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How the electric car maker who challenged Tesla went bankrupt

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  • Faraday Future, an electric-vehicle company based in California, generated a lot of buzz when it poached top talent from companies like Tesla, BMW, Audi, Ford, and Ferrari. The ambitious company was cofounded and largely financed by Jia Yueting, a millionaire mogul who owns a multibillion-dollar media conglomerate in China.
  • In 2017, a court in Shanghai issued a freezing order on Jia’s assets, and Jia was named to a debt blacklist after he left to California to helm Faraday Future and refused to return to China to pay more than 470 million yuan. In 2018, Jia, $3.6 billion in debt, filed for bankruptcy. Unable to find another financier, Faraday Future furloughed all essential employees and applied for government financial assistance.
  • Jia is no longer a majority investor in the company nor its CEO; however, he remains in a senior role as a chief product and user officer. Faraday Future, helmed by a new CEO, relaunched its first production EV, the FF 91, this past November.
  • Visit Business Insider’s homepage for more stories.

The following is a transcript of the video:

Narrator: 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? 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.

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Futurist Amy Webb explains why COVID-19 is forcing businesses to ask new questions about data, trust

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The COVID-19 pandemic has businesses driving on ice and too willing to slam on the breaks says, Amy Webb. This Thursday, the noted author and CEO of the Future Today Institute spoke with Debbie Gamble, chief officer of innovation labs and new ventures at Interac, in a fireside chat jointly hosted with Elevate about data, trust, and how businesses can respond to the current pace of technology innovation induced by the pandemic.

“The companies that get through this, that don’t just survive, but wind up thriving, have their eye on the farther future.”

According to Webb, the technological disruption caused by COVID-19 has presented businesses with a new set of challenges and opportunities, particularly with regard to how they approach data. For example, with a new surge in demand for virtual health solutions, new questions have arisen about how health data is collected and managed to ensure privacy is protected.

Webb recounted a conversation in which a prominent CEO expressed excitement for a solution that could immediately test employees for illness each day before starting work, rather than considering issues regarding privacy protection and data ownership risks that could arise with such a technology.

“Data itself is not a panacea,” Webb said. “The problem is that as our systems become more complex, we tend to pull back. And the problem with this is that these very same systems that mine, refine, optimize our data, are also making decisions about us.”

Webb said just as consumers need to be aware of how their data interacts with the technology they use, businesses must also not push data governance to the bottom of the priority list, and should begin asking questions that go beyond the surface-level value proposition of collecting and storing data.

“Yes, you can leverage data to expand your business. But you also really need to think hard about trust, and about data hygiene and risk and making sure that the data that you are collecting are being put to good use,” Webb said. “They’re big questions that we’re going to have to ask going forward, even today.”

Some key questions on data businesses should consider more deeply, Webb said, include: who owns the data, who scraped the data, and is there algorithmic accountability? She added that risk modelling and data scrubbing are things that tech companies are actually disincentivized from doing for financial reasons, but prioritizing data is critical in the current era.

Businesses that want to thrive can’t “slam the breaks”

Webb noted that the COVID-19 pandemic was only a catalyst for the changes being seen, with trends such as wearables that collect biometric data and collect health information already in motion.

“These were already things that we were tracking, and because of COVID, now we’re seeing a big, quick shift,” she said.

Webb also observed that in times where change is happening at an accelerated rate, many companies become myopic. Their first reaction is often to “slam on the brakes” instead of slowing down, keeping an eye on the future, and planning incrementally.

“The companies that get through this, that don’t just survive, but wind up thriving, have their eye on the farther future,” Webb said. “And that farther future, where they’re trying to go, means that they are slowing things down.”

Webb likened the business community’s response to COVID-19 to cars driving on ice. She said although the first reaction is to slam on the brakes, the decision with the best likelihood of success involves slowing down and recalibrating.

For companies, she said, this means not making a few decisions once a quarter, and not conducting future planning just once a year. Rather, looking to the future should be an always-on process, with incremental decisions.

“These characteristics were always important, but they have never been more important than they are right now,” Webb said. “If you know that, the reality is that oftentimes catastrophe can be a great catalyst for change.”

BetaKit is an Elevate media partner.



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Potential COVID-19 exposure at Regina business and on Regina Transit

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The Saskatchewan Health Authority is notifying the public that an individual who tested positive for COVID-19 visited the following business in Regina and rode Regina Transit on the following routes when the individual was likely infectious on the following dates:

The person was at the Golden Mile Superstore on Albert Street on Sept. 12 from 4:30-5:30 p.m., Sept. 14 from 12:30-12:45 p.m. and Sept. 16 from 3-3:30 p.m.

This person was also on Regina Transit on the following dates and times:  

  • Sept. 7 Route 9 (south to east) – 1-2 p.m.;
  • Sept. 8 Route 7 (south to east) – 1:50-2:50 p.m.;
  • Sept. 8 Route 7 (east to south) – 9:30-10:30 p.m.;
  • Sept. 10 Route 7 (south to east) – 1:30-2:30 p.m.;
  • Sept. 10 Route 7 (east to south) – 9:30-10:30 p.m.;
  • Sept. 11 Route 7 (south to east) – 4-5 p.m.;
  • Sept. 11 Route 7 (east to south) – 9:30-10:30 p.m.;
  • Sept. 13 Route 9 (south to east) – 1:20-2:20 p.m.;
  • Sept. 14 Route 9 (south to downtown) – 10:30 – 10:45 a.m.;
  • Sept. 14 Route 40 (south) – 12 noon – 12:20 p.m.;
  • Sept. 14 Route 7 (south to east) – 3-4 p.m.; and
  • Sept. 14 Route 7 (east to south) – 9:30-10:30 p.m.

Public Health officials are advising individuals who were at this business location or on these Regina Transit routes on the specified dates during the specified times to immediately self-isolate if they have had or currently have symptoms of COVID-19 and to call HealthLine 811 to arrange for testing.

All other individuals who are not experiencing symptoms should self monitor for 14 days. It is important to note that individuals may develop symptoms from two to 14 days following exposure to the virus that causes COVID-19.

© Copyright Estevan Mercury



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Billionaire Chuck Feeney achieves goal of giving away his fortune | Business

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Chuck Feeney has achieved his lifetime ambition: giving away his $8bn (£6bn) fortune while he is still around to see the impact it has made.

For the past 38 years, Feeney, an Irish American who made billions from a duty-free shopping empire, has been making endowments to charities and universities across the world with the goal of “striving for zero … to give it all away”.

This week Feeney, 89, achieved his goal. The Atlantic Philanthropies, the foundation he set up in secret in 1982 and transferred almost all of his wealth to, has finally run out of money.

As he signed papers to formally dissolve the foundation, Feeney, who is in poor health, said he was very satisfied with “completing this on my watch”. From his small rented apartment in San Francisco, he had a message for other members of the super-rich, who may have pledged to give away part of their fortunes but only after they have died: “To those wondering about Giving While Living: try it, you’ll like it.”

Feeney, who gave most of his money away in secret, said he hoped more billionaires would follow his example and use their money to help address the world’s biggest problems.

“Wealth brings responsibility,” he often said. “People must define themselves, or feel a responsibility to use some of their assets to improve the lives of their fellow humans, or else create intractable problems for future generations.”

Christopher Oechsli, the president and chief executive of The Atlantic Philanthropies, said Feeney would not preach his views to other members of the global super-rich: “But he would scratch his head and say ‘how many yachts or pairs of shoes do you need? What is it all this wealth accumulation about, when you can look about you and see such tremendous needs’.”

Oeschsli said Feeney would not criticise other people for not giving more “but he would be dumbfounded – what is all that wealth about if you’re not going to do good with it?”

He said the one-time $8bn man would encourage the likes of Jeff Bezos, the Amazon founder and world’s richest person who has an estimated $186bn fortune, to “pick a global problem that interests you and invest your wealth and get involved”.

Feeney was influenced by Andrew Carnegie’s essay The Gospel of Wealth, with its declaration that “the millionaire will be but a trustee for the poor”.

“I have always empathised with people who have it tough in life,” Feeney said in a rare interview with Ireland’s RTE in 2010. “And the world is full of people who don’t get enough to eat.”

Secret Billionaire: The Chuck Feeney story.

Feeney has lived a remarkably frugal lifestyle, not owning a car or home, and only one pair of shoes. He was known for flying only in economy class, even when members of his family and colleagues would travel in business class on the same plane.

Oeschsli, who has worked for Feeney for more than 30 years, said his boss had once tried to live a life of luxury but it didn’t suit him. “He had nice places [homes] and nice things. He tried it on and it wasn’t for him,” Oeschsli said.

“He doesn’t own a place, doesn’t own a car. The stories of his frugality are true: he does have a $10 Casio watch and carry his papers in a plastic bag. That is him. That’s what he felt comfortable with, and that’s really who Chuck has been.”

It was in the early 1980s when his Duty Free Shoppers (DFS) Group empire was raking in huge amounts of money, that Feeney decided he would give it all away. He secretly transferred his shares in the company to the Atlantic Philanthropies. “What am I going to do with it [all the money],” he recalled thinking. “Like many of the wealthy people today they have [so much] money that they wouldn’t be able to spend it.”

His attitude to money is in stark contrast to his DFS co-founder, Robert Miller, the 293rd richest person in the world, who has a $6bn fortune. Miller has luxury homes in Hong Kong, New York, Paris and Gstaad, Switzerland, as well the 14,500-hectare (35,800 acres) Gunnerside estate country park in Yorkshire. Miller has three socialite daughters: crown princess Marie-Chantal of Greece, Alexandra Miller, and Pia Getty.

Miller and Feeney have not spoken since the latter sold his stake in DFS to luxury goods firm LVMH in 1996. A dispute with Miller over the sale led to Feeney’s once-secret philanthropy being exposed in the run-up to a court challenge. DFS Group operates more than 420 duty-free boutiques at 11 international airports.

Over the years, Feeney has given more than $3.7bn to higher education institutions, including almost $1bn to Cornell University, where he studied hotel administration for free under the GI bill after service as a US air force radio operator during the Korean war.

Feeney has also donated $870m to human rights groups (including $62m in grants to groups campaigning to end the death penalty in the US, and $76m to grassroots campaigns supporting the passage of Obamacare.)

The son of immigrants from County Fermanagh, Northern Ireland, he has also donated $1.9bn to projects in the country, as well as the Republic, where he was instrumental in the founding of the University of Limerick. He also helped behind the scenes during the peace process.

In 2003 he joined the protest march through London against the invasion of Iraq.

Feeney has five children, four daughters and one son, with his first wife Danielle. All the children were instructed to work summers as waiters or chambermaids. He later married Helga, a former secretary.

Feeney’s generosity spurred Bill Gates and Warren Buffett to establish the Giving Pledge, under which the world’s richest people commit to giving away at least half their wealth to charity.

Gates credited Feeney with creating a path for other philanthropists to follow. “I remember meeting him before starting the Giving Pledge,” Gates said. “He told me we should encourage people not to give just 50% but as much as possible during their lifetime. No one is a better example of that than Chuck. Many people talk to me about how he inspired them. It is truly amazing.”

Buffett described Feeney as “my hero and Bill Gates’ hero – he should be everybody’s hero”.

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