Xu Jiayin used 6.7 billion yuan to do two things: buy at the bottom and get a "FF without Jia Yueting"

On June 25, Evergrande Group purchased 100% of the shares of Hong Kong Shiying Company for HK$6.746 billion, indirectly acquiring 45% of the shares of Smart King Company and becoming the largest shareholder of Smart King. Jia Yueting's FF Company is affiliated with Smart King. This means that Evergrande has successfully taken over FF. After Xu Jiayin became Sun Hongbin, Jia Yueting has encountered the second white knight who can turn the tide.

On the same day, FF announced that it had received $2 billion in financing. This was a timely help for Jia Yueting, who was in urgent need of funds. Although Jia Yueting gave up his position as a major shareholder, he still enjoyed the voting rights of "1 share, 10 votes" and could continue to steer FF.

What exactly did Xu Jiayin gain from this 6.7 billion deal?

Xu Jiayin's Evergrande is not an angel

Jia Yueting's FF was founded in 2014, more than half a year before LeEco proposed the "SEE Plan". LeEco is not a shareholder of FF, but only a cooperative relationship. It was only Jia Yueting himself who invested in FF.

According to statistics, before Jia Yueting fled to the United States, the Jia family had cashed out more than 10 billion yuan. After leaving the United States, Jia Yueting devoted most of his energy to FF's car manufacturing business.

There is no clear statistical data on how much money Jia Yueting has invested in FF. But if Jia Yueting still has any valuable cards to play, it can only be FF.

FF has its own R&D team in the United States, which currently has more than 1,400 employees, including more than 1,000 professional and technical personnel. In addition, FF has applied for nearly 1,500 patents in China and the United States, and has obtained more than 380 patents so far.

It is said that the FF91, which took four years to develop, has excellent performance and many technical indicators have reached the world's top level. The acceleration time from 0 to 100 km/h is 2.39 seconds, and the maximum range is 700 kilometers. In last year's Pikes Peak race, the FF91 broke the race record by beating the Tesla Model S by 20 seconds.

FF91 is in line with people's imagination of future cars. It has advanced technologies such as unmanned automatic parking, facial recognition, and seamless entry system. It has achieved technological changes in six major areas including power system, vehicle platform, autonomous driving, artificial intelligence, computing platform, and Internet system.

Previously, Jia Yueting hoped that FF's valuation could reach 8 billion to 10 billion US dollars, but now he sold 45% of the shares for 2 billion US dollars. The reason is that FF is in urgent need of funds and is close to bankruptcy. Evergrande's investment can be said to help FF overcome difficulties, but also means bargain hunting.

Xu Jiayin often says that "real estate is a sunset industry" and proposed Evergrande's diversified development strategy in 2014.

Entering the high-tech industry is the current way of Evergrande's transformation. In the next ten years, Evergrande plans to invest 100 billion yuan to develop key areas such as life sciences, aerospace, integrated circuits, quantum technology, new energy, artificial intelligence, robotics, and modern science and technology agriculture.

The new energy vehicle industry is developing rapidly. Not only are traditional car companies making efforts, but also various cross-border capitals are entering the market. Evergrande is naturally unwilling to miss this investment opportunity. The acquisition of FF marks Evergrande's entry into the competition of the new energy vehicle industry.

The market is optimistic about Evergrande's move. Evergrande Health's stock price rose as high as 80% after opening on the 26th of the month, and closed at HK$7.66. Its market value increased by HK$26.35 billion (about US$3.358 billion) in a single day. The US$2 billion used to invest in FF was earned back in one day.

FF plans to complete mass production by the end of this year. In addition, FF plans to mass-produce the simplified version of FF91, FF81, in China from the end of 2019 to the beginning of 2020.

In fact, Xu Jiayin's investment in FF is not entirely an angel. The industry is not optimistic about FF's mass production goals. When Evergrande invested in FF, it also signed a bet agreement: if FF cannot achieve mass production in 2019, Jia Yueting will lose the power of 10 votes per share, and Evergrande will take over the leadership of FF.

FF without Jia Yueting

FF has received Evergrande's investment, temporarily escaping the dilemma of being on the verge of bankruptcy. FF91 has been in development for four years now, and it would be a pity if it cannot be mass-produced. Evergrande's investment has brought a glimmer of hope for the mass production of FF91.

However, only $800 million of the $2 billion has been received so far. According to the agreement, the remaining two installments of $600 million each will be received in installments on or before December 31, 2019 and December 31, 2020, respectively.

With $800 million and less than half a year to spare, and considering the extremely high configuration and technical difficulty of FF91, the hope of achieving mass production is really slim.

The optimism of the stock market cannot guarantee a win-win situation for Evergrande and FF. LeEco’s stock price has soared before, but it is not “returning to China next week” after all.

In early 2017, FF91 began accepting pre-orders. Since its release date, it has received more than 60,000 orders. However, it is easy to order, but difficult to deliver. Tesla, the competitor of FF91, also has a steady stream of orders, but its production capacity cannot keep up. The large number of orders has brought trouble to Tesla's operations.

The reservation of more than 60,000 vehicles is enough to show the high expectations of the market for FF91. Once the delivery is delayed, FF will inevitably be affected. FF's goal of mass production of FF81 in China is even more slim. In March this year, Faraday Future's Guangzhou factory was still under construction.

Jia Yueting's credibility is FF's Achilles' heel. His reputation as a "debtor" in China has long spread to the United States. Jia Yueting's debts to suppliers will inevitably affect FF's integration of resources and mass production. Automobile production has high requirements for resource integration and supply chain management. The end-of-year mass production may just be an excuse to boost market confidence.

In addition to the credibility issue, Jia Yueting's management ability is also questionable. Many of the core executives who co-founded FF with Jia Yueting have resigned. Stefan Krause was once Jia Yueting's most trusted foreign executive and served as FF's chief financial officer and chief operating officer. Now he has set up his own business and founded Evelozcity Electric Vehicle Company.

Some FF internal employees revealed that Jia Yueting was burning money too fast, and FF spent all the budgets of other car manufacturers in one month. Some employees were worried that if Jia Yueting did not improve management, it would be difficult to get out of the predicament even if he got financing.

We might as well believe that Jia Yueting has begun to seriously develop cars after experiencing the disastrous failure of LeEco. But the reality is cruel. If mass production cannot be carried out as scheduled, not only will the future of FF be worrying, but Jia Yueting will also lose control of FF.

The bet agreement between Evergrande and Jia Yueting shows that Evergrande has made preparations for FF not to be mass-produced as scheduled. After the first quarter of next year, Jia Yueting is likely to lose control of FF, just like he did when he left LeEco.

A "de-Jia Yueting-ized" FF may be what Evergrande wants most.

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.