Author: Li Mu
Jia Yueting, who once led hundreds of thousands of people to “suffocate their dreams”, once again showed the energy of dominating the headlines.
On January 28, Faraday future (hereinafter referred to as “FF”) announced that it had reached a final agreement with spac property solutions acquisition Corp. (hereinafter referred to as “PSAC”) (NASDAQ Trading Code: PSAC) on business merger. After the merger, it will be listed on the Nasdaq stock exchange with the stock code of “ffie”.
It is reported that the merger is expected to be completed in the second quarter of this year, and the specific progress will depend on the approval speed of PSAC shareholders and regulatory authorities. FF said the deal would provide it with about $1bn in funding, with a valuation of about $3.4bn after the merger, based on a $10.00 per pipe subscription price.
It is worth noting that FF pointed out in the statement that the common share pipe includes more than 30 parent institutional shareholders from the United States, Europe and China. Pipe cornerstone investors include China’s top three private automobile main engine plants and long-term institutional investors. Earlier on the same day, Reuters reported that Geely would act as an anchor investor in the merger.
As for whether the “private automobile main engine factory” in FF’s statement is Geely or not, AI financial society has consulted FF’s public relations personnel on this issue. As of press release, no reply has been received yet.
As a matter of fact, FF has been acting frequently in China recently, and it’s not only Geely that has had an affair with FF. Previously, according to a number of media reports, FF is promoting financing in China. Zhuhai state owned assets, including Gree Group and HUAFA group, will invest about 2 billion yuan in FF, which will build a production base in Zhuhai after backdoor listing.
According to the rumor, Geely will not only inject US $30 million to US $40 million into FF, but also act as the manufacturing service partner of the latter. The two sides will also cooperate in the automatic driving of FF models. It is worth noting that Evergrande, a shareholder once involved in a control dispute with FF, was also said to have participated in the financing negotiation.
Can Jia Yueting turn over and return home? On the morning of January 27, Jia Yueting sent a microblog to pay homage to Kobe, and at the same time encouraged himself, saying “never give up”.
However, the heat only lasted for less than a day, and some parties involved in the scandal poured cold water on it.
Unlike Geely’s previously ambiguous “no comment”, AI Financial Society learned from close to Evergrande insiders on January 27 that Evergrande did not participate in this round of FF financing negotiations. A number of people in Zhuhai Government also replied that they did contact with FF, but the financing has not yet been finalized.
In fact, Zhuhai is not the only local government to have an affair with FF. Previously, it was reported that FF would build factories in Deqing, Zhejiang, Guangzhou and Hulunbuir, Inner Mongolia.
AI financial society also learned that FF had also contacted Hefei municipal government, which had been successful in “bottom hunting”, but it was only “chatting” and made no substantial progress.
An auto industry analyst told AI financial news agency that according to the current reactions of all parties and FF’s previous actions before financing, “they should be talking, but none of them has been finalized”. At the current stage, FF should deliberately release news to show that it is welcomed and raise its value.
However, for Jia Yueting, who was bankrupt because of car building and now wants to turn over by car building, the agreement with PSAC represents the first step on his way back to China. However, before the boots land, variables will always exist. At present, the only predictable thing is that it will be his last chance to bet. If it fails, he may be completely “suffocated”.
each takes what he needs
In addition to Evergrande, which has explicitly denied participating in FF financing negotiations, both Zhuhai and Geely have their own considerations in making decisions to invest in or cooperate with FF.
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As early as 2016, with the introduction of national support policies for new energy vehicles, Zhuhai, located in the Pearl River Delta region, proposed in the 13th five year plan that new energy vehicle equipment should be included in the six key development areas. In the same year, ZTE automobile was also introduced, planning to build an intelligent vehicle manufacturing base project with an annual output of 5000 vehicles and an area of 1200 mu. At the same time, Zhuhai also has local automobile enterprises such as Yinlong new energy, which seems to have the first mover advantage over the old fuel vehicle manufacturing bases such as Hefei.
However, in the following years, the local new energy vehicle industry in Zhuhai has been in a slump. Although the ambitious Dong Mingzhu is dedicated to building cars, he has not achieved substantial results. Yinlong new energy, which once spent a lot of money to build, has also been a chicken in the management disputes. What is more important is that there is no well-known new energy passenger car enterprise in Zhuhai so far Some places like Guangzhou and Hefei are eclipsed, even less than Zhaoqing, which has already put Xiaopeng P7 into production.
Therefore, for Zhuhai, the introduction of FF can further improve the local new energy vehicle industry. Although it is not without the element of “gambling”, Hefei, Anhui Province has achieved great success by “bottom hunting”. Zhuhai may not want to miss the “dividend period” that new energy vehicles are experiencing.
A person familiar with the matter told AI financial news agency that since the sale of part of Gree Electric’s equity in 2019, the Zhuhai local government, which holds a lot of money, has been looking for new industrial targets everywhere. In the layout of the automobile industry, “it has also talked with Geely.”.
In the view of the above-mentioned people, the reason why Zhuhai chose FF is not only optimistic about the development prospect of new energy vehicle industry, but also that it hopes to copy the successful model of Hefei’s bold bet on Weilai. In addition, FF investment is also a “choice with the greatest leverage effect” at this time, and “when facing the door, the risk is relatively small”.
As far as the existing information is concerned, FF has been in the field of new energy vehicles for many years, and many pre production vehicles of ff91, known as “Tesla killer”, have come off the production line. It’s really only one step away from large-scale mass production. If FF can really find Geely as a domestic OEM in the future, it can not only solve the problems of plant construction and production qualification, but also get the support of China’s leading independent automobile enterprises.
Of course, Geely does not have its own ideas when it chooses to negotiate with FF. In the view of auto analyst Zhang Xiang, Geely and FF are more likely to reach a cooperation. “If you want to find Geely OEM, FF must invest in the construction and commissioning of factories and production lines. Geely does not need to invest too much money,” he told AI financial agency. “Cooperation with FF can also solve Geely’s current overcapacity problem and improve the utilization rate of its idle capacity.”
In addition, auto industry analysts believe that through the cooperation with FF, Geely may also obtain part of FF’s technology and patents, so as to feed back its new energy models which are difficult to break the circle for a long time. In fact, not only FF, Geely has recently decided to build a car jointly with Baidu, which also plays the role of “foundry”.
Through a series of recent actions of Geely, it can be seen that under the situation that many of its new energy vehicle brands have not aroused much enthusiasm in the market, Geely not only needs to find a “good partner” to revitalize its production capacity, but also needs the other party’s technology to empower its own models. More importantly, facing the transformation from an automobile manufacturer to a travel service provider, Geely’s current important goal is to build a new model It is to promote as much as possible the vast structure of sea, a pure electric platform built with huge investment of 10 billion.
It is worth noting that whether in the cooperation with Baidu or FF, Geely requires the other party to use its own vast sea architecture. In this way, not only Geely’s idle capacity can be revitalized, but its own genes can be replicated on a large scale. Zhang Xiang believes that Geely can also increase its revenue by cooperating with Baidu, FF and other companies, and improve its market share and brand awareness, “achieving twice the result with half the effort.”.
To say the least, even if the OEM cooperation between Geely and FF is dead in the end, Geely can also obtain huge profits by virtue of the pre IPO anchor orders of FF under the background of the current hot new energy vehicles in the capital market only from the perspective of financial investment.
Jia Yueting’s “scheming”
On the surface, FF seems to have opened a door to success for its partners, but it is as smart as Jia accountant. How can it not have its own tricks? In fact, it is the best and last choice for FF to “return home” at this time.
Jia Yueting’s huge LETV empire in the past began to collapse in “LETV automobile”. Since his departure from the United States and his subversive dream of “ecological anti” turned into empty talk in front of huge debts, another automobile project FF has become the only chip left on his card table. However, no matter where it is, car building is a business of heavy investment and money burning. However, due to Jia Yueting’s personal debt and reputation bankruptcy, FF’s financing road is not smooth.
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In the past few years, in addition to having received most of the investment from Heng and being invested by birch lake, an American commercial bank In addition to the $225 million debt and trust financing, FF’s cooperation with the ninth city, a US listed company that started as an agent of online game world of Warcraft, has not come to an end. The rumored strategic investors such as sovereign funds in the United States and the Middle East, evaio, a blockchain company for electric vehicles, and stifel, a US investment bank, have never seen a shadow.
In order to clear the biggest obstacle to FF financing, Jia Yueting applied for personal bankruptcy and reorganization in the United States on October 14, 2019, claiming that all assets including FF equity will be transferred to creditors through creditor trust, which is controlled and managed by the creditor Committee and trust trustee. After the completion of the scheme, Jia Yueting will no longer hold any equity in FF.
In May 2020, the California bankruptcy court of the United States officially approved and approved the plan, and on June 26, 2020, the plan officially took effect. Jia Yueting once explained that “in order to protect the interests of all creditors, fully repay debts, and speed up the process of FF equity financing”, he “took the initiative to apply for personal bankruptcy reorganization”.
But in fact, for many years, the creditors who “have no way to collect debts” have no better choice but to accept them, which can only be closely linked with the success or failure of FF. And the “financial technology” amazing accounting Jia, once again let the creditors bet all the money to accompany him to “suffocate for the dream” to the last moment.
After the divestiture of the relationship between Jia Yueting and FF at the equity level, the biggest obstacle to the latter’s financing will be removed. In October 2020, FF announced that it has obtained a total of US $45 million bond financing loan from birch lake and ATW partner, two major financial institutions in the United States, and said that the completion of this financing means that FF has obtained sufficient working capital before the formal IPO and basically survived the short-term cash flow crisis.
In January 2021, it was reported that FF was considering landing on NASDAQ “backdoor listing” by merging PSAC, and FF was trying to achieve the goal of over $400 million in pipe financing through roadshow.
The verge also wrote that, combined with the great enthusiasm of the current capital market for new cars, FF will easily achieve a leap through listing. This road also seems to be the best choice for Jia Yueting. The key is that there have been successful precedents before.
In November 2020, canoo, an electric vehicle start-up, completed its listing on NASDAQ by merging with Hennessy capital acquisition Corp. IV (HCAC), a special purpose acquisition company, and obtained a valuation of more than US $2 billion. Coincidentally, the founder of canoo used to be an executive of FF, but later turned against Jia Yueting due to different ideas.
At present, Jia Yueting seems to be playing a capital game again: if FF wants to realize the above-mentioned promise to build a factory for domestic investors, it is more important to open the secondary market for fund-raising, and get on the bus before the initial capital dividend of the new car is dissipated, it is necessary to successfully acquire “property solutions acquisition” To complete the backdoor listing, and to complete the acquisition, we need to raise enough funds
The key to breaking the game is precisely Chinese investors. According to Tencent Qianwang report, in the case of foreign private financing is not smooth, FF began to target domestic funds. Cao he, President of all in car Investment Management (Beijing) Co., Ltd., also told AI financial news agency that it was because it was difficult to promote financing in the United States that FF thought of returning home.
Now, the “top three private automobile main engine plants in China and the first tier cities in China” mentioned by FF in the statement seems to be a disguised expression of its recent “scandal” with Geely and Zhuhai.
In fact, deep binding with partners such as Zhuhai and Geely will not only relieve FF’s current financial difficulties, but also enable it to obtain strong endorsement from the former. Since Jia Yueting’s personal credit bankruptcy, it is of profound significance for FF, which was founded by him, to go public or to explore the market in the future.
The last “suffocation”
In fact, the cooperation between FF and Zhuhai is not groundless, and a signal has been released before. On December 14, 2020, FF established Fafa automobile (Zhuhai) Co., Ltd. (hereinafter referred to as “Fafa Zhuhai”) in China, with a registered capital of US $250 million and a legal representative of Jia chentao. Its business scope includes sales of new energy vehicles and car rental, etc.
Although Jia Yueting no longer holds the equity of FF, Cao he told AI financial news agency that from the actions of both sides, he is still the actual controller of the company. In addition, Zhuhai is closely related to Jia Yueting, whose legal representative Jia chentao is also a supervisor of LETV eco automobile (Zhejiang) Co., Ltd. According to other public information, Wang Jiawei, a director of FF Hong Kong holding limited, the company’s wholly-owned controlling shareholder, is also Jia Yueting’s nephew.
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Jia Yueting built a huge LETV empire by relying on his relatives and Shanxi compatriots as agents. At present, LETV has repeatedly claimed that Jia Yueting is still the actual controller of the company, and that the personal bankruptcy reorganization plan he applied for in the United States is not applicable to domestic LETV creditors. Therefore, FF’s production base in China is bound to face a lot of legal and debt problems. This may be the reason why Zhuhai is more cautious.
As Jia Yueting’s personal credit in China has been completely bankrupt, FF has not gained much positive attention in China. But in fact, as far as the necessary R & D strength of a new energy vehicle enterprise is concerned, FF does have a certain accumulation.
On January 21, FF announced that it had won the “top 10 California technology start-ups 2020” selected by the tech Tribune of the US media. This is also the third time that FF has been on the list since 2018. This news was also forwarded by Jia Yueting in person and topped by microblog. However, the above-mentioned media are not well-known in the United States, and often hold different kinds of selection, so when FF was first listed in 2018, it encountered the question of “spending money to buy the list”.
According to the data from Randolph square IP (RSIP), an analysis company, FF has applied for or been granted about 880 utility and design patents worldwide, of which 530 have been granted, ranking first among start-up technology companies of the same age. In addition, RSIP said FF’s diversified patent portfolio is more powerful in similar technologies than many leading OEMs including Toyota, Ford and Honda. RSIP also pointed out that FF’s expanding patent portfolio for electric vehicles is comparable to Tesla’s in key technologies.
AI Financial Society learned from many people who have been in contact with ff91 real cars that Jia Yueting has a keen sense of aesthetics and smell of products. If ff91 can be mass produced, its actual strength is not bad.
However, even if FF with certain technical strength can really achieve its wish, from the perspective of products, the future is still bumpy. As ff91 focuses on the luxury car market, it was also reported that the price of the car in China will be as high as 2 million yuan. For FF, the high cost will also be a severe test for the funds needed for its mass production. Previously, Dyson, a giant of home appliance manufacturing, had to give up building cars temporarily because of the cost problem. How much money does FF have to raise in the capital market to gain more confidence than Dyson?
What’s more, the high price of ff91 will limit its target audience to the super high-end market or the high-end business travel it has been promoting. However, in the above-mentioned segments, sports car brands such as Porsche and Ferrari, which have existed for a long time, have occupied users’ minds. At the same time, in the field of high-end business travel, there are also high-end models under BBA to choose from. For a brand new brand with its own “stain”, it is not easy for FF to compete for the favor of the rich.
However, in the view of some analysts, luxury label is the advantage of FF. Zhang Xiang believes that consumers in the Chinese market are still very concerned about the brand positioning and luxury degree of vehicles, so “FF has a certain market prospect in China”. As for the brand image, in his opinion, as a car company with R & D headquarters in the United States, and all current models are developed and promoted in the United States, combined with the personal experience of its founder Jia Yueting, it is more legendary. If Jia Yueting can really turn over, it is not impossible for him to turn from black to red in the future.
The information released by FF also seems to confirm Zhang Xiang’s view. In the statement, FF pointed out that the first model FF 91 has received more than 14000 orders, FF 81 is expected to be launched in mass production in 2023, FF 71 is expected to be launched in mass production at the end of 2024, and FF is expected to sell more than 400000 vehicles in the next five years.
In addition, it is also pointed out that if FF successfully returns home to build a factory, its first mass production model in China may be built based on Geely’s vast sea architecture, which is a simplified version of ff91, and the price will be cheaper. Combined with the estimated price of zero concept, which is the only pure electric vehicle based on Geely sea’s vast architecture, the first domestic FF mass production vehicles are likely to compete with Weilai ES6, ec6 and Tesla’s domestic model y.
Cao he told AI financial news agency that if FF’s domestic price remains in the same or lower range as that of Weilai, “there is still a certain space” in terms of sales volume. However, in his view, from a longer time dimension, with the gradual setting of domestic new car manufacturing enterprises, more importantly, traditional fuel vehicle enterprises pay more attention to the research and development of new energy vehicles, which will gradually occupy the market in the future There is little room for new car manufacturers to survive for a long time.
Those who had been cheated by Jia Yueting into getting on the bus
There is no shortage of smart people in the world. The emergence of FF is just right at the pain point of the places or enterprises represented by Zhuhai and Geely. However, the benefits and risks are never far away. After all, most of the people who have been on the old Jia’s cart have suffered losses. A bloody story is just like yesterday.
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Jia Yueting’s idea of building a car began in 2014, but Zhou hang, the founder of Yidao, had an intersection with him in “car” at first. In October 2015, LETV injected US $700 million into Yidao, obtained 66.67% of the equity and became the controlling shareholder. In the following years, LETV led Yidao to carry out several rounds of large-scale recharge and cash back activities, but the purpose was not to expand Yidao’s business, but to buy a lot of hardware products such as TVs and mobile phones that no one wanted.
After poking out billions of capital holes, Yidao became the abandoned son of LETV, and was quickly pushed into the hands of taoyun capital Wen Xiaodong. The latter once recalled that LETV owed taoyun capital money and was unable to repay it, so it agreed to transfer the ownership of Yidao to the other party first, and then raise funds to repay it by selling LETV shares. However, after he took over Yi Dao, Wen Xiaodong found that he was cheated. Not only was Yi Dao’s real debt far from what Jia Yueting had said. In July 2017, Jia Yueting left the United States, and his assets such as stocks were frozen, “and the sale was stillborn.”.
In July 2018, the problem of difficult cash withdrawal by drivers broke out easily. Yidao said the crisis was caused by LETV’s concealment of debts and freezing the company’s accounts through a unilateral lawsuit. Since then, taoyun capital has repeatedly issued announcements to sue Jia Yueting and LETV, and to pursue debts.
Before leaving the United States, Jia Yueting once shared a piece of leeco’s “the sea and the sky”: “those who know me best, thank you for accompanying me silently all the way, so that I can have a good story to tell.”.
After Zhou hang and Wen Xiaodong, sun Hongbin of rongchuang China became an audience of Jia Yueting.
Sun Hongbin claimed that he had talked with Jia Yueting for six or seven hours for the first time. After that, he had an impulse to invest. Subsequently, rongchuang China invested 15 billion yuan to buy LETV, and the deal was settled in 36 days. At the press conference that year, sun Hongbin once looked at Jia Yueting and said affectionately, “some people have known each other for many years, but you still feel strange to them. Some people feel very close after a short time of communication, just like brothers.”
After all, sun Hongbin’s true feelings were wrongly paid. In the end, it was his brother who cheated him. After Jia Yueting went to the United States, sun Hongbin took over the post of chairman of LETV. But less than half a year later, he gave up the post and admitted with tears, “LETV is a failed investment. It’s not a broken arm, but a broken end.”
Regarding the mess left by Jia Yueting, sun Hongbin claimed that he knew about LETV’s related party transactions, but wrongly judged that the debts owed by related parties to the listed company could not be effectively paid off. He said, “what can I do? I’ll lend him another 10 billion yuan. I’m stupid.” As for Jia Yueting’s dream of making a car, sun Hongbin made it clear, “it’s impossible for Jia Yueting to make a car for me.”
Sun Hongbin no longer believes Jia Yueting’s story, but Xu Jiayin, another real estate tycoon, believes it.
In June 2018, FF and others, who were troubled by capital, received the support of Evergrande. At that time, Evergrande announced that it would purchase Hong Kong Shiying company with HK $6746.7 million and obtain 45% shares of smart king company. Previously, Shiying invested US $2 billion to hold 45% of the shares of smart king, and the former shareholder of FF (Jia Yueting) took 33% of the shares of smart king at the price of FF.
However, the honeymoon period lasted less than four months, and the two companies fell into a control dispute, even to the point of court once. On December 31, 2018, the two sides reached a settlement agreement, with Evergrande holding 32% of the preferred shares of FF and 100% of Evergrande FF Hong Kong. Meanwhile, Jia Yueting can buy back the FF shares held by Evergrande within five years.
After the non peaceful breakup, on the one hand, Evergrande poured money around the world and built a factory in Nansha, Guangzhou. At the same time, it released the design drawings of 12 models. On the other hand, FF had financing difficulties and repeatedly sold assets for capital. Interestingly, the big news of both sides also came together. Evergrande’s stock price soared after the Hong Kong stock issue, and FF may return to build a factory.
According to Tencent’s Qianwang report, Jia Yueting felt regretful after breaking up with Evergrande, and he had taken the initiative to make friends with Evergrande for many times, one of which was to give up the CEO position to bi Fukang. But through the constant generous response, boss Xu may not forget.
Jia Yueting not only cheated you into getting on the bus, but also many governments in China and the United States.
As early as December 2015, FF announced a $1 billion investment to build a 3 million square foot manufacturing plant in North Las Vegas, Nevada. To this end, the Nevada government has specially approved a $335 million reward program for FF.
However, at that time, Schwartz, the director of Finance Bureau of Nevada, seriously doubted FF’s financing ability. Since January 2016, he issued five statements to express his concern, and even called FF “Ponzi scheme”. Soon after, due to financial problems, FF plant construction fell into a state of shutdown.
In August 2016, LETV also planned to invest 20 billion yuan to build a “Lesee ecological automobile” super factory and automobile ecological town in Zhejiang Deqing Moganshan national economic development zone. For this project, LETV invested 420 million yuan to acquire land in Deqing, Zhejiang Province twice in 2016 and 2017. However, four years later, the above-mentioned land was reclaimed by the local government through negotiation because it was idle for a long time.
In those years, the cases of being fooled into getting on the bus by “jabbs” all expounded the profound truth that “investment has risks”. Today, Jia Yueting threw down his remaining chips on the card table in front of him. Success or failure will be his last chance. Jia Yueting has been telling the story of FF for four years. It’s time for a result.
Can Jia Yueting do it this time?