New Lease on Life, or Delaying the End? Faraday Future's Dad Drops Off Some Cash

Matt Posky
by Matt Posky

After a myriad of financial troubles and irresponsible corporate dealings, we assumed Faraday Future’s end was near. However, its spectral parent company now claims it has convinced more than ten Chinese companies to invest $600 million into its automotive division.

While the future of Faraday can not be considered even close to bright, the brand could theoretically hobble onward using this financial stimulus as a crutch.

Reuters reports that Leshi Holdings has secured commitments of $600 million to support LeEco, the Chinese technology and automotive unit pulling Faraday’s strings. Half of that hefty sum is to be delivered immediately and invested directly into the auto business and LeEco Global.

Earlier this month, company founder and CEO Jia Yueting announced that LeEco was confronted with a major cash shortage stemming from its rapid and irresponsible expansion into other industries. Jia said it was necessary to take drastic cost-cutting measures and scale back LeEco’s automotive ambitions or risk being forced to abandon them entirely.

This incredible mass of capital and support could not have come at a better time. Zhou Jianping, chairman of Hailan Group, claims his company’s investment in LeEco is primarily to bolster China’s indigenous automotive industry.

However, LeEco and Faraday Future have only managed to deliver promises thus far. While Faraday assures us it will have a production-ready electric vehicle at the CES technology show this January, its last offering was a ludicrous supercar EV concept. Similarly, LeEco has been showcasing the LeSee — an autonomous vehicle with no clear idea of how it might work or be sold. Jia even went to far as to suggest that LeEco cars might eventually be free, using a business model that makes money on the content and other services sold through its autonomous connected cars.

What was not established, however, is how that business model might work. It’s also unclear how much of this $600 million will go toward finishing the construction of Faraday Future’s billion-dollar factory in Nevada. Work on the plant had been stalled due to the company owing millions in back pay to the contractor.

Richard Windsor, an independent technology analyst, told Reuters that he fully expects the financial pressures to eventually force LeEco out of the automotive industry. “I suspect that the automotive ambitions will be reluctantly curtailed which I think gives LeEco its best chance of success in its other endeavors,” he said.

[Image: LeEco]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

More by Matt Posky

Comments
Join the conversation
2 of 6 comments
  • Erikstrawn Erikstrawn on Dec 01, 2016

    I keep thinking they need to partner with Renault and build the "LeEcoCar".

  • Redmondjp Redmondjp on Dec 01, 2016

    Maybe they can repurpose the Faraday factory site as an off-road vehicle course or something like that.

  • Verbal Here's a little tale about long-term Tesla ownership.In 2017 my buddy bought a three year-old Model S for $68k, which was the going rate at the time. He kept it garaged and treated it with kid gloves. It looked and ran virtually like new. The only problem he ever had with it was some kind of recurring issue with the driver's door handle. He never had to replace the brakes.A couple months ago, at ten years of age, the original battery finally bricked. Tesla quoted him $17k to do a battery replacement. But! If he replaced the battery, they would give him $11k in trade on a new Tesla!!! You don't have to be a math genius to see that those are crooked numbers.Using aftermarket parts is a non starter. Rebuilt batteries can be sketch. And the cap that goes on the battery is a Tesla-only part.Most people don't have $17k burning a hole in their pocket for a car repair. What are you going to do? Ask your credit union for a $17k loan to put a new battery in your ten year-old car? Good luck with that.A local auto recycler quoted him $1000. The recycler said that if he replaced the battery, the car would have a resale value in the low $20k's. That wouldn't give him enough headroom to make it worth his while. He said there are 150,000 dead Teslas in the national inventory (don't know where he gets this figure). And there's no demand for used Tesla parts, since most Tesla owners seem to treat their cars well. So Teslas with dead batteries have marginal scrap value.Thus, my friend's Tesla, with 80k miles on the clock and in excellent condition, with a dead battery, was scrapped. During his ownership, the car depreciated by around $800 a month.He saved a lot of money by not paying for gas, oil changes, tune ups, and consumables. But in the end, all those saving were erased by huge depreciation.Welcome to long term Tesla ownership, folks.(Cue the wailing and rending of garments from the Tesla fanboyz.)
  • Aja8888 My BIL had one of these years ago. great car!
  • Wjtinfwb Job cuts and EV's... is that a winning strategy? You're locked in to substantial labor expense after the UAW agreement signed a few months ago. And EV's ain't exactly flying off the shelves en masse. Get the new Charger out already, it's been teased more than the Bronco and Supra were combined. Get a real Hybrid option out for the RAM trucks and big Jeeps that consumers will buy. Consider bringing back a Gen 3 Hemi with an aluminum block, direct injection and perhaps a Hybrid option to counter the Toyota debacle and get a jump on GM. Dump the Hornet and build Dodge a version of the Jeep Compass they can actually sell. A Dodge with Alfa bones isn't compelling to either brands fans. Fix the Durango's oil cooler problems to avoid alienating police departments nationwide. Do you want every cop in the US driving an Explorer? Freshen up the Pacifica and get Chrysler a cool sedan or wagon that can create a buzz like the 300 did more than a decade ago. And fix your dealers, they are by a large jackasses. Plenty of opportunity for improvement.
  • 3-On-The-Tree True that’s the worst beat down in history.
  • Jalop1991 Tesla has made getting repairs a real headache for some owners, as the automaker hasn’t allowed them to get work done at third-party shops. That policy has led owners to seek  class-action status against the company,So, move next to the airport then complain about the noise.Got it.
Next