Faraday Future’s main backer, Jia Yueting, has been ordered to return to China to meet financial obligations promised to investors of his LeEco electronics and video streaming business. The order was issued on Monday by the China Securities Regulatory Commission which has been pushing for Yueting’s return since September.
Yueting is thought to be residing in the United States, though the Chinese regulator doesn’t have the authority to force his return. A Chinese court, however, this week seized a number of the embattled businessman’s assets.
According to Bloomberg, the Beijing First Intermediate People’s Court has already seized approximately $200,000 in bank deposits and is eyeing Yueting’s shares in the holding company that controls LeEco, plus two Beijing prototypes linked to him. The court said it took action after agreeing to enforce a petition from a securities firm owed $30 million by Yueting.
Faraday Future FF 91
The news comes just weeks after Yueting was placed on an official list of debt defaulters in China for failing to comply with a court order to pay one of his creditors.
According to the South China Morning Post, Yueting had promised to provide interest-free loans to cover LeEco’s debts. In a statement issued by LeEco in October, the company said Yueting had promised in 2015 to make two interest-free loans payable in 10 years or more worth a combined $872.6 million, while his sister had agreed to make loans valued at $260.2 million. It's not clear how much of those funds have been delivered.
Yueting originally made his fortune via a video streaming service similar to Netflix, which he offered through LeEco. He then expanded LeEco into the consumer electronics business with smartphone and television sales, and eventually into the automotive sector with Faraday Future in the United States and LeSee in China. Yueting is shown main with a LeSee concept car unveiled in April 2016.
Faraday Future FF 91
His fall from grace commenced in November 2016 when he came out with the statement that he was experiencing a cash crunch due to too rapid expansion of his various ventures. Since then his once successful LeEco business has generated a long list of creditors demanding to be paid. Some have even taken to camping out in the lobby of LeEco's Beijing headquarters.
This in turn has led to the money spigots at Faraday Future running dry, most notably with the company having been forced in July to stop construction on a planned vehicle plant in Nevada. Faraday Future’s best chance of survival now is setting up its recently acquired Californian plant to start production of the promised FF 91 electric car. The company is hopeful of having the vehicle on sale by 2019 though will need significant investment.
While there have been reports this month of reprieve at Faraday Future in the form of a $1 billion lifeline, apparently generated by Yueting via equity financing, given his latest setbacks there is plenty of reason to doubt the funds will ever show up. That will likely mean the end of the road for Faraday Future. Stay tuned.