Jia Yueting has admitted that LeEco and Faraday Future are both short on capital and that he is to blame for blindly speeding ahead and pushing the companies’ cash reserves to the limit.
China’s answer to Elon Musk has brought both companies a long way and like Musk he has ploughed vast resources into an EV manufacturing plant in Las Vegas, a functional prototype of the SUV that has not yet officially broken cover, a partnership with Aston Martin to make an electric version of the Rapide and more.
Now he has been forced to apologise to his shareholders for trying to run before the companies could walk. He has also slashed his wage to a symbolic 1 Yuan, or 15 cents and promised to put the brakes on LeEco’s spending while the company consolidates its position in the luxury ride-hailing space.
A grand apology with a deeper meaning?
“No company has had such an experience, a simultaneous time in ice and fire,” speaking about LeEco’s growth followed by subsequent issues. “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.”
This is a story we’ve heard before. Elon Musk faced all these issues and, in fact, Tesla and SpaceX have both been hours from bankruptcy at numerous points. Yueting is no stranger to the boardroom, having built a media empire in his native China, so we can assume he knows this and he also knows how to work the room.
This solid apology and promise to be more responsible may have been essential to keep the shareholders on side. But there’s no doubting the size of Yueting’s ambitions. The LeEco LeSEE is a clear rival for the Tesla Model S, even though it’s based on full autonomy and a ride-hailing concept that isn’t proven or even feasible right now. Faraday Future, meanwhile, is about to launch an all-out assault on the US market.
Yueting needs a united boardroom right now as the capital expenditure at Faraday Future simply has to increase in the near future. Only a simply astonishing launch that yields thousands of pre-orders, like Tesla’s Model 3, could staunch the flow of cash. For a new company that’s even harder to achieve, but stranger things have happened in the EV world and we’ll watch with interest.
We guess, though, that will spell the end of the FFZero1 hypercar. At least for a while.