Jia Yueting insisted on driving the car himself. The Chinese entrepreneur knew that the 2017 Consumer Electronics Show in Las Vegas could make or break his startup electric vehicle company, Faraday Future. After three years of planning and designing, Faraday was finally unveiling its first car, a sport utility vehicle called the FF91. Image mattered to Jia — who goes by the nickname Y.T. — so when it came time to drive the car on stage, he wanted to be behind the wheel.
Nick Sampson thought this was a bad idea. As co-founder and head of engineering, Sampson knew the car inside and out, and thought it would be safer for Jia to sit in the back, with Sampson in the driver’s seat. But Jia wouldn’t have it, and Sampson gave in.
The silver car rolled on stage to heavily synthesized music, and Jia emerged, smiling and wearing his trademark black hoodie and jeans. At 43, he had closely cropped hair and looked boyish, nervous even, as he gave a brief speech in rehearsed English. “I am willing to devote my everything to my dream,” he said to mild applause. “Even my life.”
Sampson then invited Jia to show off the car’s auto-park capabilities, indicating a button on the side of the car. Jia pressed it. A moment passed. The car didn’t move.
“OK,” Sampson said, chuckling nervously, as the self-parking car refused to park itself. “It seems like it’s a little bit, er, lazy tonight.” It turned out that Jia, despite specific instructions not to touch the steering wheel, had done so, which shut down the car’s automated program.
The gaffe was neither the first nor the most serious error in Jia’s career, but it highlighted a trait that would eventually bring Jia and Faraday Future to the brink of ruin: His refusal to take his hands off the wheel. Once ranked among the richest men in China, worth an estimated $7.3 billion back in 2015, Jia has now filed for personal bankruptcy in the U.S., unable to pay $3.7 billion in debts.
Just a few years ago, Jia ruled the Chinese tech world. He founded one of China’s biggest video-streaming services, and built a business empire known as LeEco, which made smart TVs, cell phones, and electric cars. His do-the-impossible ambition and flair for the dramatic inspired comparisons to Steve Jobs and Elon Musk.
Faraday Future was going to be his crown jewel. When he announced plans in 2015 to spend $1 billion on a new factory in Nevada, he promised a rival to Musk’s Tesla. The state offered Faraday bountiful tax abatements and other incentives, relying on projections of thousands of newly created jobs.
Now, six years after its founding, Faraday still hasn’t sold a single car. The Nevada factory never materialized, and the company has laid off two-thirds of its employees. Jia argues that all Faraday needs to begin manufacturing is another $850 million, and then it’ll be back on track. But in order to raise that money from skeptical investors, he must first resolve his personal debt. To that end, he has filed for bankruptcy, proposing to his many creditors that they forgive the debt in exchange for his stake in Faraday.
Jia has weathered headwinds before. In 2014, he was detained in China as part of a corruption investigation into the family of one of the early investors in his business empire. In 2017, already saddled with debt, his assets frozen in China, he defied a Chinese regulator’s order that he return home to deal with his creditors. In 2018, Faraday was on the verge of insolvency when Jia convinced a massive Chinese real estate company to rescue it.
So far he has always landed on his feet, a nine-lives quality that may explain his unwillingness to step aside, even when his presence seems to exacerbate the company’s problems. Sampson and his staff would see the same traits that fueled Jia’s rise — a willingness to take risks and an obsession with doing the impossible — nearly steer the company over a cliff.
Sampson always wanted to make cars. He got his start working at Jaguar in the late 1970s, and in 2009 joined Tesla as head of chassis engineering. After leaving in 2012 — when I asked why, he simply said, “Elon” — Sampson and a former colleague discussed starting an electric vehicle company. The timing felt right: EV sales were growing exponentially, thanks in part to the Chinese government shelling out billions in subsidies.
In early 2014, Sampson flew to China to meet with investors, including Jia, who invited him to the unveiling of his company’s new high-definition TV. “It was like an Apple launch,” Sampson said: dramatic lighting, thumping music, Jia strutting out in a black T-shirt. “It seemed very real and very special,” Sampson said.
Jia’s appeal owed largely to his bootstrapping legend. Born in rural Shanxi province to a middle-school teacher father and a homemaker mother, he quit his job as a technician at a county tax bureau to open a print shop. He soon turned into a serial entrepreneur, buying and selling steel, founding a school, and investing in a fast food restaurant that combined the names of KFC and McDonald’s. His big break came when he convinced officials at a local telecom operator to let him install lightning rods in cell towers, spawning a communications company that later went public in Singapore.
That company, Sinotel Technologies, flourished by winning contracts with giant, state-owned telecom providers. Because China’s telecom sector is heavily state controlled, and difficult for private companies to break into, there were indications that Jia had strong government ties, particularly after his company named a Communist Party official, who had previously worked in the provincial police bureau, as its chief operating officer.
In 2004, Jia started a new company, LeTV, based on a simple, then-radical assumption: That legal online video was the future. At a time when piracy ruled, streaming video struck many investors as risky, but Jia sold it through smart TVs. Jia soon rolled out a network of products within a single “ecosystem,” a holding company he eventually called LeEco. Customers could buy a smart TV from LeTV and stream soccer games from LeSports or watch movies produced by LeVision while making calls on their LePro phone. Jia saw electric cars, in which passengers could stream content, as a natural next step.
“It was brilliant,” said Bill Russo of Automobility, a Shanghai-based strategy and investment advisory firm. “The articulation of his vision was correct. The execution has been an absolute failure.”
Sampson was smitten. When they met at the LeEco headquarters in Beijing, Jia impressed him with his ambition and child-like eagerness. (The signed Kobe Bryant jersey hanging in Jia’s office didn’t hurt.) Stefan Krause, who later joined as CFO, called Jia one of the few visionaries he’d ever met: “Jack Ma is this type of a person. … Steve Jobs, I saw that in him as well. And Y.T. was this down-to-earth, really simple kind of, I’d almost say boy. He had a super charming personality, he had this vision, he knew what he wanted. He knew how to change the world.” Sampson warned Jia that building an electric car company would cost between $1 and $2 billion just to get started. “He wasn’t fazed by that,” Sampson said.
Y.T. was this down-to-earth, really simple kind of, I’d almost say boy. He had a super charming personality, he had this vision, he knew what he wanted. He knew how to change the world.”Stefan Krause, then-CFO of Faraday Future
The site picked for Faraday’s new headquarters was a ramshackle warehouse owned by a Korean clothing company in Gardena, a working-class city in greater Los Angeles, that afforded easy access to the highway and a view of the pet cemetery across the street. Faraday turned it into a sleek structure with open workspaces and a cantilevered roof.
Seasoned automotive executives — including Dag Reckhorn, Tesla’s former director of manufacturing for its popular Model S, and Audi designer Richard Kim — joined the management team. Jia brought on Chinese associates who lived in a set of oceanfront mansions in Rancho Palos Verdes, a short commute away. These properties, which Jia purchased for $27 million, became his residence and a de facto hotel, with a Chinese chef for a rotating cast of Faraday employees and guests.
Early on, Faraday operated in stealth mode, without publicity or any indication that Jia was backing the start-up. Some guessed it was a secret Apple project. Chinese media noted Jia’s absence from China, in some cases speculating that he might have fled to avoid President Xi Jinping’s growing anti-corruption campaign. The company kept a low profile to downplay its Chinese roots, according to Sampson. When Jia proposed naming the company after Michael Faraday, the 19th-century scientist whose discoveries led to the electric motor, Sampson worried that critics would call it a Chinese rip-off of Tesla, named after another electrical pioneer. But Jia loved the sound and visual impact of “FF” — the letters were stylized into the company’s logo — and Faraday Future was born.
The technical vision was ambitious. Jia set out to build an electric vehicle that would outperform its competitors in speed, power and battery life, and also feature a “variable platform architecture” to easily swap out drive trains and battery packs. The Faraday team also envisioned cellular connectivity, three separate modems for web access, and facial recognition for drivers and passengers.
“Dare to dream what ninety-nine percent of people think is impossible,” Jia liked to say, “and you’ve earned that one percent chance of success.” He declined multiple interview requests for this story.
The engineering team worked on building a prototype while Reckhorn scouted potential factory sites from Louisiana to California. They settled on Nevada. In December 2015, the state legislature approved a $335 million package of tax breaks and infrastructure financing for a $1 billion factory in North Las Vegas. In early 2016, Faraday revealed a single-seat concept car that, while not exactly an aesthetic hit — a TechCrunch reporter grilled Sampson onstage about the “Hot Wheels car” — at least showed originality. And in April 2016, it held a groundbreaking ceremony at the Nevada site. If all went smoothly, the car would be in production by 2018. From the podium inside a tent in the middle of the desert, Reckhorn rallied the crowd of state and local officials to say in unison, “This is the fun part!” before clinking glasses of champagne.
THE BIG BONG
Dan Schwartz declined to attend the groundbreaking ceremony. As Nevada’s treasurer, Schwartz was responsible for clearing the issuance of $175 million in state bonds the legislature had designated for the Faraday project. But the more Schwartz learned about Jia’s record, the more questions he had.
Since the launch of Faraday, Jia’s reputation in China had nosedived. By the time of the Nevada groundbreaking, the once high-flying shares of Leshi Internet Information and Technology, the publicly traded holding company that owned pieces of his LeEco group, were falling and stumbling through trading halts as the government restricted video-streaming content. Investors had doubts about Jia’s ability to handle stiff competition.
Schwartz met with a Faraday representative in early 2016 and asked how it would pay for the factory. “They kept changing their story,” Schwartz said. “He said, ‘Don’t worry about it.’” Schwartz, who had worked on Wall Street and in Hong Kong, was skeptical. “If you looked at the financials, he wasn’t making enough money to support this,” Schwartz said, and profits were slim — “grocery-store margins,” as he put it.
Indeed, Jia had created a complex network of affiliates and offshore entities that were hard to untangle. Corporate documents reviewed by The Wire show that Leshi raised billions of dollars in stock and bond offerings in the years before its collapse, received government subsidies intended for technology startups, and made loans to Jia. His empire had grown to include scores of companies, some of which were registered in the British Virgin Islands and other tax havens. Jia had multiple titles. He was executive chairman of Sinotel, chairman of Leshi and Faraday, and had invested in an American EV startup called Lucid Motors.
Records also show that in 2014 Jia began pledging his shares as collateral for personal borrowing. Those loans, along with others Jia received, eventually topped $2 billion, according to bankruptcy filings.
This type of lending to executives can spook investors, as insiders appear to be cashing out of their stock, which can be seized by lenders and sold if the shares fall. From their peak price in mid-2015 Leshi’s shares have fallen 95 percent, ending in a trading suspension. Much diminished, the company now faces possible delisting.
As Jia’s business struggled, political trouble was also brewing. Years earlier, a private equity firm called Huijin Lifang had invested in Leshi. That firm was controlled by Ling Wancheng, the brother of then-Chinese President Hu Jintao’s chief of staff, Ling Jihua, who was sentenced to life in prison for corruption. Jia’s ties to the Ling clan dogged him. Ling Wancheng’s brother-in-law, Li Jun, was also a top 10 shareholder in Leshi, according to a report in the Chinese media.
There was also the suspicion that Leshi had received preferential treatment to gain its listing on the Shenzhen board. A regulatory official was later charged with taking bribes to help nine companies obtain listings. One was Leshi.
Chinese authorities detained Jia as part of the Ling Jihua investigation in late 2014, according to Chaoying Deng, vice president for government relations at Faraday, and a close advisor to Jia. “They found nothing,” Deng said. And although Ling fled China and reportedly settled in California, he and Jia have not met there, according to Deng. Jerry Wang, Jia’s nephew and a vice president at Faraday, said Leshi didn’t receive any special treatment in its listing.
Back in Nevada, Schwartz delayed approval of the infrastructure bonds. From his reading of Leshi’s financials, Jia “was barely making enough money to sustain their operations, let alone invest $1 billion in a North Las Vegas car plant” and pay for myriad other global expansion plans underway, Schwartz said. After visiting Faraday’s headquarters in Gardena, assessing the FF91 and learning of plans to price it in the realm of $150,000, Schwartz concluded “they were building a car that would never sell.”
Faraday supporters dismissed Schwartz’s analysis. But behind the scenes, cash flow had slowed to a trickle. Internal anxiety culminated in what Sampson called a “fairly firm meeting” in August 2016, in which colleagues confronted Jia about the lack of funding. “He assured people that money would come,” Sampson said.
In a letter to employees, Jia later admitted the company had expanded too fast: “We blindly sped ahead, and our cash demand ballooned.”
Despite the setback, Jia forged on as aggressively as ever. When one of his companies in China unveiled a car called the LeSEE — designed by Faraday engineers — Jia used the opportunity to take shots at Apple, calling its technology “outdated.” LeEco opened an office in San Jose to expand into the U.S. market and, in October, threw a coming-out party in San Francisco called “The Big Bang.”
The showcase featured executives from Jia’s Chinese empire touting their various fiefdoms. The presentations teemed with boasts about disrupting the status quo — with few specifics about how. “The whole thing was just smoke and mirrors,” said one presenter. Among some at Faraday, the event was dubbed “The Big Bong.”
Days after the event, the construction company hired to build the Nevada factory said Faraday had fallen behind on a $21 million payment. A month later, Faraday announced a “temporary work stop” at the site that soon became permanent. Jia “never had the money or skill set to build an electric car plant” in Nevada, Schwartz said.
AN ADOPTED CHILD
When Krause arrived at Faraday in March 2017 as its new chief financial officer, he found the company in a state of financial and managerial chaos — in a word, he said, “non-investable.” A veteran of BMW and Deutsche Bank, Krause said he joined Faraday partly because Jia said he “wanted to change the world.”
After three years, Faraday had no financial statements at all, according to Krause. So he set about creating them, along with internal cash controls. Krause said he cancelled planned real estate purchases and shut down product placements, including one for the FF91, which was slated to appear in a Transformers movie.
In early 2017, Jia surprised critics by persuading Sun Hongbin, the head of one of China’s biggest property developers, to invest $2 billion in a network of LeEco affiliates, helping prop up part of Jia’s troubled empire. But even that deal quickly collapsed.
Setbacks mounted. Jia’s plan for LeEco to acquire the U.S.-based TV maker Vizio for $2 billion fell apart. A group of Chinese suppliers camped out in the lobby of LeEco’s Beijing headquarters, protesting alleged unpaid bills. A Shanghai court froze $183 million of Jia’s assets, and the Supreme People’s Court placed him on a national “debtors blacklist,” restricting him from spending any funds “not necessary for living and working,” including travel.
From The Wire’s graphics team: Jia’s Rocky Road
A timeline of selected moments in Jia Yueting’s tumultuous career and sprawling empire.
Perhaps most alarming, China’s securities regulator ordered Jia to return to Beijing to deal with his debts. Jia, who had resigned from Leshi and moved to the U.S. in July 2017, posted a message on the Chinese social media site Weibo professing a “deep sense of guilt and remorse,” but refused to comply with the order.
After dozens of failed meetings with investors, Krause said, he proposed that Faraday file for bankruptcy. Jia bridled at the suggestion and accused him of trying to stage a coup, according to Krause. Wang said Krause “went behind the backs of Faraday directors” to submit the proposal, which had a “devastating impact” on Faraday. Krause resigned.
Beyond his automotive ambitions, Jia had another reason to keep Faraday alive. He was residing in the U.S. on an L-1 visa, which requires that the visa holder’s company be “viable.” If Faraday failed, or if Jia separated from it, he might be forced to go back to China. And because of his “blacklist” status, Jia feared he wouldn’t be allowed to leave China again, according to Deng.
In late 2017, low on cash, Jia surprised his weary Faraday troops with big news: he had convinced a new investor to bail out Faraday. The mystery investor was later revealed to be the Evergrande Group, China’s second largest property developer, which had committed $2 billion to the struggling start-up.
Evergrande received a 45 percent stake in Faraday, which was back in business after receiving an initial payment of $800 million from the property developer. With Nevada off the table, Jia found another site for making cars — an old Pirelli tire factory in California — and took on the title of chief executive officer.
“Not everyone believes we can achieve this vision,” Jia told a group of suppliers. “But to make a miracle you have to be a little crazy.”
By July, the $800 million from Evergrande had disappeared, and the next installment wasn’t scheduled until the following year. Jia requested it in advance. Evergrande initially agreed, but only if Jia gave up his controlling stake in Faraday. He declined.
Cut off from new funding, Faraday laid off hundreds of employees, cut salaries by 20 percent, and put many workers on furlough. For Sampson, this was the final straw. The way he saw it, Jia was putting his own interests ahead of his employees. It didn’t help that in one contentious meeting, according to Sampson, Jia called him “an idiot.” In late October, he submitted his resignation.
Jia “wasn’t going to change or give up,” Sampson said. “He said he felt the company was his child, but it was more like an adopted child.”
In October 2019, with no new lifelines available, Jia filed for personal bankruptcy.
In a conference room at Faraday’s Gardena offices a month later, Jia faced his creditors for the first time. Sitting at the head of a long table littered with water bottles, wearing his usual black hoodie, he apologized to two-dozen investors and lawyers, most of whom had flown in from China and represented only a portion of the approximately 100 entities he owed money.
It was a topsy-turvy spectacle: Jia, a Chinese citizen, was sitting down to negotiate terms under a U.S. court’s auspices with creditors who were almost entirely Chinese — the same lenders who would have confronted him at home under the Chinese government order he had defied.
As part of his bankruptcy reorganization, Jia was offering his creditors a deal. He would give them his stake in Faraday if they forgave his $3.7 billion debt. If they accepted the plan, he said, that would free Faraday to raise the money from an investor and begin car production. (A Faraday spokesperson said the company has interest from investors, but wouldn’t name them.)
It seemed like a long shot. Jia was trying to convince creditors to let him off the hook based on the notion that getting a piece of Faraday – which had burned through more than $2 billion in cash, never sold a car, and needed another $850 million just to move into manufacturing – represented a better bet than the alternative, which would be liquidating his assets and dividing them up.
In the early going, Jia was getting bruised. In December, the Department of Justice’s Office of the U.S. Trustee, which oversees federal bankruptcy cases, accused him of “dishonest behavior” and wrote that he “obscures his financial affairs, by not disclosing the amounts and sources of income used to pay his day-to-day expenses, not fully disclosing the true value of his various assets” and other misrepresentations.
Creditors attacked his integrity. John Zhang, a lawyer representing Shanghai Qichengyueming Investment — owed $100 million by Jia — called the package “an unmitigated fraud.” Zhang sees a pattern of Jia “essentially giving away money to his confidantes to hide his assets.”
Daniel Saval, an attorney with Kobre & Kim, which represents Shanghai Lan Cai, one of the Chinese creditors in the case, added: “We believe he’s using the bankruptcy to shield undisclosed assets held through nominee relationships and affiliated entities.”
Faraday, while not in bankruptcy, owes at least tens of millions to suppliers. But the company argues that the car’s core technology remains viable and valuable. Four months ago, at the latest Consumer Electronics Show, reviews of the FF91 were largely positive.
The car’s much-touted user experience, however, is still rough around the edges. In a recent visit to Faraday headquarters, a friendly engineer tried to demonstrate the car’s automatic voice feature to The Wire by saying, “Open all doors,” but the car didn’t respond until the third attempt. Later, when he said, “Close all doors,” the dashboard display instead populated a list of “music artists matching The Doors.”
If the reorganization plan goes through, Jia would ostensibly give up control of the company — he would own zero shares. But his nephew would retain veto power over “certain matters,” according to Wang. Asked what that meant, Wang said that included “all important decisions.”
After a month-long solicitation process, creditors voted overwhelmingly in favor of Jia’s reorganization plan, according to court documents filed in early May. A hearing to finalize the plan is scheduled for later this month.
A dissenting creditor said it plans an appeal, but even if the judge finds reason to reject the reorganization, it’s unlikely Jia would take his hands off the wheel at Faraday voluntarily. As Jia once put it in a late-night Weibo post: “Faith spurs us on, and we bravely face the unknown future… We proceed lonely.”
Christopher Beam is a writer based in Los Angeles. Previously, he worked as a correspondent in Beijing for six years. His work has appeared in The New Republic, Bloomberg Businessweek, the New York Times Magazine, GQ, The New Yorker, and Slate.