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New Chinese-Backed Automaker Challenges Tesla

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November 9
8:16 PM 2015

Faraday Future comes as a new challenger for Tesla in building electric car. The Chinese-backed startup company has invested $1 billion to build factory in America. Other than electric car, Faraday Futures also prepares "rolling smartphone" as a different business model in automotive industry.

Elon Musk, Tesla founder, has found another competitor to take on his dream in building electric vehicle (EV). Faraday Future arise as a solid competitor to build electric car with more arsenal and better prepared. Wall Street Journal reported the California-based company has recruited personnel from BMW AG and General Motors. Faraday Future is also renovating former Nissan Motor Co.'s sales headquarters in Southern California to be its home location, along with their future manufacturing plant in U.S., Faraday plans to begin production in 2017. 

Earlier, Tesla found a very strong competitors from various Chinese automaker companies. In 2010, Warren Buffet through his Berkshire Hathaway Inc. surprisingly backed up Chinese automaker BYD to develop electric car in their Shenzen factory. So far, BYD has successfully increased its battery storage capacity into a level Tesla could not achieve. The next one is in 2014. When Chinese automotive giant, Wanxiang acquired Fisker Automotive, builder of Karma hybrid car. Wanxiang purchased Fisker at $149.2 million after Unites States court declared Fisker into backruptcy in 2013. 

This 2015, three companies with connection to Chinese automotive enter EV industry. In August, NextEV, Chinese startup prepared to launch its electric vehicle lineup after receiving huge financial backup from big names like Sequoia. Afterward in September, Beijing Automotive Industry Holding Company (BAIC), one of the largest Chinese state-owned automakers opened a factory and research center in Silicon Valley. BAIC is teaming up with Ateiva Inc., company led by a former Tesla Engineer, Bernard Tse. Then, Faraday Future comes to make competition more interesting.

Faraday has been under the radar until they reveal financial backup from Chinese billionnaire Jia Yueting on Thursday. Bloomberg reported that Faraday already started $1 billion investment plan to build factory in USA. Location of the factory is to be decided later, either in California, Georgia, Louisiana and Nevada. More than that, Faraday offers a different business model. Nick Sampson, a former Tesla director who is now a Faraday Senior Vice President, envisions car as a rolling smartphone. A car with connectivity and autonomous driving. When a car is purchased, Faraday is seeking revenue from subscriptions, apps and other infotainment piped into the car. 

A better business is also reported from Warren Buffet's BYD. According to Forbes, BYD is reporting better sales and profits, while Tesla struggles with quality and sales volumes. Forbes mentioned it as affirmation of better business strategy from Warren Buffett, showing him to be more savvy than Elon Musk. 

After other electric vehicle companies give tough challenge to Tesla, Faraday Future is the latest to enter EV industry. Faraday also comes with a better plan, an advanced business model called "rolling smartphone." A business model which a revenue stream comes from subscription and other service related to car, rather than traditional automotive business model. 

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