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Startup Faraday Future said it would move production of its planned luxury electric SUV to a new site, virtually scrapping a stalled $1 billion Las Vegas factory amid deepening financial woes of key investor Chinese entrepreneur Jia Yueting.
Faraday is part of a network of young electric vehicle (EV) firms in China and the United States backed by Jia, who has said his company LeEco – that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years – is facing a severe shortage of cash after expanding too fast and in too many directions.
Struggling to support goals that included beating Elon Musk’s Tesla in premium EV making, Jia is now trying to ride out the cash crunch by taking measures such as halting work on the Las Vegas factory and selling a Silicon Valley property less than a year after buying it from Yahoo.
On the latest decision to shift production of Faraday’s luxury electric SUV FF 91 to a new site, the startup said: “This will allow product production to be realized faster, as well as allow our future strategy to be implemented more effectively.”
For LeEco, this marks a second major setback to its ambition to become a major EV manufacturer after it recently pulled out of a joint project with British sports carmaker Aston Martin to develop RapidE electric car.
Faraday had initially planned to open the Las Vegas factory late in 2017, with a product portfolio of seven models – an estimate that was later slashed to two, including the FF 91.
Jia, who posted the Faraday statement on his social media account, did not name the new FF 91 production location. Faraday will continue to own the Nevada factory site.
The FF 91 has been described by its designer as “weird-pretty” and Faraday executives say it will be the most technologically advanced vehicle of its kind on the market when it goes into production in early 2018. But cash shortages have raised questions about the company’s prospects.
According to estimates from mutual fund investors, LeEco could see the market value of its listed unit, Leshi Internet Information & Technology Corp Beijing (300104.SZ), fall around $2.5 billion should its shares resume trading.
The company is set to hold an extraordinary shareholders’ meeting on July 17 in the Chinese city of Shenzhen.