How The Man Who Challenged Tesla Went Bankrupt

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 howdy Lamborghini BMW Ferrari Volkswagen Ford in 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 okay in 2015 faraday futures actual plans were a mystery but with a 1500 person work force over a hundred employees poached straight from tesla a foot planted firmly in los angeles and an agreement for a 1 billion dollar 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 futures co-founder shall you teen billionaire tech entrepreneur who's 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 shayateen or whitey as he was called started his career in the 1990s as an official in a local tax borough 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 dollars his most successful venture was a streaming company called late evie which launched its video streaming service in 2004 three years before Netflix on the heels of leyte V success whitey and developed other lines of businesses smart phones TVs sports programming financial products smart bicycles and even electric cars all under an umbrella brand called lay eco or lay economy while the eCos activities seemed unrelated whities 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 lei a co package in 2014 whitey co-founded Faraday future headquartered in California whitey would spend hundreds of millions of dollars developing a car out of Faraday future eventually planning to open a 1 billion dollar factory in Nevada the same state where Tesla was building its Giga Factory meanwhile in 2015 whitey led an aggressive campaign to expand lay eco products into the United States opening an 80 thousand acre campus in San Jose California hiring over 300 employees from Silicon Valley and acquiring American TV manufacturer Vizio for two billion dollars in 2016 let eco launched its flagship smartphone the lay pro 3 and lay s3 and a smart TV the Eco TV with the aim to take on tech giants Apple and Google in the US market and none of these ventures were making money for whitey with the exception of the streaming service lei she formerly late TV none of lei eCos 7 businesses were profitable according to bloomberg so where did all that money come from some from Whitey's pockets but a lot more came from China's lenders as reported by the New York Times whitey found cash over 2 point 1 billion dollars 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 too he tapped back channels and dealt in China's shadowy informal banking system where regulations hardly existed understandably there was a huge backlash when whitey didn't on his promises in april of 2017 37 representatives of small businesses staged a sit-in in the lake hola be demanding lady go paid 10 million dollars that was owed to them leggo responded by filling its lobby with potted plants to keep the angry creditors from low during their whites he ignored in 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 whitey to a debt blacklist the blacklist is a way to publicly slap the wrists of a fluent Chinese business people and try to prevent them from spending recklessly but most importantly Whitey's name on that list meant investors were less keen on doing business with Faraday future in fact Stefan Kraus Faraday future CFO was offered financing deals that were strictly contingent on whitey resigning or giving up a controlling part of the company it's just why T didn't want to give up control and Faraday future desperately needed the money but after three years the company didn't even have a car to sell remember that 1500 person work force while 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 Joe filed for chapter 11 bankruptcy according to the notice whitey accumulated over 6.6 billion dollars of debt in total while we're paying only three billion dollars 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 Reese Park 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 a man in charge of the BMW I program and co-founder of Biden cars Karsten Brite Feld Brite Feld expressed renewed commitment in faraday futures mission of using the technology FF has developed thus far to transform the car industry and as for whitey 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 whitey 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 whitey had all the tools to make a revolutionary car company if you look around you'd see Whitey'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 whitey says the success of a company is all about the choices it makes seems like whitey just made some wrong ones

Channel: Business Insider

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Keywords: Business Insider, Business News, faraday future, electric car, tesla, bankrupt, bankruptcy

Id: 8MELKXZqMQo

Length: 8min 15sec (495 seconds)

Published: Mon Jan 13 2020