Evergrande pays US$853.85 million for stake in troubled electric vehicle maker Faraday Future

A unit of Evergrande Group has injected capital into struggling electric car manufacturer Faraday Future, effectively taking control of the company formerly owned by troubled entrepreneur Jia Yueting, according to a stock exchange filing on Monday.

Evergrande Health Industry Group, the Hong Kong-listed unit of Evergrande Group, has agreed to acquire Season Smart for HK$6.7 billion (US$853.85 million), the company said in a filing to the Hong Kong stock exchange on Monday afternoon.

Last year Season Smart took a 45 per cent stake in a joint venture with struggling electric car maker Faraday Future following a US$2 billion capital injection.

According to the filing, Evergrande will replace Season Smart to become the biggest shareholder of Faraday Future, with a 45 per cent stake. The original shareholders of Faraday Future will keep a 33 per cent while 22 per cent of equity will be reserved for employees.

Faraday Future was founded by Jia Yueting in 2014 in Los Angeles to build electric cars that could challenge Tesla. Jia remains among the original shareholders.

But Faraday Future’s operations in Nevada were shut late last year as Jia struggled to keep afloat his cash-strapped business empire LeEco.

Faraday Future’s official Weibo account posted a statement on Monday afternoon, saying it welcomed Evergrande as a “new strategic investor”, while also stating that Jia will take the role of Faraday Future’s global CEO.

Smart Mobility Auto, a company under Faraday Future, earlier in April won a bid for a land plot covering 98.8 acres in the Nashan district of Guangzhou.

Jia travelled to the US in March last year to “focus on his electric car dream”.

LeEco’s Jia stays in US chasing his electric car dream, leaving wife and brother to handle crumbling empire

Jia missed an end of year deadline issued by securities regulators to return to China to address his debts. Jia said he would stay in the US to focus on the electric car business, overseeing production of the FF 91, a luxury electric vehicle being developed by Faraday Future.

Back in China, his flagship, Shenzhen-listed Leshi Internet Information & Technology Corp is facing a delisting warning from the regulator, as it has defaulted on debt worth billions of yuan, while its net assets have plunged by 98 per cent in the past year.

The company reported a net loss of 307 million yuan (US$46.9 million) for the first three months in 2018 and a loss of 13.9 billion yuan for 2017.

“Through acquiring world-leading new energy automotive technology and products …[Evergrande] has the opportunity to obtain a strong competitiveness in the fast-growing new energy automotive industry, capture market share and diversify its businesses,” the Evergrande filing said.

Season Smart has invested US$800 million into the joint venture with Faraday Future, according to the filing.

Evergrande will invest a further US$600 million before the end of 2019, and another US$600 million before the end of 2020, the filing said.