In 2015, Faraday Future
was a California-based electric-car startup
with deep pockets in China
and ambitions to take on the world.
It assembled, seemingly out of nowhere,
a star-studded cast of top executives
from Tesla, Audi, Lamborghini,
BMW, Ferrari, Volkswagen, Ford, and Google,
united behind a forward-thinking vision
of jump-starting the autonomous,
connected electric-car ecosystem.
Or developing a car subscription service.
Or inventing a drivetrain
that could be mounted to any type of vehicle.
Or putting this...Batmobile car into production?
[scratching]
Wait, were they serious?
OK, in 2015, Faraday Future's
actual plans were a mystery.
But with a 1,500-person workforce,
over 100 employees poached straight from Tesla,
a foot planted firmly in Los Angeles,
and an agreement for a $1 billion factory in Nevada,
Faraday Future was ready to kill Tesla where it stood.
But by 2018, Faraday Future
had burned through billions of dollars
and was struggling to stay in business.
And it's almost all because of this man:
Faraday Future's cofounder Jia Yueting,
a billionaire tech entrepreneur
whose aggressive money borrowing
powered Faraday Future into
a shining star in the automotive industry
and simultaneously brought its downfall
in three short years.
This is how the man who challenged Tesla went bankrupt.
Jia Yueting, or YT, as he was called,
started his career in the 1990s
as an official in a local tax bureau.
He left to start a whole bunch of businesses
ranging from coal to mobile phones.
In 20 years he would be the 17th richest person in China,
with a net worth of $7.3 billion.
His most successful venture
was a streaming company called LeTV,
which launched its video-streaming service in 2004,
three years before Netflix.
On the heels of LeTV's success,
YT acquired and developed
other lines of businesses:
smartphones, TVs, sports programming,
financial products, smart bicycles,
and even electric cars,
all under an umbrella brand
called LeEco, or Le Economy.
While LeEco's activities seemed unrelated,
YT saw an opportunity to provide consumers
with everything they could want:
an electric car that could drive you around,
call your friends, hold a business meeting,
or watch sports,
all in one neat little LeEco package.
In 2014, YT cofounded Faraday Future,
headquartered in California.
YT would spend hundreds of millions of dollars
developing a car out of Faraday Future,
eventually planning to open a $1 billion factory in Nevada,
the same state where Tesla was building its Gigafactory.
Meanwhile, in 2015,
YT led an aggressive campaign
to expand LeEco products
into the United States,
opening an 80,000-acre campus
in San Jose, California,
hiring over 300 employees from Silicon Valley,
and acquiring American TV manufacturer
Vizio for $2 billion.
In 2016, LeEco launched its flagship smartphone,
the Le Pro 3 and Le S3,
and a smart TV, the EcoTV,
with the aim to take on tech giants
Apple and Google in the US market.
And none of these ventures were making money for YT.
With the exception of the streaming service LeShi,
formerly LeTV, none of LeEco's seven businesses
were profitable, according to Bloomberg.
So where did all the money come from?
Some from YT's pockets,
but a lot more came from China's lenders.
As reported by The New York Times,
YT found cash, over $2.1 billion in this report,
in two different ways.
One: He simultaneously courted small,
working-class investors by promising
good rates of return and playing down risks.
Two: He tapped back channels
and dealt in China's shadowy informal banking system
where regulations hardly existed.
Understandably, there was a huge backlash
when YT didn't deliver on his promises.
In April of 2017, 37 representatives
of small businesses
staged a sit-in in the LeEco lobby,
demanding LeEco pay $10 million that was owed to them.
LeEco responded by filling its lobby with potted plants
to keep the angry creditors from loitering there.
YT ignored an order to appear in court in 2017
and instead fled China
to Faraday Future in California,
his last chance at getting some money together.
The consequences of his debt, though,
were too big and too far-reaching
for Faraday Future to save him.
In 2017, the court in China
named YT to a debt blacklist.
The blacklist is a way to publicly slap the wrist
of affluent Chinese businesspeople
and try to prevent them from spending recklessly.
But most importantly, YT's name on that list
meant investors were less keen
on doing business with Faraday Future.
In fact, Stefan Krause, Faraday Future's CFO,
was offered financing deals
that were strictly contingent on YT resigning
or giving up a controlling part of the company.
It's just, YT didn't want to give up control.
And Faraday Future desperately needed the money.
After three years, the company
didn't even have a car to sell.
Remember that 1,500-person workforce?
Well, The Verge reported that insiders at Faraday said
the company didn't even have work for them to do.
In 2018, Faraday Future, burning through cash
and unable to find another financier,
laid off a large chunk of its employees
and applied for financial assistance.
In October of 2019,
Jia filed for Chapter 11 bankruptcy.
According to the notice,
YT accumulated over $6.6 billion of debt in total
while repaying only $3 billion.
This story ends on a hopeful note.
Today, Faraday Future is still alive.
It continued to develop its first announced production car,
the FF 91, and has tried to respark interest in it,
keeping a stream of footage of the car
on the street and in testing
up on the Faraday Future YouTube channel.
The company has a new CEO,
the man in charge of the BMW i program
and cofounder of Byton cars, Carsten Breitfeld.
Breitfeld expressed renewed commitment
in Faraday Future's mission
of using the technology FF has developed thus far
to transform the car industry.
And as for YT?
Well, he's still living in a mansion in California.
He's still involved in Faraday
as a senior officer in charge of design,
though he is no longer a financier of the company.
In a statement on Twitter,
YT apologized for his mistakes,
namely failing to repay his debts.
He also mentions how important it is for him
to return to China, repay his debts,
and make Faraday Future a successful company.
It's easy to see YT had all the tools
to make a revolutionary car company.
If you look around, you'd see YT's vision in 2014
for a smart, connected electric-car ecosystem
was right on the money.
His bravado and charisma are the same as Elon Musk's,
who kept Tesla afloat through rocky financial situations
on vision and enthusiasm alone.
Faraday Future could have easily been
as successful as Tesla;
simply, the decision to push forward
for so long without seeing cash
and never compromising was unsustainable.
YT says, "The success of a company
is all about the choices it makes."
Seems like YT just made some wrong ones.