Faraday Future, the EV startup funded by wheeler-dealer LeEco founder Jia Yueting, seems to have begun construction work for an electric vehicle plant in Guangzhou’s Nansha district through its newly-formed affiliate Ruichi Smart Car. The move could prove controversial as Jia and his business network are highly indebted in China and his assets frozen here.
The plot of land designated for construction in a part of the free-trade zone dedicated to smart equipment and new energy vehicles was bought by Ruichi Smart Car on April 8th. However, the source of the funding for the RMB 364 million plot is unknown. The Paper visited the site of the plant (in Chinese) to find construction workers preparing the fertile farmland for building. Other workers at the site denied it was for Ruichi.
Faraday Future is Jia Yueting’s attempt to take on Tesla with luxury smart EVs that are autonomous-ready. After hemorrhaging cash, the venture has been bailed out by unknown investors in Hong Kong to the tune of $2 billion. Following complex stock rearrangements, about 45% of Faraday Future now belongs to a range of companies in the Cayman Islands and British Virgin Islands, according to The Verge. The company’s IP is being used as collateral meaning Jia and Faraday Future is in a precarious position. Jia is the founder and CEO of the company but the ownership of Faraday Future is unclear.
The cash injection has allowed Faraday Future to restart its failed attempts at establishing a factory in the US and could enable it to reach its goal to start production in China. A document seen by The Verge shows that Faraday Future had planned to make 10,000 cars in China by 2019.
The Paper found that Ruichi Smart Car (睿驰智能汽车广州有限公司) was founded in February 2018 as a “Hong Kong, Taiwan, Macau sole proprietor” type limited liability company with a registered capital of $300 million. Its legal representative is Wang Zhigang whose personal address was provided and happens to be in the same Shanxi village as where Jia Yueting is from. Ruchi Smart Car has already founded two separate limited companies. The reporter also found that Ruichi Smart Car staff appeared to have moved into its registered office in the same building as the Nansha Development Zone Bureau.
The Paper inquired as to the approval of the Nansha land purchase by the Faraday Future affiliate. A Nansha District official replied with:
“The 40 hectars of land that the Ruichi Company acquired in Nansha will be used to invest in the R&D and production bases for fully electric vehicles. Ruichi Smart Car is a foreign-invested enterprise established in accordance with regulations in Nansha District. It is an affiliate of Faraday Future and has no legal relationship with LeShi Holdings, a company controlled by Mr Jia Yueting. It is operated completely independently.”
According to a security guard, the staff on the newly-occupied floor did not want people to go up to the offices. Previously, The Paper visited the construction site of a previous LeShi car plant scheme at Moganshan to find it all but abandoned.
Jia Yueting and the LeEco group have proved increasingly controversial. Jia and his affiliates owe RMB7 billion to mainland debtors according to a stock filing, reported the Financial Times. Since his assets have been frozen and the authorities have called on Jia to address the debt problem, he has remained in the US and even sent his wife back to China to do his business.