The US-based automotive company was founded in 2014, has backing from China and showcased its single-seater FFZERO1 concept car in January this year.
Earlier this month it announced ex-Ferrari Formula 1 team principal Marco Mattiacci as its global chief brand & commercial officer.
As part of the tie-up Dragon, which finished second in the inaugural FE teams' championship, will be renamed Faraday Future Dragon Racing.
Its inaugural powertrain will be badged the Penske 701-EV.
More details of the partnership, which brings a US manufacturer into FE for the first time, are expected later on Friday in the build-up to the FE season finale in Battersea Park.
Faraday Future first became involved in FE by sponsoring April's race in Long Beach, which is close to the company's California headquarters.
TEAM AGURI REPLACED BY TECHEETAH
The Faraday Future news comes as part of the FIA's confirmation of the 10 FE entries for the 2016/17 campaign.
Following the sale of its entry to Shanghai-based China Media Capital, Team Aguri will be replaced by the Techeetah entry in season three.
NEXTEV TCR will now be known as NextEV NIO, reflecting the company's completed takeover of the original Team China Racing entry, which ran Nelson Piquet Jr to the inaugural drivers' title.
Jaguar Racing's first FE powertrain will be called the Jaguar I-Type 1.
2016/17 FORMULA E ENTRY LIST
ABT Schaeffler Audi Sport - ABT Schaeffler FE02
Andretti Formula E - Andretti Technologies ATEC-02
Faraday Future Dragon Racing - Penske 701-EV
DS Virgin Racing - DS-Virgin DSV-02
Jaguar Racing - Jaguar I-Type 1
Mahindra Racing - Mahindra M3 ELECTRO
NextEV NIO - NextEV TCR Formula 002
Renault e.Dams - Renault Z.E. 16
Techeetah - TBC
Venturi Formula E - Venturi VM200-FE-02