LeEco mired in financial crisis

China Holdings and others at the beginning of the year.

Partly as result of the mounting financial pressure, Jia resigned from all positions at the listed Leshi unit, stepping down as chairman, and left the board of directors.

Jia said he would focus on LeEco’s automobile business, which is not listed. He would especially devote more time to Faraday Future, the US-based startup he personally backs.

But Faraday Future said on Tuesday that it halted plans to build a $1 billion factory in Nevada. “We are in the process of identifying a manufacturing facility that presents a faster path to start-of-production and aligns with future strategic options,” Faraday said.

Lu Zhenwang, CEO of the Shanghai-based Wanqing Consultancy, said it is highly difficult for Jia to succeed in the cash-intensive automobile sector, given LeEco’s worsening financial risks.

“Producing cars is far more complicated than making smartphones. The faster an auto factory grows, the more resources firms will need to keep it running. It will take at least three to five years before enterprises generate any profit from a car factory,” Lu said.

Jia Yueting, founder of LeEco

LIU YILIN / XINHUA A visitor experiences LeEco’s VR glasses at a US product launch in Los Angeles, California.