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Chinese Evergrande Group invested USD 300 million in the electric-car startup Faraday Future

Apr 17, 2018 by The Passage Team
Chinese Evergrande Group invested USD 300 million in the electric-car startup Faraday Future

The investment came as a lifesaver to the American startup in December 2017, when the company was rumored to be facing bankruptcy.

Faraday Future was founded in 2014. They presented their first prototype of a sports car at the January 2016 Consumer Electronics Show and one year later, they showcased their first production vehicle, the FF 91, which is expected to become available this year. However, the company has been suffering economic difficulties. The majority shareholder of Faraday Future is the Chinese group LeEco, founded by Jia Yueting, who is also the CEO of Faraday Future.

According to people familiar with the agreement, the Chinese Golden Concord Group had considered investing in Faraday Future, but they pulled back at the last minute. Finally, it was Evergrande’s investment fund based in Hong Kong that invested USD 300 million in the startup in December last year, when the market value of Faraday Future was USD 1.5 billion. Not only that, the financial group also transferred USD 100 million to the account of Faraday Future in order to help the startup overcome its financial crisis. The agreement was very secretive; it came to light later that only five people in the startup knew about it. On December 13th 2017, Faraday Future announced they had raised USD 1 billion.

However, the story gets more complicated. A tech company called Reach Limited, controlled by Smart Mobility (Hong Kong) Holdings Limited (previously known as FF Hong Kong Holdings Limited), suddenly bought almost 100 acres of land in Guangzhou. Around the same time, on 30 November last year, a company called FF China headed by Jia Yueting’s nephew, pledged 95% of their stocks to another company called Shiying Limited. The agreement was signed on behalf of Shiying by Zhao Du, who happens to be the chairman of Zhongyu Group. This group has a long history of association with Evergrande. They control 2.66% of the shares of Evergrande Health and 0.12% of the shares of Evergrande China. Only 12 days after the agreement, Evergrande’s investment fund in Hong Kong invested USD 300 million in Faraday Future’s offshore company in the Cayman Islands.

Initially, Jia Yueting wanted to sell his part in Lucid Motors, another electric car startup, in order to rescue Faraday Future, but his plans changed. He is the major shareholder of Lucid with 38% of the shares. He first invested in the company when it was still called Atieva. At that time, the major stockholder was BAIC Bjev, a subsidiary of the Chinese automobile firm BAIC Group. However, after witnessing the slow development of Lucid Motors, they decided to transfer their share to Jia Yueting, who thus became the major shareholder.

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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