Faraday Future sues startup founded by former executives

Carmaker accuses Evelozcityof poaching talent and stealing intellectual property

Nick Sampson, senior vice president of research and development at Faraday Future (left) speaks as billioniare investor Jia Yueting looks on during the unveiling of the FF91 electric car at the 2017 Consumer Electronics Show. Photograph: Patrick T Fallon/Bloomberg

Nick Sampson, senior vice president of research and development at Faraday Future (left) speaks as billioniare investor Jia Yueting looks on during the unveiling of the FF91 electric car at the 2017 Consumer Electronics Show. Photograph: Patrick T Fallon/Bloomberg

 

Faraday Future, the electric carmaker run by Chinese entrepreneur Jia Yueting, is suing a startup founded by its former chief financial and technology officers for allegedly poaching talent and stealing valuable intellectual property.

Faraday accused former CFO Stefan Krause and ex-CTO Ulrich Kranz of soliciting at least 20 former employees to join a key rival they started, according to a complaint. Some employees brought technology secrets over to Evelozcity, the lawsuit says.

The lawsuit highlights internal strife at a company that debuted its prototype FF-91 in Las Vegas in 2017, claiming it could outrace a Tesla, then struggled to raise cash. It’s the latest in a series of challenges for Mr Jia, who’s been ordered back to China by regulators over unfulfilled loan obligations. The Netflix-like video service he founded, Leshi Internet Information and Technology, just experienced its fifth straight day of 10 per cent share declines.

‘Inflammatory accousations’

Evelozcity said it did not have nor need technology from Faraday Future.

“This complaint continues Faraday’s pattern of hurling false and inflammatory accusations against us,” it said in a statement. “We will respond to the many recklessly inaccurate allegations in this desperate lawsuit at the appropriate time.”

Faraday said in a statement it hired Mr Krause in March 2017 to raise funding and oversee its finances. Mr Kranz was hired several months later. But by the fall, after meetings with investors, Mr Krause was demanding Mr Jia step down and give them operational control of the company, according to the filing.

Much of the case revolves around the date ofMr Krause’s departure. He’s said he quit in October while Faraday said in its claim that rival startup Evelozcity was incorporated on or about November 7th, a day after Mr Krause asked its then-head of human resources to back-date his resignation by two weeks. Faraday said in a November 10th release it had terminated Mr Krause’s employment over “malfeasance” with immediate effect, without citing a date.

Staff who left Faraday for Evelozcity were encouraged to download thousands of confidential documents and trade secrets from vendor databases to technical documents, Faraday said, calling for a jury trial.

As part of the case, Faraday said the company was able to obtain additional funding without Jia stepping down or Krause’s assistance, without stating the amount and source of the money. The company’s long-awaited flagship will hit the market by the beginning of 2019 but additional models are still more than two years away, it added. - Bloomberg