Jia Yueting vs. Ding Lei: a battle between two car companies in a huge financial crisis

On the morning of March 5, Jia Yueting, the founder of Faraday Future (FF), issued a statement saying that FF has officially filed a lawsuit against Ding Lei and HiPhi Auto, accusing the latter of stealing and infringing FF's intellectual property rights, technical data and trade secrets, and calling it an industry disgrace.

Jia Yueting wrote on Weibo: "Ding Lei has been working for nearly two years, earning more than 30 million yuan while learning FF's new AI and Internet car-making concepts and knowledge. However, he has been taking advantage of his position to plot and steal FF's intellectual property, technical data and trade secrets. After leaving, he continued to carry out the above behavior in collusion with HiPhi Auto, and was able to launch a plagiarized product in a very short time, far below the R&D delivery cycle required by industry rules. Ding Lei and HiPhi's suspected illegal and even criminal behavior has not only caused huge economic losses to FF, but also brought shame to the industry, seriously undermined the industry's source of innovation, and distorted the industry's values."

Ding Lei also responded to Jia Yueting's accusation after a night of silence. Gaohe Auto said in a statement that the company and Ding Lei did not plagiarize or infringe on FF's trade secrets and intellectual property rights, nor did they compete with each other. It also said that Gaohe's mass-produced X/Z/Y series models were all independently developed by Gaohe and jointly developed with supplier partners, and have independent intellectual property rights. Gaohe also stated that it will use legal means to protect the rights and reputation of the company and its founder from infringement.

In 2015, when Jia Yueting just started making cars, Ding Lei joined LeEco Auto and served as co-founder of LeEco Super Car, vice chairman and CEO of China and Asia Pacific. After that, Ding Lei left LeEco and founded Human Horizons and launched the HiPhi car brand.

Today, both Jia Yueting, who has not yet returned to China, and Ding Lei, who has stayed in the country to start a new business, have encountered the same problem: lack of money.

On December 28, 2023, FF, founded by Jia Yueting, received a notice from Nasdaq regarding delisting or failure to meet the rules or standards for continued listing. At the close of the day, FF's stock price closed at $0.26 per share, with a market value of only $30 million. In 2023, the company's stock price fell by a staggering 98.88%.

In contrast, FF officially landed on the Nasdaq stock market through SPAC in July 2021 with an issue price of US$13.78. It closed at US$13.98 on the first day of listing, with a total market value of US$4.535 billion.

Moreover, this is not the first time FF has received a delisting notice. In October 2022, the company also received a delisting warning because its stock price was below US$1 for 30 consecutive trading days.

On the other hand, HiPhi, a domestic electric car manufacturer, is also having a hard time. In February this year, HiPhi announced that it would suspend operations for 6 months. Employees' salaries before February 18 will be paid as usual, and those who remain in the company before March 15 will receive basic wages, and those who remain after that will only receive Shanghai basic wages.

In terms of sales, HiPhi Auto's cumulative sales in 2021 were 4,237 units. However, in 2022, the company's sales growth was almost no growth, only 4,349 units, which means that the brand's cars have lost their growth momentum in the market. What is even more disadvantageous for the company is that they lack a model like Tesla Model 3 that is affordable to most consumers. HiPhi's official website shows that

The company has three models on sale, including HiPhi X, HiPhi Z and HiPhi Y, with a suggested retail price ranging from 339,000 yuan to 800,000 yuan.

Whether it is FF or HiPhi, the two car companies face the same problem: lack of money. At this time, Jia Yueting raised his sickle to Ding Lei and HiPhi. FF asked HiPhi Automobile to repay billions of yuan in high compensation in batches in the lawsuit.

In fact, the rift between the two had already existed. It is reported that when leaving LeEco, Ding Lei took away the FF team and the design data of the FF91 model, and then he founded HiPhi. Therefore, that was actually the best time for Jia Yueting to sue Ding Lei. But why didn't FF sue Ding Lei at that time, but waited until now?

From the perspective of personal grudges, Jia Yueting's lawsuit against Gaohe at this time can be said to be a "fatal blow" to Ding Lei. Earlier, there were reports that some companies expressed interest in acquiring or investing in Gaohe. Suing Gaohe at this time may discourage these companies.

In addition, suing HiPhi at this time may also be profitable for FF. In addition to the possibility of obtaining tens of billions of yuan in compensation, FF can also take this opportunity to gain new topics in the capital market, allowing investors from the Middle East and other places to refocus their attention on FF, thereby gaining some living space for FF and preventing it from being squeezed out of the market by other competitors.

Regardless of his purpose, Jia Yueting has already taken action against Gaohe and Ding Lei, practicing the spirit of "a gentleman's revenge is never too late." Regardless of winning or losing, Jia Yueting has achieved such a goal: to make Ding Lei more flustered in the process of seeking investment everywhere.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.