LeEco Cash Crunch Leads Us To Believe Faraday’s Future Is In Question

8 months ago by Steven Loveday 19

It doesn’t come as a big surprise that LeEco, parent company of Faraday Future, is facing the same plethora of problems as its subsidiary. Both companies lack money, which is a substantial issue when it comes to starting a business.

Faraday Future FF91

Faraday Future FF91

The cash crunch issue is first and foremost, and leads to most of LeEco’s other growing problems. Like Faraday Future, LeEco has been unable to pay suppliers, can’t get its Silicon Valley production facility past initial groundbreaking, and is reportedly shedding employees rapidly.

Jia Yueting is the company’s founder and CEO, and he also has his hand in funding Faraday Future. Reports have shared that he has become a “very unpopular” individual in his home city of Beijing. It seems that whatever Yueting has his hands in, is heading down a path of self destruction. At the debut of the LeEco LeSEE, the car failed to drive itself down the runway for the premier. A few months later, Faraday Future revealed its FF91, with Yueting on stage once again, and that car suffered a similar fate, and then the company was sued for not paying the production company for setting up the event.

Yueting assured the press that, in the next few months, issues will shape up and funds will come in. However, the startup is already set to sell its 49-acre Silicon Valley site that it recently purchased from Yahoo. Yueting sent a letter to his staff to inform them that the company was in the midst of a “big company disease.” A month prior, at LeEco’s U.S. launch, he had told the media:

“This property will be an EcoCity that houses 12,000 employees.”

This will prove to be a difficult task, since the company has reported upwards of about 1,000 U.S. employees at one time, and now says that it has “around 500.” Sources close to the matter shared that at least half of those 500 have recently departed.

LeEco is unwilling to comment on its current employee count, but did admit that it has cut around 80 percent of its employees in India alone. The automaker is currently searching for a business partner, and working to gain other investors. According to Yueting, LeEco will be receiving $2.2 billion from Sunac China Holdings, over the next three to four months. Though, this money is reportedly earmarked for LeEco’s entertainment ventures, not its car project.

In related news, Faraday Future hired former BMW CFO Stefan Krause, to attempt to make sense of its drowning financial status. Both companies plan to surge forward in China, regardless of what becomes of U.S. operations.

Source: Reuters

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19 responses to "LeEco Cash Crunch Leads Us To Believe Faraday’s Future Is In Question"

  1. DJ says:

    Didn’t they just cash in $260M worth of property as well.

    Seems like they have quite a nice cash infusion but ya I don’t know why they had to go gang busters on all their new ventures. Seems like it would have made sense to go for less.

    1. Rebel44 says:

      Those $260M will likely cover just their debts that are in default – if they are lucky.

      You need to remember that this money is for whole LeEco group – not just for Faraday Future.

      1. ijonjack says:

        There was never NO QUESTION that Faraday’s Future has always been in question . What are they Thinking???? Duuuu

  2. bro1999 says:

    Going down like the Titanic.

    1. ijonjack says:

      Even if by some Fluke of Nature they were to get it going and build an EV..Would anyone trust them enough to Actually Buy a car from them? Not Me !

  3. ffbj says:

    We want our money and we don’t care how,
    we want our remuneration now.
    Poor ole LeEco they lie prostrate, while others are gambling with Faraday’s fate.
    (Guess the reference).

  4. unlucky says:

    This is not a great time to sell SV property. Not that there’s ever a bad time, but Apple is about to start moving out of their many small properties into their huge campus. That will leave a lot of office vacancies in the short term. And if a downturn comes soon that short term will turn into a longer term.

    1. Taylor S Marks says:

      Do you think Apple will actually part with their old campus?

      I figured it would always be theirs…

    2. Not that bad says:

      It is not that bad of a time as they bought the property less than a year ago and sold it at a 10 million profit…

  5. Terawatt says:

    Ponzi!

    Bye bye, and good riddance.

  6. Anon says:

    FF’s existence was always in question…

  7. Nix says:

    Nobody is going to sweep in like an angel and save this company, because FF essentially co-signed on LeEco’s bad debts.

  8. Someone out there says:

    Did they not think this through before they started it? You would think that the CEO of a billion dollar company would create a business plan and a well thought out budget for how much this is going to cost before they even start! Did they really misjudge the cost this badly?

    I would understand if they actually did take a car into production and the sales didn’t support the company and they therefore had to give up but LeEco/FF have barely gotten half way and they are already out of money!

  9. Pushmi-Pullyu says:

    “…Faraday’s Future Is In Question”

    Hph. The only “question” left about Faraday Failure Future is how many times it’s gonna circle the drain before the plug is pulled.

    I understand that reporters and bloggers need to be cautious about pronouncing a company finished before actual bankruptcy or dissolution, but honestly, how many signs do we need that this company isn’t going anywhere, and never had any realistic chance of succeeding?

    Stick a fork in FF. It’s done.

  10. Jake Brake says:

    NextEV just got like $600M in funding…

  11. Josh Bryant says:

    Wasn’t Lucid somehow connected to LeEco and FF?

    Maybe I am wrong, because I have not heard anything about cash issues with them (yet).

  12. This only shows that Tesla’s bumpy success story can not easily be copied.

  13. Sean Wagner says:

    Faraday Future’s intellectual property is held separately in a corporate construct domiciled in the Caribbean, if I remember correctly.

    My question would be precisely how far the drivetrain has been developed (and is ready to be licensed).

    Prepare for the eventuality of that big sucking sound, with advanced electric drive tech appearing soon in countless Chinese vehicles, and it’s perfectly legal.

  14. wavelet says:

    Not surprising. As I’ve commented on previous articles, paying 1000 employees (esp. in California!) is already a huge ongoing cash drain, years before nay significant sales. I doubt that Tesla, at a similar stage of development, had more than dozens of employees.