.png)
It’s no secret that Tesla dominates the market for electric cars however in 2015, a Californian based electric vehicle company named Faraday Future began with a 1500 person workforce with over 100 employees poached from Tesla and other automobile companies like BMW, Ford and Audi. This company was cofounded and significantly financed by a man named Jia Yueting, a millionaire owning a multibillion-dollar media conglomerate in China. While the company became ready to throw down the gauntlet with Tesla, by 2018, they had already washed out billions of dollars and struggled in the market and they owed their downfall to the person who led them to their place, Yueting.
Jia Yueting aka YT was passionate about starting a whole bunch of unrelated businesses. Ultimately, his most successful venture was LeTV, a streaming service company which launched three years before Netflix. With the success of this business, YT created other lines of businesses including smartphones, TVs, sports programming, smart bicycles, and even electric cars, all below the family brand called LeEco. YT ended up finding an opportunity to provide consumers with everything they could ever desire all in one LeEco package: an electric car with multipurpose.
In 2014, YT cofounded Faraday Future basing it in California and ended up spending millions of dollars developing a car whilst eventually planning to open a factory worth $1 billion in Nevada which was where Tesla was building its Gigafactory. In 2016, LeEco launched its flagship smartphone and a smart TV with the hope of taking on major tech companies like Apple and Google in the US market. Unfortunately, none of these made money for YT besides one streaming service named LeShi.
So the question reigning your minds is how did YT find the money to start these business ventures? Whilst some money came from his pockets, most of it came from China's lenders. The New York Times reported that YT found cash (over $2.1 billion) in two ways. One was that he solicited small, working-class investors by assuring strong returns and two was that he dealt in China's shadow and informal banking system where regulations hardly existed. Notably, YT received backlash for not living up to his promise of strong returns. He even stood resilient to an order to appear in court in 2017 and instead fled China to Faraday Future in California, which was his last chance at gathering some money. However, the consequences of his debt were too big and too far-fetched for Faraday Future to save him.
In 2017, the court in China listed YT on a debt blacklist. YT's being blacklisted essentially meant investors would not be favorable in becoming involved with Faraday Future. In fact, Faraday Future's CFO was offered financing deals that were strictly subject to YT resigning or surrendering his control in the company. YT obviously didn't
want to give up control whilst Faraday Future desperately needed the finance. After three years, the company didn't even have a car to sell and the 1500 person workforce was namesake as there was simply no work for them to do. In 2018, indebted and in need of a financier, Faraday Future, laid off the majority of its employees and applied for financial assistance. In October of 2019, YT filed for Chapter 11 bankruptcy after accumulating over $6.6 billion of debt in total and only ended up repaying $3 billion.
Today, Faraday Future is still getting by with a new CEO, Carsten Breitfeld aka the man in charge of the BMW i program and cofounder of Byton cars. And as for where YT is: he's still thriving in a mansion in California and still involved in Faraday as a senior design officer however with no financial stake in the company. YT apologized for his mistakes on Twitter and mentioned how important it is for him to return to China, resolve his debts, and lead Faraday Future to success. YT undeniably had all the tools to revolutionise the market for electric cars. Similar to YT, Elon Musk was able to keep Tesla afloat through rocky financial situations with the help of his own vision and enthusiasm. Faraday Future could have easily been as successful as Tesla and in YT’s own words, "The success of a company is all about the choices it makes''. Unfortunately, YT should have taken his own advice and made some wise choices himself.
Comments