in exchange for 1,352,767 shares of our Class A Common Stock.

We recognized a $1.2 million Loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument During the three months ended March 31, 2024 a related party converted notes payable, with an aggregate principal balance of $0.7 million in exchange for 33,107 shares of our Class A Common Stock.

We recognized a $0.2 million Loss on settlement of related party notes payable.

In addition, as discussed in Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements, we also recognized a $14.1 million loss on related party notes related to interest, penalties, and principal increases resulting from our breach of the agreement with Chongqing Leshi Small Loan Co., Ltd.

(“Chongqing”).

Interest Expense

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Interest expense $ (2,302) $ (2,225) $ (77) 3.5 %

Interest expense increased by $4.8 million for the nine months ended September 30, 2024 c ompared to the same period in 2023.

This increase was p rimarily due to financial obligations associated with the Hanford, California manufacturing facility.

We pursued a sale-leaseback arrangement for this facility to generate liquidity for operational and facility enhancements.

However, due to conditions within the sale-leaseback agreement, the transaction was treated as a financing arrangement under GAAP, resulting in interest expense rather than lease expense.

This arrangement did not exist during the same period in 2023.

Interest expense increased by $0.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

This increase was primarily due to financial obligations associated with the FF ieFactory California manufacturing facility in Hanford, California.

Related Party Interest Expense

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Related party interest expense $ — $ (5,094) $ 5,094 (100.0 %)

Related party interest expense increased by $7.7 million for the nine months ended September 30, 2024 c ompared to the same period in 2023, primarily due to interest expense due to our loan with Chongqing, a related party.

Since the default, we continue to accrue all relevant interest and penalties.

Other/(Expense) Income, Net

Nine Months Ended September 30, Change

Related party interest expense decreased by $5.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

The decrease was primarily driven by our default in the first quarter of 2024 on the loan with our related party lender, Chongqing, which triggered retroactive interest charges and penalties under the prior agreement.

Under the revised loan agreement, no interest is incurred unless the Company defaults.

Other Expense, net

Three Months Ended March 31, Change

(in thousands) 2025 2024 Amount %

Other income/(expense), net $ 599 $ (1,922) $ 2,521 (131) %

Other income was $0.6 million for the nine months ended September 30, 2024, compared to Other expense of $1.9 million for the same period in 2023.

The $0.6 million of Other income for the nine months ended September 30, 2024 and the $1.9 million of Other expense for the same period in 2023 were primarily attributable to the revaluation of foreign currency transactions denominated in non-U.S.

currencies assessed at the end of each period.

During the nine months ended September 30, 2024, the U.S.

dollar exchange rate to the Chinese currency CNY declined, resulting in a foreign currency transaction gain from the revaluation of foreign currency transactions, which was recorded as Other income.

During the nine months ended September 30, 2023 , the U.S.

Other income, net $ 1,784 $ 530 $ 1,254 236.6 %

Other income, net increased by $1.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

During 2025, the U.S.

dollar’s continued strengthening against the Chinese yuan (CNY) resulted in a foreign currency transaction loss within Other income, net.

However, the extent of the dollar's appreciation was less than in 2024, leading to a smaller foreign currency transaction loss and contributing to the overall reduction in Other income, net.

Liquidity and Capital Resources

1 unchanged sentence

We have evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Unaudited Condensed Consolidated Financial Statements are issued.

Based on our recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q were issued.

Based on our recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these Unaudited Condensed Consolidated Financial Statements were issued.

Preparation of Financial statements

The Unaudited Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.

Accordingly, the Unaudited Condensed Consolidated Financial Statements have been prepared on

a basis that assumes we will continue as a going concern and that contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Accordingly, the Unaudited Condensed Consolidated Financial Statements have been prepared on a basis that assumes we will continue as a going concern, and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Capital Investment, SPA Portfolio Notes, and Future Equity Plans

We have and will continue to devote substantial effort and, to the extent available, capital resources, to strategic planning, engineering, design, and development of our electric vehicle platform, development of vehicle models, finalizing the build out of the FF ieFactory California manufacturing facility, and capital raising.

We incurred cumulative losses from operations, negative cash flows from operating activities, and have an accumulated deficit of $4,193.1 million, an unrestricted cash balance of $7.3 million and a negative working capital position of $168.3 million, excluding restricted cash, as of September 30, 2024.

During 2023, we delivered our first vehicles but expect to continue generating significant operating losses for the foreseeable future.

We have funded our operations and capital needs primarily through the issuance of related party notes payable and notes payable (see Note 7, Notes Payable and Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements), convertible notes, and the sale of common stock.

Pursuant to the Secured SPA, the Unsecured SPA, the Unsecured Streeterville SPA, the FFVV Joinder, and the Senyun Joinder (collectively the “SPA Commitments”) (see Note 7, Notes Payable and Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements), we obtained commitments from several investors.

As of September 30, 2024, the SPA Commitments totaled $554.5 million, of which $365.3 million was funded, $189.2 million remained to be funded, and $38.7 million in principal was outstanding.

As of September 30, 2024, Optional Commitments under the SPA Commitments totaled $366.0 million, of which $48.4 million was funded, $317.6 million remained to be funded, and $10.4 million was outstanding.

The remaining amounts to be funded as of September 30, 2024, are subject to the achievement of delivery milestones, satisfaction of closing conditions, and satisfaction or waiver of other conditions.

We have incurred cumulative losses from operations, negative cash flows from operating activities, and we have an accumulated deficit of $4,324.6 million, an unrestricted cash balance of $9.5 million and a negative working capital position of $112.3 million as of March 31, 2025.

During 2025 , we funded our operations and capital needs primarily through the issuance of notes payable and related party notes payable convertible notes (see Note 7, Notes Payable and Note 8, Related Party Transactions ), and the sale of Class A Common Stock.

Debt Commitments under SPA Portfolio Notes and Other Notes

SPA Portfolio Notes:

We have issued various financing arrangements collectively known as the SPA Portfolio Notes.

These are categorized as follows:

(i) Secured SPA Notes;

(ii) 2023 Unsecured SPA Notes;

(iii) Junior Secured SPA Notes;

(iv) and 2024 Unsecured SPA Notes.

As of March 31, 2025, the SPA Portfolio Notes were in good standing.

Pursuant to the SPA Portfolio Notes commitments (collectively the “SPA Commitments”) (see Note 7, Notes Payable and Note 8, Related Party Transactions ), we obtained commitments from several investors.

On March 31, 2025, the SPA Commitments totaled $655.5 million, of which $427.7 million was funded, $227.8 million remained to be funded, and $45.8 million in principal was outstanding.

On March 31, 2025, optional commitments under the SPA Commitments totaled $467.0 million, of which $50.9 million was funded, $386.1 million remained to be funded, and $2.5 million was outstanding.

The remaining amounts to be funded as of March 31, 2025 are subject the achievement of delivery milestones, satisfaction of closing conditions, resolving disputes with investors, and satisfaction or waiver of other conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes.

We may be unable to satisfy the closing conditions under the SPA Commitments or obtain additional incremental convertible senior secured note purchasers under the SPA Commitments or other debt or equity financing in a timely manner, on acceptable terms, or at all.

On September 5, 2024, we entered into another Securities Purchase Agreement (the “Junior Secured SPA”) with certain institutional investors as purchasers (the “Junior Secured SPA Investors”).

Pursuant to the Junior Secured SPA, the Junior Secured SPA Investors agreed to purchase certain secured promissory notes (the “Junior Secured SPA Notes”), warrants, and incremental warrants for approximately $30.0 million, of which $22.5 million was paid in cash and approximately $7.5 million was converted from a previous loan to us, in two closings.

As of September 30, 2024, we received $20.8 million of the commitments and the remaining commitments were received by October 30, 2024.

Additionally, the Junior Secured SPA Investors were given an incremental warrant to purchase additional Junior Secured SPA commitments, up to amounts originally funded (the “Incremental Warrants”), at the same terms and conditions as the original Junior Secured SPA Notes.

The Incremental Warrants are exercisable immediately, entirely at the option of the holder, with a term of one year to purchase the additional Junior Secured SPA Notes at an exercise price equal to the principal amount of the Junior Secured SPA Notes issued to the Junior Secured SPA Investor.

On November 11, 2022, we entered into a three-year Standby Equity Purchase Agreement (the “SEPA”) with YA II PN Ltd.

(“Yorkville”).

Under terms of the SEPA, we may, at our option, issue and sell from time to time up to $200.0 million (which can be increased up to $350.0 million in the aggregate under our option) of Class A Common Stock to an affiliate of Yorkville Advisors, subject to certain limitations.

As of September 30, 2024, we had the right to issue and sell up to an additional $192.5 million, or $342.5 million if we exercise our option under the SEPA, of Class A Common Stock under the SEPA.

Other Financing Arrangements and Related Party Notes:

Additional financing is provided via convertible debt instruments, equipment financing arrangements, and related party notes that support our operations and capital expenditures.

As of March 31, 2025, all notes were in good standing.

Standby Equity Purchase Agreement, At-The-Market Offerin g , and Equity Issuance Constraints

Standby Equity Purchase Agreement

On November 11, 2022, we entered into the SEPA, which expires in November 2025.

Under the terms of the SEPA, we may, at our option, issue and sell from time to time up to $200.0 million (which can be increased up to $350.0 million in the aggregate at our option) of Class A Common Stock to Yorkville, subject to certain limitations.

As of March 31, 2025, we had the right to issue and sell up to an additional $192.5 million, or $342.5 million if we exercise our option under the SEPA.

At-The-Market Offerin g

In addition, on September 26, 2023, we entered into a sales agreement with Stifel, Nicolaus & Company, Incorporated, B.

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and Maxim Group LLC, as sales agents, to sell shares of Class A Common Stock, from time to time, with aggregate gross sales proceeds of up to $90.0 million pursuant to the Registration Statement as an “at-the-market” offering under the Securities Act (the “ATM Program”).

The ATM Program was the primary source of liquidity for us during the period from September 2023 through December 2023.

Under applicable SEC rules and regulations, because we failed to timely file our Form 10-K and the Quarterly Report Form 10-Q for the quarter ended March 31, 2024, we are not eligible to use the S-3 registration process, which restricts our ability to raise capital through that streamlined method of offering securities and cannot access the ATM Program.

As such, our current primary source of liquidity is the issuance of various convertible note instruments.

Our ability to issue and sell additional shares of common stock or warrants under the SEPA and ATM Program is constrained by the number of authorized shares of our common stock.

We must consider shares issuable under convertible debt, warrants or other obligations with equity rights.

In addition, equity issuances can potentially trigger provisions under the SPA Commitments and Junior Secured SPA Notes that increase the number of shares to be issued upon conversion and reduce the strike price of related warrants.

Under applicable SEC rules and regulations, because we failed to timely file our Form 10-K for the year ended December 31, 2023, as well as our Form 10-Q for the quarter ended March 31, 2024, we will not be eligible to access the ATM Program until August 1, 2025, at the earliest.

Equity Issuance Constraints

Our ability to issue and sell additional shares of Class A Common Stock or warrants to support ongoing capital needs is further constrained by the number of authorized shares.

In addition to outstanding shares, we must also consider shares reserved for issuance under convertible debt, warrants or other obligations with equity rights.

In addition, equity issuances can potentially trigger various anti-dilution features in our debt and equity instruments that increase the number of shares to be issued and/or reduce the exercise price.

This could result in us having inadequate authorized shares to meet our outstanding commitments.

We project that we will require substantial additional funds to continue operations and support production of the FF 91.

If we are unable to find additional sources of capital, we will not have sufficient resources to fund our outstanding obligations and continue operations and we will likely have to file for bankruptcy protection and our assets will likely be liquidated.

Our equity holders would likely not receive any recovery at all in a bankruptcy scenario.

Capital Needs, FX Series Production, and Bankruptcy Risk

We project that we will require substantial additional funds to continue operations and support production of the FF 91, and we also plan to initiate production of our FX Series of vehicles.

If additional capital is not secured, we will not have sufficient resources to meet our obligations and continue operations, which could result in bankruptcy protection and asset liquidation, with equity holders receiving little to no recovery.

However, the anticipated start of FX Series production is expected to generate new revenue streams and enhance operational performance, thereby partially mitigating near-term cash flow pressures.

However, if additional capital is not secured, we will not have sufficient resources to meet our obligations and continue operations, which could result in bankruptcy protection and asset liquidation, with equity holders receiving little to no recovery.

Funding Alternatives and Risks

We continue to explore various funding and financing alternatives to fund our ongoing operations and to ramp up production.

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In addition to the risk that our assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and ongoing legal risks.

Capital needs to fund development of our remaining product portfolio will highly depend on the market success and profitability of the FF 91 and our ability to accurately estimate and control costs.

Apart from the FF 91 series, substantial additional capital would be required to fund operations, research, development, and design efforts for future vehicles.

Since April 2023, we have been in default on, and since January 1, 2024, we have been in breach of, our debt agreement with Chongqing Leshi Small Loan Co., Ltd., a related party, with an outstanding principal balance of $7.7 million and interest payable of $20.0 million as of September 30, 2024.

During 2024, we were also in default on our Unsecured Convertible Note obligations and various related party notes (see Note 7, Notes Payable and Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements).

Due to the cross default provisions of the SPA Notes and Junior Secured SPA Notes, we were and have been in default on the SPA and Junior Secured Commitments and we are presenting the related notes as current.

Capital needs to fund development of our remaining product portfolio will highly depend on the market success and profitability of the FF 91 and the launch of the FX series, and our ability to accurately estimate and control costs.

Apart from the FF 91 series and FX series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

In addition, elevated U.S.

import tariffs on electric vehicle components sourced from China could increase our future manufacturing costs as production of the FX Series and other future vehicle models are introduced.

While tariffs did not materially impact cost of goods sold for the three months ended March 31, 2025, due to limited production volume, continued reliance on China-based suppliers may contribute to higher input costs, pressure gross margins, and increase the Company's future funding needs.

Going Concern and Future Capital Strat egy

Despite our diversified financing structure - including the SPA Portfolio Notes, convertible debt instruments, and equipment financing, and targeted inflows from new debt, and anticipated equity - and our current cash flow projections, our recurring operating losses and continuing negative cash flows from operations continue to raise substantial doubt about our ability to continue as a going concern.

Sources of Liquidity

As of September 30, 2024, we maintained unrestricted cash on hand totaling $7.3 million, which was held for working capital and general corporate purposes.

We also have access to various sources of additional capital, including the SEPA, the ATM Program, the Secured SPA, the Unsecured SPA, the Unsecured Streeterville SPA, the FFVV Joinder, and the Senyun Joinder (collectively the “SPA Commitments”), the Junior Secured SPA and other unsecured convertible notes.

Our current primary source of liquidity is the issuance of various convertible note instruments pursuant to the SPA Commitments and the Junior Secured SPA.

Our ability to access these sources of capital and further information on amounts available is discussed in Note 2, Liquidity and Capital Resources and Going Concern in the notes to the Unaudited Condensed Consolidated Financial Statements.

As of March 31, 2025, our principal source of liquidity was cash on hand totaling $9.5 million, which was held for working capital and general corporate purposes.

We also have access to various sources of additional capital, including the SEPA and the SPA Commitments.

Our ability to access these sources of capital and further information on amounts available is discussed in Note 2, Liquidity and Capital Resources and Going Concern, of the notes to the Consolidated Financial Statements included in this Form 10-Q.

Significant Related Party Notes Payable and Notes Payable Facilities

We have been significantly funded by notes payable from related parties and third parties.

The related parties include employees as well as affiliates of employees and affiliates and other companies controlled or previously controlled by our founder and Chief Product and User Ecosystem Officer.

For more information on the outstanding related party notes payable and notes payable as well as the related schedules of maturities, see Note 7, Notes Payable , and Note 8, Related Party Transactions , of the notes to the Unaudited Condensed Consolidated Financial Statements.

Related party notes payable consists of the following as of September 30, 2024:

(in thousands) Contractual

Date Contractual

Related party notes – Unsecured Convertible April 8, 2024 0.0427 $ 1,302

Related party notes – China December 2023 18.0% $ 7,706

Related party notes – China various other Due on Demand —% 3,805

Related party notes – Convertible FFGP May 2024 4.27% 250

Related party notes – FFGP Various 2024 4.27% - 5.27% 1,576

Related party notes – Other December 2024 12.0% 75

Related party notes payable, current (14,714)

Related party notes payable, less current $ —

We have entered into notes payable agreements with third parties, which consist of the following as of September 30, 2024:

For more information on the outstanding related party notes payable and notes payable as well as the related schedules of maturities, see Note 7, Notes Payable , and Note 8, Related Party Transactions , of the notes to the Consolidated Financial Statements included in this Form 10-Q.

We have entered into notes payable agreements with third parties, which consist of the following as of March 31, 2025:

(in thousands) Contractual

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Secured SPA Notes Various 10% - 15% $ 2,500 $ 139 $ (250) $ 2,389

Unsecured SPA Notes *

Various dates in 2029 10%-15% 22,802 398 (2,350) 20,850

Junior Secured Notes September 2029 10% 20,769 (11,341) — 9,428

Collateralized loan October 2028 28% 4,805 — (419) 4,386

Junior Secured SPA Notes September 2029 10% 13,431 55 (7,426) 6,060

2024 Unsecured SPA Notes Various through January 2030 10% 30,015 12,279 (30,964) 11,330

March 2025 Unsecured SPA Notes April 2030 10% 2,000 (44) (1,193) 763

Notes payable – China other

Due on Demand —% 4,132 — — 4,132

Auto loans October 2026 7% 58 — — 58

$ 52,078 $ 12,429 $ (39,833) $ 24,674

Notes payable, current portion (56,086)

Notes payable, less current portion $ 3,800

* includes amounts attributed to the Unsecured Streeterville SPA

All notes, except amounts due in greater than 12 months pursuant to the Collateralized Loan, are classified as current as of September 30, 2024.

Notes payable, current $ 4,132

Notes payable, long-term portion $ 20,542

Related party notes payable consists of the following as of March 31, 2025:

(in thousands) Contractual

Date Contractual

Unsecured Convertible Note June 2025 (3) 4.27% $ 451

2025 March Unsecured SPA Notes April 2030 10.0% $ 143

Notes Payable — China April 2027 18.0% 4,215

Notes Payable on Demand — China Due on Demand —% 413

FFGP Note Various 2024 4.27% - 5.27% 1,576

Convertible FFGP Note May 2024 4.27% 250

Other Notes Due on Demand 12.0% 75

Related party notes payable, current $ 4,298

Related party notes payable, long-term $ 2,825

Cash Flow Analysis

Presented below is a summary of FF’s cash flows for the periods indicated:

(in thousands) Nine Months Ended

September 30,

Net cash provided by (used in):

Three Months Ended

(in thousands) 2025 2024

Net cash (used in) provided by:

Operating activities $ (20,295) $ (14,719)

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Operating Activities

We continue to experience negative cash flows from operating activities as we design and develop our vehicles and build our infrastructure in both the United States and China.

Cash flows from operating activities are significantly impacted by our capital investments to support business growth, particularly in enhancing the production capabilities of our electric vehicles, corporate planning, and general and administrative functions.

Additionally, our operating cash flows are influenced by working capital requirements to support growth, as well as fluctuations in personnel-related expenses, accounts payable, accrued interest, other current liabilities, deposits, and other current assets.

Net cash used in operating activities was $51.8 million for the nine months ended September 30, 2024 as compared to $240.4 million for the nine months ended September 30, 2023, representing an improvement of $188.6 million .

This improvement was primarily driven by a $113.4 million reduction in net loss for the nine months ended September 30, 2024, compared to the prior period.

Significant non-cash adjustments to net loss included a $61.5 million decrease in fair value adjustments on notes payable and warrant liabilities and a $25.8 million increase in depreciation and amortization.

These were partially offset by an $87.4 million decrease in losses on the settlement of notes payable and a $14.9 million gain from the settlement of previously accrued R&D expenses.

Changes in operating assets and liabilities also significantly impacted cash flows from operating activities.

Key contributors included a $37.7 million change in inventory balances, a $26.9 million change in accrued expenses and other current liabilities, a $20.4 million change in deposits, and a $11.0 million change in other current and non-current assets, partially offset by a $15.6 million change in accounts payable.

We continue to experience negative operating cash flows as we advance the design and development of our vehicles and expand our infrastructure in both the United States and China.

Our operating cash flows are significantly affected by fluctuations in working capital components, including changes in personnel expenses, accounts payable, accrued interest, other current liabilities, deposits, and current assets.

For the three months ended March 31, 2025, net cash used in operating activities was $20.3 million, compared to $14.7 million for the same period in 2024, reflecting a $5.6 million increase in cash outflows .

The reduction of $37.9 million in Net loss is an improvement in 2025 compared to the same period in 2024 ;

however, this figure includes various non-cash transactions that are excluded when calculating cash flow from operating activities.

Non-cash adjustments:

Non-cash adjustments decreased by $29.3 million for the three months ended March 31, 2025 compared to the same period in 2024 .

This decrease was comprised of a $23.6 million decrease in fair value adjustments on Change in fair value of notes payable, warrant liabilities, and derivative call options, and a $13.1 million decrease in Loss from settlement of related party notes payable.

These adjustments were partially offset by a $4.5 million increase in Loss from settlement of notes payable.

As these adjustments do not represent actual cash changes, they are disclosed for reconciliation purposes consistent with the cash flow statement.

Changes in working capital:

Changes in working capital decreased by $13.6 million for the three months ended March 31, 2025 compared to the same period in 2024.

For the three months ended March 31, 2025, changes in working capital included unfavorable shifts in our operating assets and liabilities.

Notable contributors to the change were a $4.4 million change in Inventory balances, a $8.8 million change in Deposits, and a $5.1 million change in Accrued interest expense.

These were partially offset by a $5.2 million change in Accrued expenses and other current and non-current liabilities.

While these figures are detailed in the cash flow statement, they underscore the critical role that effective working capital management has played in reducing our operating cash outflows.

The reductions in cash outlays for working capital purposes result from our cost-saving and cash management measures.

Investing Activities

Net cash used in investing activities was $0.6 million and $10.8 million for the nine months ended September 30, 2024 and 2023, respectively, representing a decrease of $10.3 million .

This change was driven by a significant decrease in the acquisition of fixed assets due to the reduction of liquidity.

Net cash used in investing activities was $1.6 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

This change was driven by a increase in the acquisition of fixed assets due to the reduction of liquidity.

Financing Activities

Given the challenging financing landscape, we continue to pursue strategic opportunities to strengthen our cash position and support our growth objectives, primarily utilizing a mix of convertible loans and non-convertible funding alternatives.

Net cash provided by financing activities was $55.7 million and $237.6 million for the nine months ended September 30, 2024 and 2023, respectively, reflecting a decrease of $181.9 million.

Proceeds from notes payable in the nine months ended September 30, 2024 totaled $54.0 million, down from $208.7 million in the same period in 2023, a reduction of $154.6 million.

Proceeds from related-party notes payable for the nine months ended September 30, 2024 were $3.1 million, down from $19.8 million in the same period in 2023, a reduction of $16.7 million.

Furthermore, cash generated from common stock sales decreased by $8.5 million for the nine months ended September 30, 2024 compared to the same period in 2023.

Amid a challenging financing environment, we are actively seeking strategic opportunities to boost our cash reserves and support growth using a mix of convertible loans and non-convertible funding.

For the three months ended March 31, 2025, financing activities provided a net cash inflow of $24.6 million, compared to a net cash inflow of $12.0 million in 2024—an increase of $12.6 million.

The improvement reflects the Company’s continued ability to secure financing despite a challenging capital markets environment.

In 2025, proceeds from notes payable were $22.0 million, up by $13.0 million from $9.0 million in 2024 .

Our proceeds from related party notes payable decreased to $1.9 million in 2025 from $3.0 million in 2024, a decrease of $1.1 million.

Moreover, financing proceeds from other financial obligations transactions totaled $1.1 million for the three months ended March 31, 2025 , compared to no similar proceeds for the three months ended March 31, 2024 .

Effect of Exchange Rate Changes on Cash and Restricted Cash

The effects of exchange rate changes on cash and restricted cash was immaterial for the nine months ended September 30, 2024 and $3.7 million for the nine months ended September 30, 2023.

The effects of exchange rate changes on cash and restricted cash result from fluctuations in the translation of assets and liabilities denominated in foreign currencies, primarily Chinese currency CNY .

The exchange rates effect on cash and restricted cash was $0.4 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

The effects of exchange rate changes on cash and restricted cash result from fluctuations on the

translation of assets and liabilities denominated in foreign currencies, primarily Chinese Yuan.

Fluctuations in exchange rates against the U.S.

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Off-Balance Sheet Arrangements

We did not have any material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Thus, we did not have any off-balance sheet arrangements as of September 30, 2024 and December 31, 2023.

We did not have any material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Thus, we did not have any off-balance sheet arrangements as of March 31, 2025 and 2024.

Critical Accounting Estimates

The preparation of our Unaudited Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities, and the reported amounts of expenses during the reporting period.

Management has based its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values that are not readily apparent from other sources.

The preparation of our Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2025, in accordance GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of expenses during the reporting period.

Management bases these estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Changes in the accounting estimates are reasonably likely to occur from period to period.

Accordingly, actual results could differ significantly from the estimates made by our management.

To the extent that there are material differences between these estimates and actual results, future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

Given the global economic climate, estimates are subject to additional volatility.

Changes in accounting estimates are reasonably likely to occur from period to period.

Accordingly, actual results could differ significantly from management’s estimates, and such differences may materially affect our financial position, results of operations, or cash flows.

Given current global macroeconomic and geopolitical conditions, our estimates are subject to additional variability and volatility.

Critical accounting estimates are defined as estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

For a description of our critical accounting estimates, refer to the section titled “Critical Accounting Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, of the Form 10-K.

As of the date of this report, there have been no changes to our critical accounting estimates described in the Form 10-K that have had a material impact on our Unaudited Condensed Consolidated Financial Statements and related footnotes.

Recent Accounting Pronouncements

See the section titled “ Recent Accounting Pronouncements ” in Note 1, Nature of Business and Organization and Basis of Presentation in our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q for a discussion about recent accounting pronouncements that are determined to be applicable to us.

See the sections titled “ Recent Accounting Pronouncements” in Note 1, Nature of Business and Organization, Basis of Presentation, and Summary of Significant Accounting Policies in our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q for a discussion about our recently adopted accounting pronouncements and the recently issued accounting pronouncements not yet adopted which are determined to be applicable to us.

Quantitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of Regulation S-K, FF is not required to provide the information required by this Item as it is a “smaller reporting company.”

Pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information under this Item as we qualify as a “smaller reporting company.”

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What changed 10-Q

Item 2. Management’s Discussion and Analysis