Cash-strapped tech Chinese billionaire behind Faraday Future forced to sell big chunks of his biz

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Two months after admitting to a major cash shortage, Chinese tech entrepreneur Jia Yueting has managed to raise US$2.2 billion by selling off significant chunks of some of his businesses.

Jia, 43, is bankrolling not only Faraday Future, an electric car maker based in the US that earlier this month showed off its first Tesla-challenging car, but also his own upcoming Chinese automaker, which last summer unveiled the dramatic LeSee sedan.

Jia Yueting (left) shows off the all-electric LeSee sedan at a Beijing event in April. Photo credit: LeEco.

All that expenditure has left Jia Yueting, despite his estimated US$4.5 billion personal fortune, struggling to run the business that made him rich – LeEco, a Netflix-style site that later expanded into smart TVs and phones.

The firm was hit by a calamitous US$2.4 billion drop in valuation after Jia’s shock revelation in November.

Fresh cash
Jia raised the cash by selling off an 8.6 percent stake in his video business, 15 percent of his relatively new film production unit, Le Vision Pictures, plus 33.5 percent of LeEco’s smart TV unit, reports the South China Morning Post today, citing Chinese business paper Caixin, which obtained the details from people familiar with the deal. LeEco has not commented.

Tech in Asia has contacted LeEco for details.

Money shot: Jia Yueting (center) onstage during the launch of the Faraday Future FF 91, with Faraday’s Richard Kim (left) and Nick Sampson (right). Screengrab from live stream.

In November, Jia vowed to cut his salary to 15 cents after conceding that he’d stretched the company too rapidly and in too many directions. “We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited,” he said in a letter to employees.

The billionaire’s cash crunch led to big problems at Faraday Future in the run-up to the reveal of its first production car at CES 2017, with alleged unpaid bills and mounting lawsuits as a string of executives at the ambitious auto startup departed.

“Month to month, the money was never there. Funds were lower than what Faraday needed to cover operational costs and commitments to suppliers,” one former employee told BuzzFeed News.

The fate of Faraday’s factory in Nevada still hangs in balance with construction on the site now halted.

 

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http://www.i4u.com/2017/02/120320/faraday-future-throttling-back-plans-build-evs-us

FARADAY FUTURE IS THROTTLING BACK ON PLANS TO BUILD EVS IN US

The China backed company will now be developing 2 vehicles instead of 7

Faraday Future has stayed in news since day one of its start up. The company which is originally a Chinese backed up company first became a news sensation when it announced the making of a full luxurious EV supercar.

Later on it revealed its plans to make a number of EVs in the coming few years with high mileage which was a surprise coming from such a new start up.

Later on the company had to cut down its budget as its factory was not properly developed and the company was sued by some firm. Finally a few weeks ago again it was sued by a graphic company for not paying the bills of graphic designing which was done by it.

Now it looks like that after all these hustles, the company has thought to make the cars work in a better and much planned way. This is the reason that we have a latest news from Reuters regarding Faraday Future, which states that the company has cut back the vehicles development program.

Where the company was supposed to make 7 cars in the coming future, now Faraday Future will be presenting 2 out of these in the market. The rest of the five designs have been laid to rest for a little bit of time till the company sorts out its finances.

For this purpose the company is going to assemble a small developmental plant in Nevada, in North of Las Vegas. Faraday Future will built a 650,000 square foot facility which will start building later this year.

The downsizing of plans will help the company to focus more on its major products and will stabilize it in the future to properly work on the new cars.

 

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http://www.bizjournals.com/sanjose/...future-seeks-1-billion-leeco-jia-yueting.html

Faraday Future seeks $1 billion as main backer LeEco falters

Electric car maker Faraday Future seeks to raise $1 billion from new investors as the troubled Chinese tech company LeEco, its main financial backer, falters, according to Bloomberg.

LeEco has U.S. headquarters at 3553 N. First St. in San Jose. This week, faced with a global cash crunch, it slashed most of its U.S. workforce and said it was hitting pause on its expansion plans in Silicon Valley.

Faraday Future is officially based in Los Angeles, although LeEco sources have previously told the Silicon Valley Business Journal that the two companies are intricately linked. Faraday employees often worked out of LeEco offices in San Jose and Santa Clara, sources said. In March, Faraday pulled out of plans to build a massive electric car factory in Vallejo. It is still moving forward with plans to build a factory near Las Vegas.

LeEco’s billionaire founder Jia Yueting has personally put $300 million into Faraday, according to Bloomberg. Jia on Sunday stepped aside as CEO of LeEco’s profitable video streaming service, days before the company cut 325 U.S. jobs.

Jia won’t put any more capital into Faraday, a source told Bloomberg. Instead, the carmaker is seeking capital from large-scale investors such as sovereign wealth funds.

LeEco still owns a Santa Clara development site it bought last year from Yahoo for $250 million. The property, which is fully entitled for up to 3 million square feet of office and R&D space, was once envisioned as a Silicon Valley campus for 12,000 LeEco employees, but the company retreated as its financial strain deepened.

Fewer than 100 employees remain at LeEco’s San Jose offices, which it moved into last year with the intention of gaining a foothold in the U.S. consumer market.