Foreign media exposes FF: As long as Jia Yueting is there, no car can be built

Foreign media Jalopnik published a long article about the whole story of Jia Yueting's investment in Faraday Future's car manufacturing, interviewing a large number of Faraday Future employees and former employees to show people's true views on Jia Yueting and Faraday Future. The full text is translated as follows:

In the famous wealthy area of ​​Los Angeles, Rancho Palos Verdes, a 720-square-meter mansion is located on the picturesque seaside. Standing in the house and looking out, you can see the beautiful scenery of the Pacific Ocean. This two-story mansion has six bedrooms, seven bathrooms and a garage that can accommodate three cars. In addition, its owner also enjoys absolute privacy - Google Maps does not provide street views of this area. Such mansions are everywhere in the local area, but the difference of this one is that its owner is not a certain person, but a company called Ocean View Drive Inc.

According to previously undisclosed state government filings, Ocean View is registered to Deng Chaoying, who is also vice president of Faraday Future. In 2016, media reported that Jia Yueting was the sole controlling shareholder of the company.

On the one hand, Faraday Future has become the focus of heated discussions after the capital chain crisis broke out last year. On the other hand, Ocean View, as a shell company under Jia Yueting's "tech empire", continues to own a luxurious mansion, which inevitably arouses speculation among the public and begins to have a negative impact on his business. This mansion has a special nickname in the circle of Faraday executives: "Club House". According to people familiar with the matter, this house has many uses: it is not only a temporary guest house for new employees, but also a company's meeting room, or a luxurious club for hosting some events, with private chefs ready to serve feasts at any time. A source said that whiskey and wine at $2,000 a bottle are standard for gatherings in this club.

The clubhouse's opulence stands in stark contrast to Faraday Future's death throes, as another wave of executives left the company this month, leaving Jia Yueting alone to salvage his already shabby image as an entrepreneur.

"I think he got rich by sheer luck. His money came too easily." - Anonymous former Faraday Future employee

Faraday Future made a splashy appearance in 2015, talking about what the future of cars should look like. It wants to build fully self-driving, stylish, all-electric cars that it claims can be adjusted to the driver's preferences, just like smartphones today. It also promised that Faraday Future would build the best cars in the world and make all existing cars obsolete.

“The car should understand the driver’s needs, preferences and where they want to go,” said Nick Sampson, senior vice president of Faraday Future, in 2015. However, apart from a few prototypes and numerous problems, the company has yet to deliver on its promises.

Faraday Future's current situation is very similar to this time last year, when the company had already exposed serious financial problems. In order to release the FF 91 model at CES (International Consumer Electronics Show), Faraday Future even stopped building a factory due to financial problems. Unfortunately, although it barely survived the appearance at CES, a year later, Faraday Future seems to be following the same old path as last year.

Faraday Future is now facing many problems: employees are frequently leaving, cash flow is tight, and according to some unreported lawsuits, it is also facing new claims - ranging from catering expenses to warehouse rental costs.

Faraday Future declined to be interviewed, but instead gave the following brief statement in response to a series of questions from the media:

"As a private company, we do not comment on any financial, legal or business planning matters related to Faraday Future or its investors."

Faraday Future is on the verge of a shattered dream, and the 44-year-old Jia Yueting is still standing in the center of this dream. Another company he founded, LeEco, is also in deep trouble now, and sources say he made a big mistake because of his own stubbornness. Seeing that the company might go bankrupt in his hands, Jia Yueting also refused to give up control of Faraday Future. Since the beginning of this year, investors have expressed their willingness to acquire, but sources say that each negotiation ended with Jia Yueting's withdrawal.

Seven people, including former Faraday Future employees and insiders, were interviewed. They all believed that Faraday could only survive if Jia Yueting was out.

“Jia Yueting has actually proven himself to be a remarkable entrepreneur — very successful, very respected,” said Michael Dunne, president of Hong Kong-based consultancy Dunne Automotive. “But now things are beyond his control.”

Jia Yueting tried to change the technology industry in a swift manner. He first made billions of dollars by creating the Chinese version of Netflix (LeTV), and a few years later, he stepped into the automotive industry with personal charm, passion and strong funds to drive the industry into an electric and autonomous future.

Since the fall of 2016, when the factory contractor AECOM demanded $21 million in construction debts, Faraday Future's debts have continued to grow. As many executives left one after another, Jia Yueting began to worry about a pile of debts alone. In early October 2016, AECOM issued a warning: If the money was not paid, the construction of the factory in Nevada would be suspended. Later, Jia Yueting completely abandoned the plan to build a $1 billion factory. However, at that time, Faraday Future also told AECOM: The money was on the way and would arrive later.

Meanwhile, Ocean View was busy. Filing documents show that just 11 days after AECOM asked for the money owed, Ocean View submitted an application to the local authorities to build a swimming pool and spa for the mansion in Rancho Palos Verdes.

Sources describe Jia as reckless — prioritizing his own enjoyment when he has money. This episode shows there is some truth to that.

“I think he got rich by sheer luck,” said a former Faraday Future employee who requested anonymity. “He made money too easily.”

Recently, the crisis faced by Jia Yueting and Faraday Future has further worsened, with the company's Chief Financial Officer Stefan Krause confirmed to have resigned in mid-October.

Faraday Future responded with a dramatic statement accusing Krause of malfeasance and saying the company had fired him, and Krause immediately hired legal counsel, saying the statement was defamatory.

On the same day, Jia Yueting expressed his disdain for Klaus' resignation in an email to employees:

“I know we have more than 1,000 dedicated employees around the world. Despite the doubts and distrust from the outside world, we are working hard day and night to bring FF 91 to market as soon as possible.”

This is a typical Jia Yueting response. Six former Faraday Future employees interviewed described him as ambitious and arrogant, and he refused to give up even in such an unfavorable environment.

Jia Yueting was born in a rural family in Shanxi in 1973. Various reports about his childhood show that his family was very poor when he was young, and he basically spent his summer vacation working in a steel factory.

After graduating from college, Jia Yueting became fascinated with technology. Before starting his own business, he worked as a computer technician at a local tax bureau. In the early days of his business, he also sold batteries for signal base stations.

In 2002, he resigned from the tax office and founded a company called Sinotel Technologies, which was listed in Singapore in less than five years. During this time, Jia Yueting also founded LeTV, which is known as the "Netflix of China".

LeEco went public in 2010 and quickly expanded into TV, streaming video services, movies and smartphones, with the company's headcount swelled to more than 10,000 and annual revenue exceeding $1 billion.

LeEco's meteoric rise also exposed Jia Yueting's background. In 2014, a senior official was dismissed for corruption. Evidence showed that the official's family had invested in LeEco two years before its IPO, sparking accusations of collusion between officials and businessmen at LeEco.

Soon after, Jia Yueting disappeared from public view for a while, and reappeared several months later. In an interview with Forbes in 2015, Jia Yueting said that he was going to treat a tumor during that time, and insisted that he had nothing to do with the government's anti-corruption investigation. Jia Yueting said that if he had known that these problems would happen later, he would not have accepted the investment.

One day in 2014 , Jia Yueting test-drove a Tesla in the United States. The moment he got out of the car, he made a decision. According to reports, he said at the time: " We have to build this. "

The brief turmoil did not slow down LeEco's development, even though some critics pointed out that LeEco had too many businesses and spread its wings too wide. Jia Yueting was ambitious at the time, and LeEco's business covered every corner of the technology industry.

Jia Yueting is also aware of the challenges, especially the fierce competition he needs to face. In order to overcome difficulties and survive, LeEco needs a constant cash flow.

“Publicly listed companies have to grow fast,” Jia Yueting said in an interview with Forbes in 2015. “We have to spend money to build these new businesses that burn money.”

LeTV's booming momentum gave Jia Yueting a lot of confidence, and he began to announce that he would challenge Apple, Tesla and Netflix at the same time.

During this period, Jia Yueting's dress also changed. He began to wear the minimalist style of Jobs, dark shirts, blue jeans and ordinary sneakers. At the same time, LeTV TVs and mobile phones were launched in Apple-style press conferences. Jia Yueting sold dreams and stories, and investors paid for them. As Jia's empire grew, his stories became bigger and bigger, occasionally beyond the public's tolerance. For example, he once compared Apple to the Nazis of the Internet age on Weibo, but later apologized for the incident.

Electric cars are also on his mind. Dunne, an expert on the Chinese auto industry, recalls a story that allegedly sparked Jia Yueting's dream of building a car: One day in 2014, Jia Yueting test-drove a Tesla in the United States. The moment he got out of the car, he made a decision. He reportedly said, "We have to build this."

He then invested in an electric car startup called Atieva (now renamed Lucid Motors) and pushed LeTV to develop its own electric car. LeTV Auto depicted an ambitious but vague vision - a "smart", "connected", fully autonomous and fully electric car that can reach a speed of 200 kilometers per hour. At the end of 2014, Jia Yueting invested in the establishment of Faraday Future, and soon attracted a group of talents from Silicon Valley and the traditional automotive industry, and even some people jumped from Tesla.

Faraday Future’s plans are equally ambitious: to build a $1 billion factory in Nevada (the state offers financial subsidies and tax breaks), to create an electric supercar that’s faster than Tesla’s, and to change the way people think about private transportation.

"Tesla is a great company that has pushed the global auto industry into the era of electric vehicles," Jia told Reuters in 2016. "But we are not just building a car. We see the car as a smart mobile device with four wheels, which is essentially no different from a mobile phone or tablet."

(Faraday Future showcases the concept car FFZero 1 at CES 2016)

However, Jia Yueting's bold words about Faraday Future were not well received by insiders and critics. The mixed business of LeEco, Faraday Future and Lucid Motors often caused headaches for industry observers and reporters.

Do Faraday Future and Lucid Motors overlap? Are Faraday Future and LeEco in the same group? When did Jia Yueting invest in Faraday Future, and what was his role? Why hasn’t Faraday Future had an official CEO? Or is Jia Yueting the CEO? The parties involved have provided very little information to the outside world, making these questions entangled and difficult to resolve. (Jia Yueting has said he plans to sell his shares in Lucid Motors; Lucid Motors declined to comment.)

"He was always trying to do too many things at the same time and didn't have the resources to do them all successfully," said one former employee.

Let's look back at Jia Yueting's original vision for Faraday Future. He wanted to do more than just beat Tesla. He also wanted to achieve an annual production of 2 million to 3 million vehicles within 10 years, and to build factories in both the United States and China.

Jia Yueting once visited GM's abandoned factory in Louisiana. Louisiana not only offers tax breaks, but also cash subsidies, the total amount of which may exceed $400 million. For Jia Yueting, he just wants to build the factory with a very small budget. Jia Yueting hopes to spend $3 billion to complete his 10-year plan. After learning that he was not joking, many investors chose to withdraw.

Jia Yueting greatly underestimated the threshold of car manufacturing. One of his senior consultants, a veteran in the automotive industry, calculated that it might take $25 billion to realize Jia Yueting's car dream. Jia Yueting laughed at them and doubted the authenticity of the number.

"His demands are ridiculous. He doesn't realize that it takes billions of dollars to build just one car," said a source familiar with Jia Yueting's car-making plans.

What was the result? The cruel reality gave the answer.

After its public debut in late 2015, Faraday Future prepared to show off its first car at the Consumer Electronics Show (CES) in Las Vegas. The hype in the media was building, and people were expecting Jia Yueting to do more than just boast about the concept and bring out the real thing.

In the end, he still failed to live up to people's expectations. Faraday Future only displayed a model similar to the "Batmobile" instead of the "real car" that the audience expected. The disappointed people were told that "the real car is already in the testing phase and will arrive soon."

He doesn't just want to beat Tesla. He wants to produce 2 to 3 million cars a year within a decade.

Jia Yueting has already invested a lot of money in the car project, but now he has only a model that cannot be driven. It is unknown how far this is from his grand goal.

At the CES booth, executives compared their car to the iPhone that came out in 2007, saying the car can be driven manually or fully autonomously, and that it will "change everything we know about cars." They promised to use advanced technologies such as AI learning and augmented reality to subvert the world's travel concepts.

In short, executives promised that this car would be able to do things that today's cars cannot do, but there was no proof.

Making cars is not an easy task, but with the beautiful future that Jia Yueting described and the seemingly endless money, it is not difficult for Faraday Future to recruit talents. The development momentum of the automotive industry in recent years seems to make people easily have similar ideas - shared cars will become obsolete in the future, all-electric self-driving cars will carry people to various places, and these cars can be conveniently called with mobile phone apps. This bold idea may be incredible in the eyes of ordinary people and people in the automotive industry in 2015, but Jia Yueting is not an ordinary person.

"His vision for the future of cars is probably the best I've ever heard," said a former Faraday Future employee.

Employees were paid high salaries and devoted themselves to the project. The company grew to 1,200 employees, and the billionaire was willing to invest his fortune in the future of the world's cars. Two former employees described Faraday Future at that time as a paradise for engineers and designers.

Despite the slow pace of development of production vehicles during this period, Faraday Future has not shown any signs of financial difficulties. But Jia Yueting's series of half-hearted moves in the electric vehicle industry - investing in Lucid Motors, launching cars under the LeEco brand, and investing in Faraday - are beginning to drain Faraday Future's investment.

By the second half of 2016, more and more financial irregularities began to appear in Faraday Future’s accounts, and the company’s financing director began to worry that due to LeEco’s complex corporate structure, lack of internal controls, and some problems with its bank accounts, the company might have difficulty raising funds in the future.

The answer is already clear: “Heaven” will not last forever.

The company's problems broke out in October 2016. That month, the construction company commissioned by Faraday Future to build a factory in Nevada issued the first overdue payment notice. This made the employees feel that things were not going well.

At the same time, Jia Yueting is busy launching LeTV's own electric car, LeSEE. In the previous weeks, Faraday Future employees were asked to transfer to LeSEE. LeTV plans to hold a grand launch event for the car in mid-October.

The project did not go smoothly. Due to an unexplained accident, LeSEE was not released to the public. But Jia Yueting brought new good news: Faraday Future Chief Business Officer Marco Mattiacci, the former boss of the Ferrari F1 team, supported LeSEE at the press conference.

In a conversation with Malone, Jia Yueting said that Faraday Future will launch its first electric car at the CES in January 2017.

This was something no one expected, and even Malone was probably surprised. At the time, Faraday Future actually had two choices: go to CES or not. However, the opinion of most of the company's internal executives was that although their FF 91 was said to have 1,050 horsepower and could beat Tesla, it was not ready yet.

But Jia Yueting left them no choice, and some executives began to leave.

Jia Yueting insisted on having FF 91 participate in CES, which meant that Faraday's employees had to work overtime during the Christmas season in December. A former executive said that he only slept one hour a day during that period.

"No one slept in the last two weeks," said a former Faraday Future employee. "Jia's crazy intervention angered most of the executives, causing some executives to leave before CES."

Another source said that the original budget for preparing the entire exhibition was seven figures, but as time became increasingly tight, the budget was even shrinking. In the end, it was simply impossible to achieve the effect that Jia Yueting required.

Seeing the resignation of senior executives, the staff team also lost their morale. Just a few days before the exhibition, Faraday Future employees resigned one after another. After realizing the company's current predicament, some senior officials wanted to cancel the exhibition at CES and hold an independent press conference at a later time. This idea was rejected by Jia Yueting.

The style of the press conference on the day of the exhibition was similar to Jia Yueting's previous press conferences. The audience was full of expectations, but the originally planned 45-minute presentation turned into an embarrassing "forcing ducks to go on the shelf" - the live demonstration of FF 91's automatic parking went wrong.

The entire press conference ultimately backfired, leaving people with the impression that Faraday Future wasn’t telling the truth.

But the car's self-driving features performed well in a test drive outside CES, so some investors still have confidence in the company.

But the source pointed out that the parking demonstration failed on the stage was a clear sign of the company's financial difficulties. "That's why the car's internal functions were not fully demonstrated," the source said, also citing defects on the car door. In fact, some employees had already foreseen that the parking demonstration would fail because the stage was not a standard parking lot, but Jia Yueting still insisted on doing it. A small example is a microcosm of the company's internal discord.

Through this embarrassing press conference, Faraday Future showed people the current achievements of FF 91 and said that there will be more progress in the future.

“In the face of all the opposition and skepticism, we will persevere,” said Nick Sampson, senior vice president of Faraday Future, during the presentation. “We will continue to work hard to make the impossible possible.”

After CES, the chaos continued. Following the glamorous conference, there was a series of compensation lawsuits: $1.8 million in promotional video production costs, $580,000 in electricity bills for the company's headquarters, and $210,000 in fees for website domain names.

In late January 2017, a warehouse rented by Faraday Future was taken back by the owner, who demanded $15 million in compensation.

However, under such circumstances, Jia Yueting is still able to recruit talents for the company. Krause, who worked for BMW and Deutsche Bank for 30 years, joined Faraday Future in March. His mission was to establish "Faraday Future's sustainable development path in the global market" as described in his appointment statement.

Soon after taking office, Krause began a fundraising roadshow and hoped to raise $1 billion for the company. Another former BMW executive, Ulrich Kranz, joined Faraday Future as chief technology officer in July. After such a round of management changes, it seems that Jia Yueting still has the potential to turn decay into magic.

But things started to get weirder.

Just as Jia Yueting finished his work at Faraday Future, his LeEco ran into trouble again. In April, under the pressure of cash shortage, LeEco laid off most of its US branch employees. At the same time, suppliers in China began to sue the company, prompting a Shanghai court to freeze $182 million of Jia Yueting's assets in July.

Because the acquisition fell through, American TV manufacturer Vizio demanded a $60 million "breakup fee" from LeTV. In early July, Vizio sued Jia Yueting personally, demanding that he bear significant financial responsibility.

In an unusual and confusing move, Faraday Future announced that Jia Yueting’s recent actions were actually consistent with the company’s long-term goals, and that Jia Yueting resigned from all his positions at LeEco to focus on Faraday Future’s development.

"These news (about Jia Yueting) will not affect FF's daily operations, but on the other hand it also meets FF's needs for diversified financing. The company expects to launch FF 91 on the market in 2018," said a Faraday spokesperson.

A few days later, Faraday Future confirmed that it had abandoned its plan to build a $1 billion factory in Nevada and was looking for a new location. Sources said Krause had arranged for Indian auto company Mahindra to acquire Faraday, but the deal ultimately fell through.

By August, Faraday Future had run out of money, but it subsequently received a $14 million emergency loan to stay afloat and found a location in California to build a factory. However, without a subsequent massive injection of capital, the future remains empty talk. Krause's $1 billion fundraising plan failed to attract any actual investment, with only a few investors expressing interest.

Faraday Future's factory is still a wasteland

Multiple sources said the problem was not with Faraday Future’s products. Investors were willing to invest only if Jia Yueting handed over control or allowed bankruptcy reorganization, which was what Krause wanted, but Jia Yueting refused to give up any rights.

The impasse has triggered a new round of departures. In early October, a group of Faraday Future veterans left the company. On October 14, Kraus announced his resignation. A day later, Chief Technology Officer Kranz also announced his resignation. Sources said that more executives and employees will leave in succession.

"At that time, Klaus was the only one who could keep the company afloat," said a former Faraday Future employee. "Filing for bankruptcy was the only way for FF to survive, and Klaus knew that only by letting Jia Yueting go could the company get out of its current situation. Now that Klaus is gone, the remaining group of people won't last long either."

LeEco's problems have prompted Chinese regulators to scrutinize similar companies, and two lawyers who worked on LeEco's 2010 listing have been arrested for wrongdoing, according to the South China Morning Post.

As long as Jia Yueting is still the decision maker of Faraday Future, there will be no chance of building a car - Former Faraday Future employee

Jia Yueting denied the outside world's speculation that LeEco's IPO was suspected of fraud. Today, Jia Yueting lives in a California mansion and rarely goes out. Compared with usual, he is much more low-key. After intermittent financing rumors, Faraday Future was once again reported to be on the verge of bankruptcy last month.

Some leaked documents show that Faraday Future is seeking to file for bankruptcy and sell the company to new investors - exactly what Krause wanted to promote. Although Faraday Future denied creating the documents, people familiar with the matter believe that it is clearly considering such plans.

Just when things seemed to be getting better, new changes occurred. In November, Faraday Future's Chief Financial Officer Krause confirmed to the media that he had resigned from the company a few weeks ago. However, Faraday Future said that Krause was fired for malfeasance and claimed that it would take legal action to hold him accountable. (Krause's lawyer did not respond to a request for comment.)

A former Faraday Future employee called the accusatory statement "utter nonsense" and said he was used to such tactics.

"They're trying to save face," the source said. "I've had a few times when I was at the company where people left and the company immediately went into counterattack mode, blaming the other party."

Krause's resignation was soon overshadowed by new news. It was rumored that India's Tata Motors, the parent company of Jaguar Land Rover, planned to acquire a 10% stake in Faraday Future for $900 million. If the news is true, it would be a great help to Jia Yueting, who is in deep trouble. But unfortunately, this is not true. Last Wednesday, Tata Group denied investing in Faraday Future.

"This news is not true, so we have no comment," a Tata Group spokesperson told Indian media. People familiar with the matter believe that the news was fabricated by Faraday Future's insiders in China, intending to create a positive image for Jia Yueting and make him look like he can lead Faraday Future in the right direction.

In addition to the troubles on the Faraday Future side, another shell company controlled by Jia Yueting, Ocean View Drive, is also involved in a lawsuit. Jia Yueting's California mansion is the property of this company. The lawsuit comes from a former Ocean View employee named Miles Bernal, who accused Jia Yueting and the company of intentional layoffs and made a series of allegations that Jia Yueting used the company's property for his own use. The case will be heard on November 27.

Although the current situation of Faraday Future looks bleak, there is still a group of people in Jia Yueting's circle who are willing to follow him. Sources revealed that people who are loyal to Jia in the original LeTV company will be transferred to Faraday Future to replace those who have left.

Sources revealed that despite the current difficult environment, Jia Yueting, who is now living in California, remains calm and confident in his goals. One insider said that he began to mention again the grand vision of Faraday Future to achieve an annual production of 3 million cars within 10 years.

But whether he can attract enough followers this time remains to be seen.

"Non-LeTV employees in the company still believe that as long as Jia Yueting is still the decision-maker of Faraday Future, there will be no chance of building a single car," said a former Faraday Future employee.

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.