LeEco LeSee concept, 2016 Beijing Auto ShowEnlarge Photo
Faraday Future plans to put an electric car into production within two years at a brand-new factory with a stated price tag of $1 billion.
So far, this ambitious plan has had the backing of Chinese billionaire Jia Yueting, and his LeEco tech empire.
But now LeEco may be running out of cash.
In a letter to employees, Jia admitted that LeEco has overextended itself, and said he would cut his own salary to help save money, according to Bloomberg.
"We blindly sped ahead, and our cash demand ballooned," Jia said in the letter, referring to the company's automotive programs and other recent expansions.
In the letter, Jia said LeEco's automotive division has already spent 10 billion yuan ($1.475 billion).
LeEco’s U.S. headquarters in San Jose, CaliforniaEnlarge Photo
LeEco also showed its own electric concept car—called the LeSee—at the 2016 Beijing Motor Show, and has a partnership with Aston Martin separate from Faraday.
In addition to its automotive programs, LeEco recently launched its phone and television lines in the U.S.
It also promised $2 billion to acquire California-based electronics company Vizio.
Much of the funding for these projects is based on loans acquired by pledging LeEco stock as collateral.
But stock prices have been on the decline, dropping almost a third since the start of 2016.
At the groundbreaking for Faraday Future's production facility in North Las Vegas (April 13, 2016)Enlarge Photo
Earlier this year Schwartz asked for greater transparency in LeEco's funding before signing off on a $120 million state contribution for the necessary roads, power lines, and water mains to supply the plant.
In March, Faraday put up a $75 million bond, and set aside $13 million in an escrow account, in an attempt to reassure the state that it could meet its financial obligations.
Faraday itself has had some more recent financial issues as well.
Last month AECOM—the lead contractor on the factory—sent a letter to Faraday stating the carmaker was late on a $21 million deposit for an escrow account to cover material costs and subcontractor work.