Ringing the bell tonight, why is anyone investing in Jia Yueting?

Ringing the bell tonight, why is anyone investing in Jia Yueting?

On the 367th day after LeTV delisted from the A-share market, Jia Yueting will ring the bell in the United States tonight.

On July 22, FaradayFuture (Faraday Future, hereinafter referred to as FF) founded by Jia Yueting and Property Solutions Acquisition Corp. (NASDAQ: PSAC) completed the business merger. After the transaction was completed, the company was valued at approximately US$3.4 billion ( Approximately RMB 22 billion). And, it will be officially listed on the Nasdaq at 9:30 tonight under the code “FFIE”.

In pre-market trading on US stocks, FFIE’s stock price soared by more than 40%.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

Source: Tiger Securities

A few days before the listing, FF founder Jia Yueting and FF global CEO Bi Fukang appeared together at the first FF futuristic experience center on East 59th Street, Upper East Side, New York, USA. He is dressed in black casual clothes, has short capable hair, and still has a “Jia-like” smile on his face. He seems to be immersed in the joy of ringing the bell.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

Image source: Internet

But joy is destined to be short-lived. Since its establishment, FF has accumulated losses of more than 2.39 billion U.S. dollars, and its first mass-produced model FF91 has not yet been mass-produced. In the face of the upcoming mass production delivery, localization, new car development and other links, the $1 billion in funds obtained after the listing is just a drop in the bucket for FF.

Although Jia Yueting, who has a debt of more than one billion in China, can only look far away from the motherland across the Pacific Ocean, there is no shortage of Chinese white knights by his side. For example, there are media reports that on the eve of FF’s listing, Evergrande Motor, which holds 20% of its shares, made a fortune, and its stock price rose by more than 20% . Geely, the “Self-Made Brother”, also injected a financing into FF at the beginning of this year.

As for why the big bosses got on the bus, a former FF employee told Hu Xiu: “I personally think that Boss Jia has the strength and charisma. Of course, from the product point of view, it is definitely good enough. The other is the interest relationship. , Take what you need.”

1. Going public is far less than going ashore

“FF is like my child, I will always be proud of it,” Jia Yueting wrote on Father’s Day this year.

In 2014, Jia Yueting teamed up with former Tesla executive Nick Sampson and Lotus China executive Nie Tianxin to jointly establish a company in California-“LeTV ENV Inc.”. In the summer of that year, the company officially changed its name to Faraday Future, Faraday Future.

From the name of the company, you can see Jia Yueting’s ambition-Michael Faraday, who discovered alternating current in 1831, a full 25 years before the birth of Nikola Tesla.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

In the second year of FF’s establishment, LeTV’s market value stood at the historical peak of RMB 150.5 billion. The pinnacle of LeTV is also the pinnacle of FF. As early as 2016, FF has more than 1,000 employees in the United States. At the CES Electronics Show in January 2017, Jia Yueting completed the debut of his first model, the FF91, and completed 64,000 bookings within 36 hours of the conference.

Debut is the pinnacle, talking about the FF91 this car. The crisis in 2017 caused LeTV’s ecosystem to collapse in an instant. Jia Yueting also went to the United States to continue to pursue the dream of building a car, and the mass production plan of FF91 was delayed again and again.

Lack of money has been the norm for FF since 2017.

As of December 31, 2020, FF’s cumulative loss was 2.39 billion U.S. dollars. In 2019 and 2020, FF’s net losses were US$142 million and US$147 million, respectively. Even FF’s book cash is only 1.12 million U.S. dollars, and its total liabilities are nearly 600 million U.S. dollars.

Nowadays, stepping into the gate of Nasdaq can be regarded as landing on one leg. From the perspective of the amount of funds raised, although this “merger transaction” will provide FF with about 1 billion US dollars of funds, the funds will not only be used for the mass production and delivery of FF 91, but also for the follow-up product FF Preparation for the development of 81 and IAI system.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

FF factory renderings

And FF’s Hanford factory in California still needs 90 million US dollars to start production. It is expected that the factory will enter production nine months after the completion of the backdoor listing. The FF 91 car will need to invest 377 million US dollars in the next 12 months before it can be delivered to the market-that is to say, in the next year, the FF company still does not have hematopoietic capabilities.

For reference, in August 2020, when Xiaopeng Motors went to the US for IPO, the amount of funds raised reached 1.28 billion US dollars. The ideal car, which went public in July of that year, even raised the fundraising amount to a high of US$1.473 billion. Weilai, the first to go public, did not catch up with the good time of the “US stock release”, but it also raised US$1.15 billion at the time of its IPO.

Behind these new car-making forces’ crazy money-absorbing, new products are constantly being introduced to the market, and they can bring continuous cash flow to the company.

For example, when Weilai was in the IPO, the first model ES8 has been delivered in batches, and the second model ES6 has been officially released. Ideal car also chose to go to the United States for listing soon after the first car was delivered. When Xiaopeng Motors went on the market, there were even two mass-produced models of Xiaopeng G3 and P7, which were delivered to users in large quantities.

It should be emphasized that the listing of FF does not mean that the company is “successful.”

FF is listed using the SPAC method, that is, special purpose acquisition companies, which is a backdoor listing method in the US stock market. Unlike buying shells and listing, SPACs are built by investors themselves, and they have no actual business. They can inject business and increase value through mergers and acquisitions of non-listed companies within a certain period of time. In this way, it is also destined to have no high requirements on the business situation.

For example, the electric vehicle company Fisker and the hydrogen-energy heavy-duty truck company Nikola, which are also listed on the SPAC method, have yet to produce a mass-produced vehicle. As for Lordstown Motors, an electric vehicle pickup company, after completing the SPAC listing, the CEO and CFO suddenly resigned, and the executives left the company and ran away.

Joseph Schuster, the founder of the American investment company Ipox Schuster, believes that from the long-term research data on IPO performance, small companies, especially SPAC listed companies, do not perform well. He also lamented: “There are countless lotteries and very few winners. , This is inevitable.”

2. FF, why is it worth 22 billion?

“The market value of FF is only about one-tenth of that of the new forces. This indicates that there is great room for growth in the future, and it is also a very good potential opportunity.”

Wang Jiawei, vice president of FF Capital Markets, said in an interview recently that FF is far ahead of all EV companies listed on SPAC in terms of product maturity, historical investment, technical reserves, and talent reserves. Compared with excellent EV companies such as Weilai and Xiaopeng, it also has a very unique competitive advantage.

In May of this year, the first FF Experience Center settled in Manhattan’s Upper East Side. Opposite the store is the famous Apple New York Fifth Avenue store. The importance of this location is no less than that of Chang’an Avenue in Beijing and the Bund in Shanghai.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

FF’s experience center in New York

Therefore, in the FF91 product benchmarking, Jia Yueting did not put Tesla in his eyes at all, but directly aimed at the products of top luxury brands such as Bentley Bentayga, Lamborghini Urus, Mercedes-Benz S-Class, and Porsche Taycan. At least the BMW 7 series.

Of course, the price is also in line with them. According to the plan, FF will first launch the FF 91 futurist version in Q1 of 2022, with a target price starting at 180,000 US dollars (about 1.16 million yuan), and then launch the FF 91 regular version in Q4 2022, priced at 100,000 US dollars From (approximately RMB 650,000). 

Ringing the bell tonight, why is anyone investing in Jia Yueting?

FF roadshow PPT

So where is it so expensive?

An FF salesman provided us with some clues. He said: “You can study our patented technology on the official website. We are a company established in Silicon Valley, USA.”

According to FF Global CEO Bi Fukang, FF has 880 global patents so far, of which 550 core electric vehicle technologies have been authorized, and it is the only company that can compare technology with Tesla. The core technologies of the next-generation Internet intelligent electric travel ecology with the core of the artificial intelligence) system, the three-electric system, and the iVPA platform system.

Although patents are important, they are not so necessary at this stage.

For example, the inverter, its function is to convert the high-voltage direct current of the power battery into the alternating current required by the power motor. The performance of the inverter directly determines the performance of the motor, but only a few companies such as BYD and Huawei can master the core technology of high-power inverters.

And FF mentioned that its self-developed parallel IGBT inverter has the characteristics of “very low inverter loss to provide 98% efficiency, high reliability, high torque accuracy, and fast transient response”. Judging from the parameter results, FF91 got the data of 2.39 seconds and 1050 hp per 100 kilometers, and indeed there may be two brushes.

But the market is always impetuous, and consumer demand is also changing .

In history, many car companies that are obsessed with technology and become a mystery in scientific research can’t escape the fate of being acquired. Volvo and Saab are examples within reach. Essentially, it is because the technology is iterating too fast. Car companies need to have enough foresight or endurance, and can invest in the battery segment like BYD, and “simmer” the car companies on the day when the market breaks out. Still a minority.

Looking at it the other way round, there are no patents, and the market can still be opened at this stage. Take the ideal ONE for example, neither the motor nor the engine is self-developed, and it still sells 6,7,000 units a month. When traditional car companies turn to electrification, they are gradually converging. The chip is looking for Qualcomm, the battery is looking for Ningde times, and the autonomous driving is looking for Baidu and Huawei. Such modular car-making routines have become popular.

Compared with selling cars, Jia Yueting wants to realize the “ecological anti” he used to realize the application.

Let’s start with a new App. On July 19, FF announced the launch of the FF Intelligent App. Domestic users can directly book FF 91 on the App. However, the deposit for the FF 91 Futurist version alone is as high as 50,000 yuan -equivalent to directly buying back a Hongguang MINI EV in full.

An FF sales consultant told Hu Xiu, “After paying a deposit of 50,000 yuan, you can get the exclusive colors, interiors and configurations of the limited edition models, and you can also give priority to trial rides and test drives. The deposit is also fully refundable. of.”

On the App, FF particularly emphasizes a UP2U co-creation concept-User Planning To User, that is, users customize future products for users, and users are deeply involved in the design, research and development, manufacturing, and sales of FF. However, the concept of “UP2U” is not a new concept. It was proposed by Jia Yueting in 2016 when he held a LeEco Ecology conference in the United States. At that time, it was mainly aimed at LeEco members.

For example, users who have purchased LeTV Super TV can enjoy some ecological rights, including online film and television and live broadcast viewing services, TV and mobile phone warranty services, and so on. And conversely, more wonderful rights and even the pricing of membership service fees are also determined by users through UP2U.

If you replace the aforementioned LeTV TV with the FF91 car, the logic will also work. In fact, this is what Jia Yueting said, the “platform + content + hardware + software + application” ecosystem.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

It’s just that these routines are about to be “troubled” by Tesla and Weilai.

Tesla’s autopilot functions and entertainment systems are all taking the form of software payment. Tesla’s cars are both hardware and ecological portals. For example, Wei comes from a user company that has established a membership points system on the App. Users can obtain corresponding points by participating in online and offline activities, redeem goods, and even upgrade vehicle functions.

In the end, this so-called user co-creation is actually equivalent to user complaints. For example, on the FF App, there is a user who booked FF91. When paying a deposit of 50,000 yuan, he encountered a bug that the order interface displayed 50,000 yuan, but the payment interface displayed 20,000 yuan. After the final payment, 50,000 yuan was deducted. .

Ringing the bell tonight, why is anyone investing in Jia Yueting?

Screenshot from FF Intelligent App

An FF insider also revealed to Huxi that the app is led by FF China. But at the same time, it is also admitted that because of the current budget, there are still some gaps compared with the functions of the Weilai App.

3. Evergrande overturned, why does Geely insist on it?

After attracting Sunac Sun Hongbin’s tearful press conference, Jia Yueting still relied on his super personal charm and imaginative PPT to bring FF the investment of Xu Jiayin of Evergrande Group and Li Shufu of Geely Group.

On June 25, 2018, Evergrande announced the acquisition of 100% of the shares of Hong Kong Shiying Company, accounting for 45% of the shares of SmartKing, a joint venture between Shiying and Jia Yueting, with an investment of US$2 billion over three years and an initial payment of US$800 million.

After investing in FF, Xu Jiayin also went to FF’s US headquarters to visit, admiring Jia Yueting’s car-making career. But before the “honeymoon period”, FF took Evergrande to court with a petition, because the two parties had a greater dispute over the control of the company.

The final settlement result is that Evergrande will hold 32% of the FF preferred equity, and Jia Yueting can repurchase the 32% of FF equity held by Evergrande within 5 years. According to the roadshow PPT, before the listing, Evergrande was still the largest shareholder of FF. Therefore, this transaction is a steady profit for Evergrande. First, it explores the way for Evergrande to build a car, and secondly, it adds new impetus to market value growth.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

Li Shufu also saw this in his eyes.

On January 29, 2021, Geely Holding Group officially announced the cooperation with FF. The two parties plan to cooperate in the field of technical support and engineering services, and explore the possibility of providing foundry services by the joint venture between Geely and Foxconn. At the same time as a financial investor, Geely also participated in a small amount of investment in the FF listing.

Ringing the bell tonight, why is anyone investing in Jia Yueting?

FF roadshow PPT

The reason why Geely invested in FF has a certain relationship with Foxconn. In January of this year, Geely announced the establishment of a joint venture with Foxconn to jointly provide OEM production services. As early as 2015, Foxconn and Harmony Automobile had co-founded a car company with Tencent and the three parties and incubated Byton Motors. The current FF global CEO Bi Fukang is the former CEO of Byton.

According to FF insiders revealed to the tiger sniffing, before Sun Hongbin then set the music network, Foxconn has considered buying music as, “then either Sunhongbin bid high, the music network to sell Foxconn” . It is this intricate relationship between characters that led to the story line of Li Shufu’s investment in Jia Yueting.

As Li Shufu said in his internal speech at the beginning of this year: “Some people say that there are no friends in the business field. I think this sentence does not fully define the essence of business. The history of human social development is the history of life and death, the civilization of cooperation and win-win, and the history of business. The fun lies in making friends and making deals.”

But in retrospect, whether it is Foxconn’s OEM car manufacturing or Geely’s wide-ranging circle of friends, in essence, it is still preparing for the future competition pattern of the auto industry.

In the past, Huawei and DJI transformed into electronic parts suppliers, and later, Xiaomi Lei Jun went to build cars himself. On the one hand, it is the desire of Internet and technology companies to access the traffic terminal of cars; on the other hand, it is indeed the weakness and helplessness of traditional car companies in the era of software-defined cars.

In the crowded electric car track, there are not many high-quality investment targets. Coupled with the anxieties of the giants, casting the net has become the norm. FF is just the epitome of this era, and it happens to stand in the center of the focus, and it happens to be able to catch up with the “last train” of the capital market.

Finally, I still find the answer from Li Shufu’s speech: “The world has entered an era of free exploration of science and technology and cross-industry integration. Traditional thinking, single-domain thinking, and one-way thinking are no longer suitable for the sustainable development of Geely Enterprise Group. You must have the courage to deny yourself, the ability to surpass yourself, and continuously improve the level of free exploration of science and technology and cross-industry integration.”

Write at the end

In the FF’s IPO roadshow PPT, the bottom of the risk factors read: “Our founder Jia Yueting has a close relationship with Faraday Future’s image and brand. The external environment has affected Jia Yueting’s reputation, as well as investors’ and the public’s His views on his role and influence in the company. This may shape Faraday’s future brand and business capabilities.”

In fact, after Jia Yueting filed for personal bankruptcy, his shares in FF will be placed in trust by creditors. After FF is listed, this part of the shares can be converted into cash. But at the same time, it is necessary to ensure the mass production of FF91 and subsequent models, so that it is possible for Jia Yueting to pay off the debt, and then lift the restrictions on the dishonest, and finally return to China.

FF is on the market, will Jia Yueting return home, will it be far away?

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/ringing-the-bell-tonight-why-is-anyone-investing-in-jia-yueting/
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