Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )

From The Los Angeles Times

In an industrial corner of Gardena, near a credit union and pet cemetery, a small white sign in front of a metal building reads “Faraday Future,” with a number to call for deliveries.

It’s the only indication of the high-tech hive of activity inside, where a mysterious electric car start-up is taking shape. In sleek offices with white furniture, a cast of highly pedigreed executives and engineers — including former senior employees of Tesla Motors — is planning a $1-billion factory that will churn out the next luxury electric car.

“You have to be a little bit brave to do something like this,” said Richard Kim, head of design, who previously worked at BMW, Porsche and Audi. “We are going to make intelligent vehicles. We’re building a brand.”

The Faraday brand is tied to a Chinese multibillionaire with towering ambitions and an equally tall pile of cash.

The company declined to identify its ownership and investors, but a review of incorporation papers filed with the California secretary of state’s office links Faraday to a Chinese media company operated by Jia Yueting, an entrepreneur who founded Leshi Internet Information & Technology.

Jia is worth $7 billion, according to Forbes, which ranked him as China’s 17th richest person. He recently launched a line of smartphones and acquired a 70% stake in Yidao Yongche, an Uber-like car service in China.

The papers list Chaoying Deng, the woman who runs a Leshi affiliate in the U.S., as Faraday’s chief executive. Earlier this year, Jia told the Wall Street Journal that he wanted to develop a car that would rival Tesla.

A vendor working with the company in Gardena told The Times that Faraday hasn’t made any secret of its origin or its plans.

“They told us right off that this is China’s response to Tesla,” said the vendor, speaking on condition of anonymity because he was not authorized to speak for Faraday.

Faraday spokeswoman Stacy Morris confirmed that Chaoying Deng is the chief executive but said that she wasn’t involved in the day-to-day operations of the auto company.

“That’s just on paper,” Morris said.

What’s clear is that the company and its 400 workers, housed in Nissan’s former U.S. sales office, see themselves as a rival to Tesla, the Palo Alto maker of high-end electric cars.

It also plans a similar game plan — offering a single high-end model first, followed by a wider array of hopefully more affordable electric cars.

“It will be a halo vehicle that will establish our brand and identity as we move forward into a larger range of vehicles that fill the need of a larger population,” said Nick Sampson, a senior vice president at Faraday.

Sampson headed vehicle and chassis engineering for the Tesla Model S sport sedan, the only vehicle that that company has yet sold in large numbers. Other members of Faraday’s leadership team include Dag Reckhorn, a former Tesla senior manufacturing executive, and several engineers and designers who worked on BMW and General Motors electric cars.

Faraday poached a manager from another company owned by Tesla Chief Executive Elon Musk — Porter Harris, a battery engineer from Musk’s SpaceX rocket company in Hawthorne.

Tesla declined to comment Thursday on how a rival maker of high-end electric cars might affect its business.

Faraday said it plans to sell its first vehicle in 2017 and is eyeing factory locations including California, Georgia, Louisiana and Nevada.

The pedigree of Faraday’s leadership has helped lure investors, said Alan Baum, a West Bloomfield, Mich., auto analyst.

“It’s a lot of people who are notable for their prior experiences,” he said.

Sampson revealed almost no details about plans for the company’s first car, except that it will include some self-driving functions.

“We are starting from a clean sheet of paper and, being 100% electric, we won’t fit into any of the current categories of vehicles,” Sampson said. “We can look at what peoples’ needs are for the future and develop a vehicle around that.”

Like Tesla and other manufacturers, Faraday is talking to various states about economic incentives for opening a car factory, Sampson said. A contest for Tesla’s battery factory yielded a $1.3-billion economic development package from Nevada.

A $1-billion investment would be adequate to build a sizable auto factory, said James Rubenstein, an auto industry analyst and geography professor at Miami University in Oxford, Ohio. This year Volvo said it would spend about half that much on a plant in South Carolina that will open in 2018 and produce up to 100,000 cars annually.

The time is ripe for new entrants to get into the auto business, said Thilo Koslowski, who heads the automotive practice at Gartner Inc.

“Technologies are coming together at the right price points for all kinds of companies to get into the industry,” he said.

Electric vehicle designers don’t have to deal with all the moving parts of a gasoline engine and transmission or engineer an exhaust system, he said.

“You can almost use off-the-shelf stuff. You buy battery technology from suppliers like LG. Electric motors are easy to source,” Koslowski said. “And unlike a combustion engine car, you don’t need as much of a research and development and testing infrastructure.”

Nonetheless, it’s still daunting to break into the auto market against mature companies with massive dealership networks and existing customers.

“You have to convince consumers that the product is safe, exciting and that the company will be around to support the car,” he said.

In addition to selling cars, Faraday is looking at other business models, such as subscription or shared ownership services.

“People could buy into a subscription model where you order a car to come pick you up,” Morris said.

Sampson said driving is about to experience a period of “revolutionary change” as cars become more autonomous and traffic in big cities builds.

“With energy constraints, urban crowding and the increasingly intrinsic relationship we have with technology, today’s cars simply do not meet today’s needs,” Sampson said.

Tesla may be looking at this same market. In a conference call with analysts this week, Musk was asked whether he saw a business case for offering on-demand transit using Tesla-built vehicles.

“I think it’s quite a smart question, actually,” Musk said, but declined to answer directly, saying the strategy was not yet “fully baked.”

When it comes to building electric cars, Faraday will face stiff competition both from other start-ups and mature automakers. Tesla is expanding its product line and has just started manufacturing a second vehicle, the Model X crossover.

Meanwhile, Audi said it will enter the luxury electric vehicle market when it launches the Audi e-tron quattro sport utility in 2018.

And Karma Automotive, the new name of the company that built Fisker vehicles, has leased a large factory in Moreno Valley where it will build plug-in electric hybrid vehicles that could be for sale as early as the middle of next year.

The car company, which filed for bankruptcy protection in 2013 and was bought by Chinese auto parts giant Wanxiang Group a year later, has signed an 11-year lease worth an estimated $30 million in the Riverside County city, signaling a long-term commitment by the firm.