LeEco’s Founder Jia Yueting Steps Back From Struggling Business. Faraday Future’s Future Unclear (update)

3 months ago by Mark Kane 28

LeEco LeSEE

LeEco, the Chinese parent company of Faraday Future, is currently undergoing a massive restructuring, and now an executive reshuffle after earlier bold plans turned out to be well under-capitalized, causing a cash-crunch at the company.

Jia Yeuting with his “other” EV paroject – the LeEco LeSEE

LeEco’s founder Jia Yueting is being replaced as general manager of Leshi Internet Information & Technology Corp (LeEco’s “Netflix” business, as well as TV and phone making division, and automobiles) by Liang Jun, who earlier joined the company from PC-maker Lenovo Group Ltd. about five years ago.

Update (May 23rd): Statement from Faraday Future’s Global CFO, Stefan Krause to InsideEVs stating it is unaffected by happenings at LeEco below

Yueting will remain a chairman of Leshi Internet.

Also the former Leshi finance director Yang Lijie will be replaced, by Zhang Wei.

LeEco recently receive a 13 billion yuan ($1.9 billion) investment from Sunac China Holdings Ltd. to put itself on better footing, but it appears that deal appears to have come with strings of better disclosures and executive control over its money.

“Billionaire Jia Yueting will relinquish the day-to-day running of his flagship streaming service, as cash-strapped parent LeEco considers an internal overhaul that will group businesses from entertainment to TVs under its main listed company.

The Chinese technology conglomerate’s founder announced he’s stepping down as general manager of Leshi Internet Information & Technology Corp., a Netflix-like service and phone- and TV-maker. Jia will remain chairman to devise longer-term strategy and oversee a corporate revamp intended to improve transparency — an area in which Jia admitted LeEco’s been lacking.”

It’s not clear what will happen with the LeEco LeSEE electric car project, and more specifically, EV start-up in the US, Faraday Future.

“Jia didn’t spend much time expounding on LeEco’s U.S. interests. The billionaire is a backer of electric vehicle maker Faraday Future, which is building a plant in Nevada that at one point was suspended. It remains unclear how the American business, which on one occasion was said to have struggled to pay employees on time, will fit into a re-organized LeECo.”

A transcript of an interview with Jia provided by LeEco (via Bloomberg), notes the company wants to distinguish itself legally from the electric automobile components…which doesn’t sound like the precursor to good news.

“In the future, we hope LeEco is only formed of two parts: the listed businesses and the auto unit.” – Jia Yueting

Update (May 23rd):  Faraday Future reached out to us on the news/article on LeEco’s US operations.

A spokesperson for the company stated that LeEco’s decision on US operations and Yeuting’s has no impact on Faraday’s “daily operations, the development of FF 91, nor our manufacturing plans in North Las Vegas in any way.”   The company also stressed to us that “no layoffs are planned for FF employees.”

Faraday Future’s Global CFO, Stefan Krause, also added this note to be added to our coverage:

“Hearing about layoffs at our strategic partner LeEco is discouraging. However, I want to be clear that these layoffs have no impact on Faraday Future. We remain committed to our immediate goals of diversifying FF’s investment sources and getting FF 91 on the road in 2018, and we remain confident in the outlook for diversifying FF’s global investment.”

source: Bloomberg

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28 responses to "LeEco’s Founder Jia Yueting Steps Back From Struggling Business. Faraday Future’s Future Unclear (update)"

  1. Michael Will says:

    If tesla doesnt buy them Ford will.

    1. jelloslug says:

      Why would anyone buy them?

      1. Michael Will says:

        Because of the US based employees, EV IP, the planned EV factory plans which includes Nevada relationships and permits.

        1. Pushmi-Pullyu says:

          You’re suggesting the permits and/or lease on the land could be transferred to another company if FF and its assets (if it actually has any of value, which I question) are sold off?

          Of course I don’t know the exact wording of the contract between FF and the State of Nevada, but it seems likely to me that the State would have included a clause in the contract giving it the right to cancel all deals if the company was sold off. Some contracts can and will be transferred if the company is sold, but it seems unlikely that these contracts would.

          1. Michael Will says:

            I would presume Nevada has planned for this factory to be there, how many jobs it creates, what infrastructure needs to happen. I don’t quite see why you think they would prefer that to just all go away ?

            1. unlucky says:

              You don’t always get what you prefer.

            2. Pushmi-Pullyu says:

              I think what the State of Nevada would prefer, is to make contracts with a company that is actually able to hold up its end of the contract. It’s painfully obvious that Faraday Future cannot. In fact, it was obvious to me from the first time I read a FF press release, and I am baffled that anybody in the Governer’s office in Nevada was fooled.

              Even Tesla Motors had to make a contract with Nevada that had some very specific milestones. Tesla only gets its tax deferments and other perks if it actually hires X number of employees in Nevada on a full-time basis, and if it meets other requirements based on real achievements, not mere claims.

              The contracts that the State of Nevada made with Tesla were smart contracts. Contracting with an all-hat-and-no-cattle company like Faraday Future was very ill-advised, and it’s no surprise to me that the Nevada State Treasurer has been very vocal in sounding the alarm about the deal with FF.

              What is surprising is that the Governor’s office continued to defend the deal with FF, even to the point of appearing to get into a public feud with the State Treasurer over the issue. It’s hard for me to understand why the Governor (or his office) was willing to go so far out on a limb for a company with vastly inflated claims and vastly under-funded plans. I can only suspect some sort of shady under-the-table deal, perhaps a kickback of some sort, which would be a motive for the Governer’s office to continue advocating for a company which appears to have been (rather obviously to me and many others) a sham from the very start.

              Either that, or the Governor and/or his advisors are a lot more naive than any politician in a position of responsibility ought to be!

    2. William L. says:

      This is probably the most silliest statement today. Why would Tesla buy this company? the only thing valuable is the dirt they cleaned up nearby Vegas.

      Then the second part makes sense to me, Ford or GM probably will buy it, they make silly decisions that don’t make sense to me all the time.

      1. William says:

        Alex, I will take “Cleaned up dirt near Las Vegas” for $500!

        1. PK says:

          insideev dot com really needs to update their comment system so that we can upvote gems like this. 🙂

      2. Pushmi-Pullyu says:

        “This is probably the most silliest statement today. Why would Tesla buy this company?”

        Oh, I think that’s woefully insufficient. Surely it’s at least the silliest of the month!

  2. Pushmi-Pullyu says:

    “Faraday Future’s Future Unclear”

    The only thing that’s unclear about Faraday’s future is how many weeks or months remain before the company is sold off or goes bankrupt. And frankly I’m not sure why anyone would pay good money for the company; I haven’t seen any indication that their prototype(s) are even worthy of storage space in a garage, let alone worthy of someone paying good money for one.

    1. unlucky says:

      Agreed. The mystery is really only when the story of this sham will be fully retired. Honestly, it barely looked like more than a mirage even at the peak of credibility.

      1. Stimpacker says:

        Yup, nothing more than a sham.
        17 years ago I was in the Silicon Valley right in the middle of a similar setup. All I can say about that is I’ve learnt to say “show me the money”.

        The promise of a great Chinese deal based on a supposed Letter of Credit caused many good people their jobs.

        Nothing new here.

  3. Don says:

    Faraday Future & LeEco LeSEE are selling the IPO dreams to recruit talented workers from other publicly traded companies …

  4. floydboy says:

    I knew there was a reason Faraday’s car refused to move on stage! It knew there was simply nowhere to go!

    1. William says:

      No where to go! There is always belly up.?

  5. Mike I. says:

    LeEco also called off their $2B acquisition of American TV maker Vizio last month.

    https://www.theverge.com/2017/4/10/15246058/leeco-vizio-acquisition-cancelled

  6. Taser54 says:

    Well, hello apple?

    1. unlucky says:

      There’s nothing to buy except computer renderings of their plant which will never be built.

  7. Scott says:

    This car is supposed to be running with a driver named Robin Shute at Pike’s Peak in June. Might have to go back to this race just to see it, even if it never becomes a reality.

  8. Nix says:

    “In the future, we hope LeEco is only formed of two parts: the listed businesses and the auto unit.” – Jia Yueting

    I wonder how their creditors will feel about that? The LeEco automotive side had to get Faraday Future to back their loans too. It seems like their finances are all intertwined. I don’t know how easy it would be to make a clean split.

  9. wavelet says:

    “The company also stressed to us that “no layoffs are planned for FF employees.””

    So that means they expect everybody to quit very soon, before the company stops paying their salaries? A lot of senior people have left recently, and LeEco is firing 80% of the US (car-related) workforce…
    Given FF has/had 1400 employees in CA, the salary costs alone are >$7.5M/month (*), probably more like $10M . Where is that money coming from?

    (*)see
    http://insideevs.com/watch-faraday-futures-ev-reveal-here-tonight-from-6pm-pst-huge-stage-set-video/#comment-1124750

  10. Someone out there says:

    It’s been clear for a long time that Faraday has no future

  11. Robert Fahey says:

    Name one successful Chinese automotive foray into the US, ever.

      1. EVA-01 says:

        Doesn’t count. The Swedish company was based in the U.S long before the switch to Chinese ownership.

  12. Pushmi-Pullyu says:

    Re the Update:

    “A spokesperson for the company stated that LeEco’s decision on US operations and Yeuting’s has no impact on Faraday’s ‘daily operations, the development of FF 91, nor our manufacturing plans in North Las Vegas in any way.’ The company also stressed to us that ‘no layoffs are planned for FF employees.’ ”

    Reminds me of Baghdad Bob, continuing to insist that Iraqi forces were winning “the mother of all battles” against American forces, even as American tanks were rolling into Baghdad!

    😆 😆 😆

    Not exactly credible.

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