Yidao Car Rental was exposed to be in arrears. What cards does LeTV's automotive ecosystem have left to play?

The battle between dream and reality began the moment LeEco entered the automotive field. LeEco, which entered the market as a "disruptor", launched several fronts, including Super Car, Yidao Car Rental and Zero Car Enjoy, which were coupled with each other to become a part of the LeEco automotive ecosystem envisioned by Jia Yueting.

On February 8, 2014, Jia Yueting, CEO of LeEco Holdings, decided to make his own electric car in a coffee shop at Los Angeles Airport. He asked his wife Gan Wei to post a message on WeChat Moments to commemorate the moment.

Exactly 10 months later, Gan Wei posted another promotional Weibo, and LeEco officially announced its car-making "see plan" the following day. Rumor has it that Jia Yueting pointed to the smog in Beijing to convince other LeEco executives, saying, "Even if LeEco's car-making will lead to eternal damnation, we will not turn back."

In the next two years, LeEco has been making frequent moves to build cars. Jia Yueting has recruited former SAIC vice presidents Ding Lei and Zhang Hailiang, former Sohu Auto general manager He Yi, and others, and has also invested in Faraday Future and announced cooperation with Beijing Auto, Aston Martin and other auto companies.

The battle between dream and reality began the moment LeEco entered the automotive field. LeEco, which entered the market as a "disruptor", launched several fronts, including Super Car, Yidao Car Rental and Zero Car Enjoy, which were coupled with each other to become a part of the LeEco automotive ecosystem envisioned by Jia Yueting.

Now, following the news that the Supercar Factory project has defaulted on construction payments, Yidao Car Rental has also defaulted on payments to suppliers, and two major links in the LeEco Auto ecosystem have shown signs of loosening. The LeEco Auto ecosystem, which "may drag down the entire LeEco ecosystem", seems to have few cards left.

With aggressive subsidies, when will Yidao receive its next round of financing?

Recently, Beijing Business Daily reported that Yidao Car has owed five or six customer service suppliers a total of nearly 50 million yuan. A person related to Yidao Car did not deny this in an interview, and said that the debt problem may be resolved by the end of this month. Yidao Car responded publicly that there are still balances with some suppliers that have not been settled, and emphasized that this situation has nothing to do with the company's capital chain.

According to reports, Yidao Car Rental owes its customer service supplier Hebei Zhongrui Communication Technology Co., Ltd. (hereinafter referred to as "Hebei Zhongrui") more than 2 million yuan in fees. The person in charge of Hebei Zhongrui said that Yidao Car Rental had said in June that it would pay off the debt, but it has not paid it back until now. At the beginning of the cooperation, the payment would be delayed by about a month, but from June to now, there is a debt of 2.4 million yuan, and only 400,000 yuan has been settled so far, and there is still more than 200,000 yuan withheld. The person in charge also revealed that there are five or six suppliers who have been owed money by Yidao Car Rental. "As of September this year, the total amount of fees owed by Yidao Car Rental to these suppliers has reached 50 million yuan, of which some companies have been owed nearly 10 million yuan."

In this regard, the relevant person in charge of Yidao Car said that there is indeed a phenomenon of unpaid customer service contractors, and the reason for the arrears is that Yidao Car’s financing has not yet arrived. “Funds may arrive at the end of this month to return the arrears to these customer service contractors.”

Yidao Car Rental later issued a statement saying that the supplier's statement was not true. "However, due to Yidao's recent efforts to improve customer service experience, some suppliers have changed. We are currently dealing with matters before and after the change. Some companies that do not intend to continue cooperation have outstanding balances. This is a normal situation in business operations and has nothing to do with the company's capital chain. Rumors such as '50 million in arrears' are groundless rumors."

In fact, Yidao Car Rental is not the first company under LeEco Holdings to be exposed to arrears. In early November, people claiming to be suppliers of LeEco mobile phones held banners in the Beijing LeEco Building to protest LeEco's long-term arrears of payment. Many media outlets quoted suppliers' estimates that LeEco owed suppliers billions of yuan in arrears. Subsequently, Jia Yueting issued an open letter admitting that LeEco's capital chain was in crisis due to its rapid expansion. Jia Yueting said that because a large amount of funds were invested in the super car project, insufficient investment was made in other businesses, which would end the first phase of LeEco's blind expansion.

LeEco Auto, which Jia Yueting mentioned, has invested heavily in the development of supercar projects and has also long since acquired Yidao. On October 20, 2015, LeEco Holdings issued an announcement, announcing that LeEco Auto had officially signed an equity investment agreement for Yidao Yongche, investing US$700 million to acquire 70% of Yidao Yongche's equity and become the controlling shareholder of Yidao Yongche.

Less than a month after LeEco took control, Yidao launched an aggressive marketing campaign - 100% rebate. It then began to give away LeEco products such as LeEco TVs, LeEco phones, and LeEco memberships. On June 21, 2016, Zhou Hang announced that Yidao's daily order volume had exceeded 1 million, completing the three goals set by Jia Yueting for Yidao - "one million daily orders, one million new drivers, and one million new vehicles" six months ahead of schedule.

Yidao, relying on huge subsidies, seems to have returned to the top of the private car market. In June, Peng Gang, president of Yidao, publicly stated that Yidao's daily order volume has reached twice that of Shenzhou Private Car. Zhou Hang also used the four characters "resurrection" to describe Yidao's achievements.

However, Yidao paid a heavy price to return to the top tier. According to data disclosed by Yidao at the press conference, during the 224-day "100% recharge and refund activity", 6.53 million users recharged more than 6 billion yuan in total. This means that Yidao had to subsidize 6 billion yuan to users. If the subsidy threshold and platform commission are taken into account, Yidao actually had to subsidize nearly 4 billion yuan.

Despite the massive subsidies, Yidao did not have an easy time raising funds. In the first half of 2015, Didi and Uber both completed billions of dollars in financing, and included large VCs and PEs. It is said that Didi and Uber signed exclusive agreements with them. Zhou Hang also admitted that at the time, he did not have many choices. Jia Yueting hoped that Yidao and LeTV would be deeply integrated, so there was basically no room for negotiation on the 70% equity.

More importantly, after accepting a $700 million investment from LeEco, Yidao Car Rental has not disclosed the next round of financing. This year, Peng Gang, president of Yidao, and Zhou Hang, CEO of Yidao, both said on different occasions that Yidao is currently in the process of a new round of financing. Although Yidao denied the news of the debt, it also indirectly reflects the reality of Yidao Car Rental's tight funds. Unfortunately, LeEco may no longer be able to support Yidao.

With an investment of over 10 billion yuan, how far is LeEco Auto from mass production ?

In addition to Yidao Car, the super car project that Jia Yueting has been thinking about is also the focus of LeTV's investment in the automotive field. Jia Yueting revealed that he has invested more than 10 billion in the super car project. In September this year, LeTV Super Car announced that it had received 1.08 billion US dollars in financing, and after LeTV exposed its capital chain problems, it received another 600 million US dollars in support from Jia Yueting's classmates.

However, the $1.68 billion in financing publicly disclosed by LeEco may be just a drop in the bucket compared to Jia Yueting's car-making plan. At the end of 2015, Faraday Future (FF), invested by LeEco, announced that it would build its North American advanced manufacturing plant in North Las Vegas, Nevada, with a total investment of $1 billion. However, multiple news reports recently proved that the FF factory was shut down due to overdue project payments. Nevada Treasurer Dan Schwartz also publicly accused LeEco of risks in its car-making project, saying that "LeEco's approach is a 'Ponzi scheme'."

Similarly, LeEco has also announced a large investment in automobile projects in China. In August this year, LeEco announced the construction of a super automobile industrial park and automobile ecological town in Moganshan, Deqing, Zhejiang, with a planned investment of 20 billion yuan. Yesterday, LeEco Auto announced that the Moganshan Automobile Industrial Park will start construction before the end of the year. What is certain is that as of now, there is no sign of construction of the project. Regarding the factory projects of Faraday Future and Deqing, Zhejiang, LeEco responded that everything is normal and will be carried out according to the established plan. However, multiple responses did not dispel the doubts of the outside world.

Li Xiang, CEO of CHJ Auto and founder of Autohome, once commented on Weibo that "making a few exhibition cars made by a third-party design company that has nothing to do with mass production will not fool anyone". "It is indeed difficult to build a car, but it is not impossible. We must gather truly outstanding talents and do it with all our heart and soul. If we pay more attention to products, supply chain, quality, manufacturing and service, the chances of success will be greater". Tesla, the predecessor, experienced many dangers before slowly groping forward. For LeTV, in addition to the financial difficulties to be solved, there are still many hurdles to overcome.

There are many players in time-sharing leasing. Where is the future of Lingpai Lexiang?

If LeTV's investment in online car-hailing and car manufacturing is aimed at expanding the existing ecosystem, its layout in the time-sharing rental field can be said to be ahead of the times.

On May 20, 2015, LeEco's electric car time-sharing rental platform Lingpai LeXiang was established. In May this year, Lingpai LeXiang announced that it had received investment from LeEco Holdings, which will invest a total of RMB 2 billion by 2019 to support Lingpai LeXiang.

According to the strategy disclosed by He Yi, chairman of ZeroPay LeXiang, in the future, this electric car sharing travel ecosystem will cover upstream and downstream players in the electric car industry chain, forming a customer-centric ecosystem that includes electric cars, wearable devices in the car, smart charging piles and parking spaces, and other service providers. Users can obtain all car services including time-sharing self-driving cars, special cars, ride-sharing, designated drivers, vehicle charging, parking, maintenance, after-sales insurance recovery, in-car content, etc. In the entire LeTV system, LeTV Super Car, Yidao Car Rental, and ZeroPay LeXiang three businesses have built LeTV's automotive ecosystem.

After LeEco Holdings announced the capital injection, ZeroPay LeXiang also announced its expansion plan. According to data disclosed by ZeroPay LeXiang, as of the first half of this year, there were about 200 to 300 cars and 40-50 parking points on the platform. According to the plan, by the end of 2016, ZeroPay LeXiang will complete the layout of 7 cities and 3,000 cars; in 2018, it will expand to 100 cities and 200,000 cars; in 2020, it will achieve globalization and connect more than 1 million vehicles to the platform.

However, the expansion process does not seem to be as expected. So far, the only city where Zero-Pai LeXiang is available is Beijing. Some senior users have reported that it is becoming increasingly difficult to rent a Zero-Pai LeXiang car, and the price is gradually increasing. In addition to the seemingly slower-than-expected speed, Zero-Pai LeXiang still faces competition from car companies and many rivals. In Beijing alone, there are several companies participating in the competition, including YiDu Car Rental, Youyou Car Rental, BAIC Green Dog, and Shouqi Gofun Travel, and these companies have already formed a scale.

In the time-sharing rental market, LeEco is being tested on its capital investment and resource operation capabilities. In addition to continuous investment in hard resources such as vehicles and parking spaces, it also needs to provide user subsidies and promotion. Without LeEco's blood transfusion support, ZeroPay's expansion path will not be easy.

For LeEco, the biggest problem of the entire automotive ecosystem is the lack of funds. With the current funding crisis brewing, LeEco Super Car, Yidao Car Rental and even Zero Enjoy are facing an unknown future. If Jia Yueting wants to realize his dream of making cars, he needs more people to help him.

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.