A Chinese tech entrepreneur's U.S. startup halted construction this week on a $1 billion electric vehicle factory in Nevada, a sign of financial problems were escalating for Jia Yueting, who aimed to be a rival of Elon Musk's Tesla Motors Inc.
The company, which is based in Gardena, Calif., said it plans to restart work on the plant in 2017.
In October, a construction firm working on the Nevada factory warned the electric-car startup that it could face a work stoppage over millions of dollars in unpaid bills, raising questions about Faraday’s financial condition.
The firm, AECOM, and Faraday Future then issued a joint statement that said construction on the plant would continue.
“The business relationship between Faraday Future and AECOM is strong and we remain committed to building our factory of the future in North Las Vegas,” the statement read.
A Faraday spokesman told Automotive News that no work stoppage would take place and that the automaker was working diligently with AECOM to resolve an overdue payment.
But on Tuesday, a Faraday spokesperson declined to confirm whether it missed payments and said Faraday "is working with" AECOM during an "adjustment period" at the plant.
The Faraday spokesman said the company is "refocusing its resources" on preparing its first production vehicle for introduction in early January at the annual Consumer Electronics Show in Las Vegas.
Skeptical state treasurer
"This is a Ponzi scheme," Nevada State Treasurer Dan Schwartz said in an interview Tuesday. "You have a new company that has never built a car, building a new plant in the middle of the desert, financed by a mysterious Chinese billionaire. At some point, as with Bernie Madoff, the game ends."
Faraday is part of a network of young EV companies in China and the U.S. backed by Jia. He said last week his company LeEco, which has invested in high-tech products from electric cars to smartphones, faced a shortage of cash and was suffering from expanding too fast, in too many directions.
Earlier Tuesday, LeEco's parent, Leshi Holdings, said it had secured commitments in China for $600 million to support LeEco.
LeEco said in August it would invest nearly $2 billion to build an electric car plant in eastern China.
Not on the hook
Earlier, Faraday negotiated a deal to build a $1 billion plant in Nevada, with the state providing more than $200 million in incentives. The plant was expected to create 4,500 jobs.
Schwartz said Nevada had yet to issue $175 million in bonds that were part of the incentive package for the plant, and "is not on the hook for anything."
Meanwhile, Faraday Future in late October confirmed the departures of six top executives over the last several months.
One former Faraday Future manager told Reuters that several senior officials who left "saw that the financial condition of the company was in trouble" and that Jia had been unable to obtain sufficient investment "to fund all the LeEco initiatives."
David Undercoffler contributed to this report.
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