Update | LeEco gets 10 billion yuan lifeline, breaks ground on China car plant
LeEco’s 12 billion yuan Deqing assembly will have the capacity to produce 400,000 electric vehicles a year by 2018
LeEco said it has received a 10 billion yuan (US$1.44 billion) lifeline from an unidentified strategic investor, the same day that the cash-starved video streaming and TV maker founded by Jia Yueting broke ground on a car assembly in China.
The plant, located in Deqing (德清) county of Zhejiang province close to the tourist destinations of Moganshan and Hangzhou, will have the capacity to assemble up to 400,000 electric vehicles by 2018.
The factory will be fully automated, with robots handling up to 90 per cent of the work, said Zhang Hailiang, chief executive of LeSupercar, the LeEco unit that’s producing the vehicles.
Trading in the shares of LeEco’s video streaming unit Leshi Internet Information & Technology Corp. was suspended on the Shenzhen exchange on December 7, after an 8 per cent plunge in its stock price a day earlier amid concerns about LeEco’s cash shortage.
The company said it asked for shares to be halted to protect shareholder interests, after market rumours surfaced that margin calls on the credits of Jia and his brother Jia Yuemin had been triggered when the stock price slipped to below 35.21 yuan on December 6. LeEco refuted the margin call rumours.
In a November letter to his staff, Jia highlighted the company’s financial woes. LeEco had expanded quicker than it could raise external funds, and the company’s capital structure was “weak,” Jia wrote.
