LeEco, the primary backer of the electric vehicle startup Faraday Future, is now looking to sell the 49-acre property in Silicon Valley that it acquired from Yahoo less than a year ago. LeEco also unveiled the LeSEE last year in China and then in San Francisco — pictures of the LeSEE are throughout this article*.
So, the company bought the property last June with the intent to develop it into “an EcoCity that houses 12,000 employees,” as Founder and CEO Jia Yueting stated at the time, and is now looking to sell it.
As we reported when the news first broke, LeEco is currently undergoing something of a cash crunch (and thus Faraday Future is as well) and is thus aggressively cutting expenses. The news wasn’t too surprising at the time, as expansion had over the past few years been extremely aggressive, and many observers had been questioning the long-term viability of the approach. (Originally the firm had simply been China’s version of Netflix/YouTube. This core part of the company is still the primary revenue source, reportedly.)
Reuters provides more: “Now cash-strapped and struggling to repay a pile of debts to suppliers and business partners, LeEco plans to sell the US site to little-known Chinese developer Genzon Group for $260 million, $10 million more than what the firm paid for it in June, said a source with direct knowledge of the deal who did not want to be named due to rules on talking to media.
“Genzon confirmed it was in talks to buy the site, but declined to comment on the deal size or whether it was teaming up with any partners as the discussions were still ongoing. Genzon also declined to elaborate on why it was interested in the property, but according to its website, the Shenzhen-based firm founded in 2003 is erecting a 140,000-square meter office building in Silicon Valley in a project called Burlingame Point — its first in the United States.”
LeEco itself said, through a spokesperson, that it was “working on securing a development partner” — whatever that means — and that it wasn’t ready to share further plans.
Reuters provides a bit more: “According to sources in and outside the company, workforce has been downsized across LeEco US, with some estimating numbers had at least halved in its current Silicon Valley office alone… LeEco has seen headcount reduction in various units of its business in China since its financial problems deepened. The company said earlier this month that it had also cut almost 80% of its workforce in India.
“Jia in January said LeEco’s financing problems would be solved in three to four months, before the firm got a much-needed capital injection of $2.2 billion from property developer Sunac China Holdings. … But the Sunac investment was for LeEco’s entertainment units and not its car-making business, which analysts say is very expensive to sustain.”
The situation is clearly still unfolding, despite Yueting’s earlier comments. We’ll keep you posted.
*Notably, the car has an obvious resemblance to the Lucid Air, and Yueting has been an investor in Atieva (now Lucid Motors) as well.