The Tesla challenger’s path to bankruptcy

The company brings together a strong management team from Tesla, Audi, Lamborghini, BMW, Ferrari, Volkswagen, Ford and Google, all aiming to build an electric vehicle ecosystem and widespread connection.

At that time no one knew what Faraday Future’s real plan was. But with 1,500 employees, more than 100 people moving from Tesla, and holding a deal on a $ 1 billion factory in Nevada, Faraday Future is ready to destroy Tesla.

But by 2018, Faraday Future has burned billions of dollars and is struggling to survive. It all starts and ends because of the company’s founder, Jia Yueting, a technology billionaire, and it lasts only 3 short years.

Jia Yueting, or YT as people call him, started his career as a local tax officer. He quit his job and started various companies, from coal to cell phones. And 20 years later, he became the 17th richest person in China with a fortune of up to $ 7.3 billion.

YT’s biggest success was television company LeTV, which started offering its video streaming service in 2004, three years before Netflix appeared. Thanks to LeTV’s success, YT also acquired and developed many other businesses such as smartphones, TVs, sports programs, financial products, smart bikes, and even electric cars, all under the LeEco brand.

While LeEco’s operations seem irrelevant, YT sees an opportunity to give consumers everything they want: a self-driving car that takes you anywhere, calls acquaintances, host a meeting or watch sports, all in one LeEco package.

In 2014, YT founded Faraday Future in California.

In 2015, he led a massive campaign to bring LeEco products to the United States, opened a 300 square kilometer headquarters in San Jose, California, hired more than 300 employees from the Sillicon Valley, and acquired US TV maker Vizio for $ 2 billion.

By 2016, LeEco launched its hit smartphones Le Pro 3 and Le S3, and a smart TV called EcoTV, with the aim of competing for market share with tech giants like Apple and Google. However, no branch of the business is profitable for YT, except for streaming service LeShi (which was LeTV before).

So where does the money come from? Partly from YT itself, but mostly from Chinese investors. According to The New York Times, YT finds the source of money (more than 2.1 billion USD) in 2 ways:

– First: He convinces retail investors by promising attractive returns and hiding hidden risks.

– Second: He relies on financial supply channels and the informal banking system in China, where laws are almost non-existent.

Of course, when YT does not keep his promise, everything falls apart. In April 2017, 37 representatives of small businesses held protests in the hallways of LeEco, demanding that LeEco pay $ 10 million in debt. LeEco responded by filling the hallway with potted plants so that creditors wouldn’t gather there. YT ignores the Chinese court’s summons in 2017 and flies straight to California. But the consequences of the debts are too great and Faraday Future cannot save YT.

Future Faraday was in desperate need of money. After 3 years, they did not have any cars to sell. The employee doesn’t even have anything to do. In 2018, Faraday Future laid off most of the staff and applied for financial assistance. By October 2019, YT filed for bankruptcy. Accordingly, they can only pay 3 billion USD in debt up to 6.6 billion USD.

The story of Faraday Future ends with a new hope. Today, Faraday Future still exists and continues to strive to create the first car, the FF 91. They have a new CEO – Carsten Breitfeld – who heads the BMW i program and co-founded the electric car company Byton.

What about YT? He still lives in a villa in California. He remains with Faraday as a senior executive in charge of design, but is no longer a financial provider for the company. In a statement on Twitter, YT apologized for his mistakes. He also said that going back to China and paying off debt is extremely important, on par with helping Faraday Future go to success.