Behind Jia Yueting's return to China: eight years of car building is still on the road

Since Weibo recently opened up to show the IP attribution of some users, users have paid great attention to the positioning of some celebrities, including Jia Yueting, who has been ridiculed by netizens as "returning to China next week". On May 7, Jia Yueting's latest Weibo post showed that his IP belonged to Beijing, causing netizens to speculate about whether he had returned to China. On May 8, a relevant person close to FF confirmed to the Beijing Business Daily reporter that Jia Yueting did not return to China.

It is reported that like most celebrities, the accounts are operated by professional operation teams, and the social media accounts of "Jia Yueting" take into account the problem of jet lag, and some of the content is released with the assistance of the domestic operation team. Regarding the progress of car manufacturing, he said that "the car construction is still carried out according to the original plan, which is very smooth."

Losses increased

After the rapid expansion of LeTV, followed by collapse? Jia Yueting, carrying a huge amount of debt, went overseas and set up a new energy automobile company Faraday Future (FF) in the United States, intending to make a comeback, but the third quarter of 2021 financial report disclosed on May 7, Beijing time, made investors full of worries about the "second spring" of Jia Yueting's career.

Operating expenses for the third quarter ended September 30, 2021 were $186 million, compared to $17.55 million for the three months ended September 30, 2020, up approximately 960% year-over-year, according to the financial report. FF explained that "the significant increase in operating expenses is mainly due to the increase in investment in the Hanford manufacturing plant in preparation for full commercial production." ”

FF also explained the nearly 10-fold widening of net losses over the same period. "The increase in net loss was primarily due to a significant increase in operating expenses, losses on changes in fair value of notes payable, notes payable denominated at fair value, fair value liabilities, and losses arising from the treatment of notes payable to related parties, notes payable and supplier payments payable." FF said in the earnings report.

The earnings report also shows that for the third quarter ended September 30, 2021, FF had a net loss of $304 million, compared to a net loss of $33 million for the same period last year; and a balance of cash and cash equivalents was $666 million. Cash balances as of March 31 of this year were $276 million, including $97 million in notes and planned interest payments.

It is worth noting that in addition to financial losses, there is also the problem of "difficult childbirth" in the financial report itself. Due to the repeated postponement of the release of the quarterly report, in November 2021, the SEC of the US Securities and Exchange Commission issued a delisting warning letter, if it can not be submitted on May 6 this year, FF will be delisted, and now the company is a "pressure line" to give the report card.

Financial concerns

As for the reasons for the loss, Faraday Future explained that it was mainly due to increased operating expenses, related party notes payable, notes payable denominated at fair value, fair value change losses on warrant liabilities, and losses arising from the processing of related party notes payable, notes payable and supplier payments payable.

For such an explanation, industry experts do not buy it. Shen Meng, executive director of Chanson Capital, told Beijing Business Daily that Jia Yueting's performance when he was in charge of LeTV, as well as the declaration of his personal bankruptcy in the United States, has made the market lose confidence in it, and it is still unnecessary to hope for his "car-making" cause.

Experts look back on leTV's past is not without reason, LeTV's financial problems are now looming in the FF financial report, to the 2016 financial report reference, when LeTV "deposits and loans double high", the book funds are full at the same time there is a large number of financing, borrowing, the reason is that the company holds most of the restricted funds, including a variety of unpaid bills.

According to the 2021 interim report of the detailed data released, FF's cash and cash equivalents were $17,900, down 48.27% year-on-year, while short-term liabilities and liabilities payable reached about $500,000 and $1.98 million, respectively, and current liabilities reached about $2.48 million.

According to the report of J Capital Research, a U.S. short-selling agency, FF has not delivered the car for eight years, in addition, FF has broken its commitment to build factories in five places in the United States and China, and has repeatedly postponed the process of building a sixth plant; FF is being sued by dozens of unpaid suppliers and failing to disclose that its assets in China have been frozen by the courts.

In response to the question, Jia Yueting responded through his circle of friends on personal social media on the same day that Mei Qijin's remarks were "cold rice and hot stir-fry, nonsense" .

Build a bus hopping ticket

In addition to financial concerns, FF's automotive products have also been delayed for a long time, and FF's official data shows that as of March 31, 2022, the number of FF 91 bookings was 401. According to the plan, FF's first production car, the FF 91, will be delivered within 12 months after FF goes public on the NASDAQ.

In the surging field of new energy vehicles, Xiaopeng G3 took three years to get off the line, Weilai ES8 took about two and a half years, and FF 91 released a quasi-mass production model this year, according to the establishment of the company has been more than eight years, from the 2017 FF 91 sample car debut has also been five years ago.

Veteran industrial economic observer Liang Zhenpeng is not very optimistic about the future of FF, he believes that FF 91 needs to consider not and the first-mover companies to seize the market problem, but there is no comparison at all, he told the Beijing Business Daily reporter that Tesla, Weilai these enterprises, whether profit or loss, are in the continuous rapid expansion, commercial mass production stage, are running on the road, every year a large number of sales of cars, and FF after so many years, have not been able to go to the market.

Experts' doubts are not without reason, before the FF car-making activities have been repeatedly delayed, in 2016, Jia Yueting became the actual controller of FF, in 2018 he received capital injection from Evergrande, and announced that mass production was achieved at the end of the same year, delivered in the first quarter of 2019, after which Jia Yueting and Evergrande launched disputes around control, and the mass production plan was also shelved. In July 2020, Jia Yueting once again announced that "there is only one foot left before mass production", but it has not been cashed in to this day.

"Companies like FF have no actual operating performance, have been making huge losses since their inception, and are still investing, and still don't see any value." Liang Zhenpeng said.

Beijing Business Daily reporter Jin Chaoli Wang Zhuli