“It’s clear Mr. Jia doesn’t have any money,” Nevada State Treasurer Dan Schwarz recently said of Jia Yueting, the tech mogul behind the mysterious Silicon Valley car startup Faraday Future. This does not look good.
Last week Schwarz spoke to China Daily with a fairly grim assessment of how his state’s $335 million tax break to the Chinese-backed car company is looking:
“The projects Jia invested in, including in China, seem very difficult for him personally to realize,” Nevada State Treasurer Dan Schwartz said in an interview with China Daily.
“If you look at Leshi (LeEco’s listed arm) it has roughly $6 billion in revenue, but it’s netting about $50 million. That profit margin is less than 1 percent ... Grocery stores make 2 percent to 3 percent,” said Schwartz.
“It’s clear Mr Jia doesn’t have any money, it’s clear that Leshi isn’t making money. That’s the reason for my concern.”
Schwartz said the factory construction stopped earlier last week and he believed the reason was no payment had been received from Faraday Future.
Faraday Future has not yet replied to a request for comment from Jalopnik.
Anonymous sources close to Faraday Future’s finances have given a different kind of impression to Jalopnik, arguing that it’s not that Jia doesn’t have any money, it’s just that he hasn’t been investing enough of it into Faraday Future. A recent memo from Jia himself stating that he was going to refocus on his core businesses away from Faraday Future does not give great hope in this case.
The Nevada Treasury accusations are unfounded and totally inconsistent with the facts, we suspect defamation, but our channels of communication are always open.
About a year ago Faraday Future emerged, a new car startup with big promises to take on Tesla with all-electric, self-driving cars based out of Silicon Valley and funded by the Chinese tech billionaire Jia Yueting. Jia is best known for founding the first subscription video streaming service in China, the Chinese Netflix as it has been called.
Faraday Future was not only going to match Tesla in the kinds of cars it would build, it would match Tesla in how it built those cars, too. Faraday Future broke ground on a billion-dollar factory in North Las Vegas, Nevada, this year, aping Tesla’s Gigafactory outside Reno.
FF’s work on its Nevada site has not been going great. A few weeks ago, its construction company AECOM revealed that Faraday Future was $21 million behind on payments. Not long later AECOM confirmed that work on the factory is currently stopped.
All of this work is being done thanks in no small part to $335 million in tax credits from the State of Nevada, so it makes sense that Schwarz is weighing in here.
Schwarz did at least admit that since the state hasn’t issued any bonds, any damage from the project totally failing would be “minimal.” At worst, the state’s governor and economic development agency would be “very embarrassed.”
I don’t know if current employees of Faraday Future would share that sentiment.