Freezing of assets casts doubts on Faraday Future

The freezing of the assets of LeEco's founder and Chairman Jia Yueting is raising questions about the future of the company's startup, Faraday Future (FF).

"We are aware that YT (Jia)'s equity has been frozen in China as a normal legal procedure to preserve the assets as YT had undertaken a personal guarantee of LeEco's mobile phone business," said FF spokesperson Dan Zhu in an email on Wednesday.

A Shanghai Court has frozen 1.24 billion yuan ($183 million) in assets belonging to Jia, his wife and three affiliated companies after LeEco failed to pay interest due on bank loans taken out to fund its smartphone business.

But Zhu said this has no impact on FF's daily operations as LeEco and FF have been two separate companies since the latter was founded in 2014.

FF's immediate goals are "diversifying FF's investment sources, and getting FF 91 on the road within 2018," she said, without providing an update on the construction of the 3 million-square-foot factory in North Las Vegas.

"Faraday Future wants to reinforce that our commitment to the State of Nevada and our $1 billion investment in the region over the next few years has never changed," said the company in a February statement.

The startup is planning to raise $1 billion to protect itself from the financial woes of its primary backer, LeEco. It has begun meeting potential investors and is in the process of selecting advisers, according to Bloomberg.

The company hired Stefan Krause, former Deutsche Bank executive and BMW Global CFO, to drive investor diversification.

FF has ended talks with the city of Vallejo, California, for a planned second factory on a 157-acre site on the city's Mare Island. It will build a much smaller auto assembly facility than originally planned in North Las Vegas. Qiong Liu, North Las Vegas city manager, told Reuters that the company will build a 60,390-square-meter facility beginning later this year.

LeEco and FF are intricately linked. Jia has personally invested $300 million into FF and he will lead the company as chairman.

The cash crunch at LeEco has worsened since November last year when Jia admitted publicly that it was expanding too fast into the new realms of smartphones, automobiles, cloud and internet finance business.

In May, Jia stepped down as chief executive of Shenzhen-listed Leshi Internet Information and Technology Corp, the company's video-streaming branch.

Two days after Jia quit, the company's US headquarters announced that it would lay off approximately 325 people due to "difficulty in raising new capital".

liazhu@chinadailyusa.com