LeEco Admits Cash Crisis, Casts Doubt over EV Development

LeEco LeSee concept 1 photo
Photo: LeEco
Last month, Chinese technology giant LeEco made its debut on the US market, bringing a varied assortment of products with it from 4K TVs to VR headsets, and from mobile devices to electric bikes.
What it remarkably failed to bring, though, was the electric luxury sedan it plans to launch shortly. Called the LeSee Pro, the car has been shown around in its concept form, landing a role in the future Transformers movie as well - which was also the reason why it missed its US appearance.

However, that turned out to be the least of LeEco's worries, as a letter to its employees signed by the company's co-founder and renowned Chinese billionaire Jia Yueting revealed the delicate situation it finds itself in. The main idea of the memo is that LeEco is running out of cash due to its exaggerated expansion and will soon have to cut costs.

No company has had such an experience, a simultaneous time in ice and fire,” read the Yueting's letter, quoted by Bloomberg News. “We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited."

Among the measures expected are cost-cutting programs, reduced subsidies for customers, and, most importantly for everyone interested in the EV market, a switch of focus on existing business as opposed to new ones. It's unclear whether Yueting sees the electric car development as a new business or not, but will get an answer in the following months.

Aside from LeSee Pro, LeEco was also backing up financially another EV startup you might have heard of: Faraday Future. This US-Chinese merger is currently in the process of building its own $1 billion Gigafactory in Nevada (where else?). Once that's done, it will be used to assemble the company's first product of many: an electric crossover that's already been teased and should be officially unveiled next January.

A recent report late last month showed that Faraday Future had fallen behind on its construction bills, with the total debt toward the company contracted to build the facility having reached $60 million. A joint statement from both parties assured everybody that there were no problems and it was all going to be sorted out soon. Now, though, that piece of news can be read in a totally new light.

Given the latest developments and today's announcement that Toyota is going to build a battery-powered EV by 2020, it could be that the established carmakers will be the ones that run the electric market after all. Well, them and Tesla, obviously.
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram
About the author: Vlad Mitrache
Vlad Mitrache profile photo

"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
Full profile


Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories