HONG KONG -- After China's third-richest man backed entrepreneur Jia
Yueting's electric-vehicle startup with a $2 billion funding pledge, the
wheels finally started turning at its plant in Hanford, Calif.
The
once-abandoned factory came to life three years after Faraday Future
executives visited the farm town to scout the location. Between plant
visits from a state senator and local officials, Jia started building
his team. He hired plant workers, Tesla Inc.'s former head of
intellectual property and litigation, and even the city's former mayor.
"Vehicles are being assembled as I type!" Hanford's city manager, Darrel Pyle, said in an email in August.
The
zest didn't last long, as the new backer for the Chinese challenger to
Tesla is now pumping the brakes. In an Oct. 7 filing, billionaire Hui Ka
Yan's Evergrande Health said it engaged lawyers to defend the company's
interests after Jia began arbitration on Oct. 3 at the Hong Kong
International Arbitration Centre. Jia's company alleges that following
Evergrande Health's initial $800 million investment, it failed to inject
additional funds into the business after Jia fulfilled the required
conditions, according to a statement posted on Faraday's Twitter
account.
Faraday wants to scrap the deal because Evergrande not
only is withholding payments in a bid to allegedly get Faraday's
intellectual property, but it's also preventing Faraday from accepting
immediate financing from other sources, the Twitter posting said.
Evergrande Health denied the claim.
Competition heats up
The dispute raises more questions about Faraday's financial footing
just as the startup prepares to bring out its first model after years of
work. Additional delays could result in Faraday falling behind a slew
of Chinese rivals, including Nio Inc., that already are selling EVs, and
others, such as Xpeng Motors Technology Ltd., that are nearing their
launches.
The spat also represents another setback for Jia, whose
Shenzhen-listed flagship Leshi Internet Information & Technology
Corp. lost $22 billion in market capitalization from its 2015 peak after
regulators temporarily suspended trading and ordered him to return home
and repay outstanding obligations. The company now is valued at about
$2.1 billion.
In an email response to questions sent Oct. 4, John
Schilling, a spokesman for Faraday, said the company was set to begin
deliveries in the first half of 2019 for the first road versions of its
FF91 model.
Schilling didn't respond to requests for comments on the arbitration involving Evergrande Health.
Evergrande
Health, part of Hui's China Evergrande Group, runs "high-end
international hospitals, community health services and health management
services," according to its website. Its Healthy Land project is an
experiment to bring health care services to seniors in large real estate
developments.
Diversify
Hui -- who sits atop a $30 billion fortune -- has
been diversifying his empire away from the property market. Last month,
his group announced a $2.1 billion investment in Guanghui Group, an
owner of BMW dealerships.
Evergrande Health said in a June filing
that Faraday has 1,400 global employees, as well as r&d centers in
Beijing and Shanghai. Its plans for r&d and production bases in
cities such as Guangzhou are aimed at bringing "advanced new energy
automotive technology to take root in" China, according to the filing.
After the deal was announced, Jia met with California state Sen. Andy Vidak at the Hanford plant, according to the Hanford Sentinel newspaper. In September, Pyle welcomed new workers at the facility,
which the company has said will employ 1,000 people by the end of 2019.
That
month, Faraday appointed Jeff Risher, former head of intellectual
property and litigation at Tesla, as vice president of product,
technology and IP strategy. On Oct. 3, the company said it hired John
Lehn, a former mayor of Hanford, as director of government affairs.
