By on November 7, 2016

Faraday Future (FF) FFZERO1

Jia Yueting, head of China’s LeEco, is finally copping to claims that there was insufficient money to support the company’s wild expanse into new territories.

This is particularly bad news for the moderately sketchy American automotive startup Faraday Future, which is strategically partnered with LeEco and is quite possibly doomed if its parent doesn’t shape up.

According to Bloomberg, Jia has issued a memo apologizing to employees and shareholders for his reckless leadership. In the letter he also pledged to reduce his income to one yuan (15 cents), while reining in LeEco’s brazen expansion and ensuring a more reasonable pace of growth for the company in the future.

Jia says LeEco will immediately begin cost cutting, decreasing subsidies offered to customers and focusing instead on established businesses instead of new ones. Those new ventures ready to be ignored are likely to include a self-driving car named LeSEE, a concept vehicle built with Faraday Future, and a massive electric car plant being built in Nevada.

That desert EV factory has already come under heavy scrutiny. Nevada’s state treasurer, Dan Schwartz, had expressed repeated worry over Jia’s involvement with Faraday Future. Schwartz even traveled to China earlier this year and attempted to meet with executives at LeEco.

A Faraday Future representative explained to Business Insider in May that LeEco’s business was separate from that of Faraday Future, because Jia was backing Faraday Future with personal assets. Except LeEco actually is bankrolling Faraday Future, including the Nevada factory, and the company is already behind on its bills to the tune of several million dollars.

The LeeSEE and Faraday Future vehicle projects are both part of LeEco’s unlisted ventures; not officially claimed as part of the company but operated via separate unlisted entities. While LeEco has not disclosed any financial numbers for the non-listed companies, they are no less interconnected. Jia Yueting has also borrowed massive amounts of capital to finance the automotive ventures, using his own shares in the listed entities as collateral.

Matters relating to Faraday Future are further complicated as it’s unclear who actually runs and owns the company. It has no CEO and how many shares LeEco or Jia Yueting actually own is a complete mystery. The company has also seen key personal abandoning ship and its promised production vehicle was a no-show at its own Consumer Electronics Show unveiling last January.

We’ll see what happens next, but it sure sounds like Jai and LeEco are thinking of abandoning the automotive industry and focusing on its bread and butter business of video-streaming services. However, Gizmodo spoke with LeEco North America’s Chief Revenue Officer today, who attempted to reassure everyone by saying, “The United States is our highest priority within the company,” and that the car project with Faraday Future was “extremely important.”

Bowman then admitted that LeEco was definitely open to gaining more investors. “As we look through three prioritized countries we will be looking for capital partnerships in all three of those countries,” he said.

[Image: Faraday Future]

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13 Comments on “Faraday Future’s Parent Company Has a Compulsive Spending Problem...”


  • avatar
    SCE to AUX

    And people accuse Elon Musk of being a charlatan.

  • avatar
    Kenmore

    Incongruity Award for 2016!

    Overwrought alien-starship-ass topped with a cheap plexiglass panel that looks stolen from a Goodwill display case.

    Doesn’t look like they even bothered to chamfer its edges. *SNAP* “Good enough”.

  • avatar
    CarnotCycle

    Batman’s Prius, and about as real.

  • avatar
    brn

    Is there anyone that DIDN’T predict this?

  • avatar
    eggsalad

    Anybody want to buy some cheap land in Apex, Nevada?

  • avatar
    Old Man Pants (nee Kenmore)

    HOLA, ADMINS

    WP refuses to upload a swell new photo to go with my swell new nickname.

    It’s an ordinary square jpg under 3 K in size. Multiple attempts to upload result in the same “No file selected” even after the Avatar Management browse button has listed its name above the blank preview frame. Clicking “Update Avatar” then deletes the name but the preview is still blank.

    Ayudame por favor. Gracias!

  • avatar

    And we haven’t even mentioned the other two Chinese funded EV startups yet: Lucid Motors and NextEV. If the mentality is “bombard the media with computer images of high-speed prototypes and hope they’ll create enough momentum and interest”… then I’d say that they have been poorly advised, probably by some coke-sniffing Silly Con Valley consultants.

  • avatar
    psarhjinian

    LeEco is one of a number of Chinese “lifestyle” flash-conglomerates that are trying to grow very fast and very wide, selling a suite of products and the promise of a “lifestyle”. Xiaomi is probably the most successful of this type, but there are others. LeEco happens to be aiming much higher than most.

    Think of a Japanese keiretsu, but much faster-moving and without the financial stability of a bank, insurance and heavy-industry arms.

  • avatar
    Ol Shel

    Why do investors keep falling for these supercar start-up scams?

    Every year at least 10 are launched, but none ever produce vehicles. The visionaries (and their connected ‘advisors’) always walk away with the fat salary they collected before the investors finally pull the plug.

    I could actually move some new products and hire some people if anyone wanted to invest a fraction in some practical ideas.

    But, churning out parts and creating a few stable jobs isn’t sexy, I guess.

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