Meet Jia Yueting: The Elon Musk Of China, Who Has A Vegas Problem

By on August 19, 2016 in ArticlesBillionaire News

Jia Yueting is a self-made Chinese tech billionaire who started out as the IT guy at his local tax bureau and made his $3.2 billion fortune through Leshi Television – his Internet video company. Now, he's turned his ambitions to the world outside of China and has trained his eye on Elon Musk and Las Vegas. Jia Yueting is nothing if not ambitious. He wants his Faraday Future to be a bigger and better electric car company than Tesla Motors, Inc. In fact, he is so focused on that latter goal that he has hired staff from Ferrari and BMW and gotten the backing of the Governor of Nevada to build a $1 billion auto plant in North Las Vegas—just 400 mile from where Tesla built its battery factory in 2014.

Sounds good, right? There's just one problem. Nevada's Treasurer, Dan Schwartz isn't buying it. He is skeptical that Jia can get the financing for his revolutionary electric car plant. Schwartz notes that Jia would need the support of the U.S. government for power lines, water mains, and roads. Schwartz wants more than promises from Jia, he wants a clear plan on funding for the project before committing $120 million in state bonds to the infrastructure improvements. And by the way, Schwartz used to the CEO of a private equity firm in Hong Kong, so he has some familiarity with the climate of China.

The main problem Schwartz has is with Jia's plan to rely on equity-backed loans. If this strategy backfires, it could leave Nevadans vulnerable to the ups and downs of China's volatile stock market. Regulatory filings show that Jia has pledged 87% of his holdings in Leshi Internet Information & Technology Corp. – his flagship firm – for cash that he can then put back into building his car company.

The problem, as Schwartz mentioned, is in the vagaries of the Chinese stock market. The stock was halted in Shenzhen from January through May and has dropped 11% since it resumed trading on June 3rd. Schwartz fears that a margin call could keep Jia from being able to fund the plant.

The type of financing questions that are surrounding Jia's proposed electric car plant are becoming increasingly more common around the world as wealthy Chinese entrepreneurs make investments in companies and properties overseas. But with the debt level in China rising, doubts have been cast over these entrepreneurs' abilities to secure truly stable funding.

Faraday's concept car is a 1,000 horsepower machine that has drawn comparisons to the Batmobile. Jia has invested more than $300 million of his personal fortune into Faraday. The car firm is expected to announce an outside round of funding within the next several weeks. This funding is expected to come from Asian investors, which does nothing to quell Schwartz's worries over the company's financing.

Faraday, like Tesla, is named after a 19th century electricity pioneer.

Articles Written by Amy Lamare
Amy Lamare is a Los Angeles based writer covering business, technology, entertainment, philanthropy, and pop culture. She spent 8 1/2 years covering the entertainment industry for www.hsx.com. She attended the University of Southern California where she majored in Creative Writing. An avid long distance runner, weekends she can be found running the streets of Los Angeles training for 1/2 and full marathons. Follow her on Facebook.
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