Chinese smartphone maker LeEco has been plagued with an intensive cash crunch due to the ambitious scale of its global expansion coupled with the back-to-back product release timeline. But, according to regulatory filings, the company is in talks with strategic investors to add a hefty 10 billion yuan (approx $1.4 billion) to its life support coffers.
In a regulatory filing, Leshi Internet Information and Technology, which is LeECo’s video platform has mentioned that its parent has signed a framework agreement with the unnamed investor. It further adds that the two sides are discussing the final deeds of the transaction. There is no word on who the investor is but sources close to China Business News suggest that it’s an insurance company.
This investment, if it goes through, will be yet another grant that’ll be directed towards the company’s efforts to save its business in a market which is already seeing a slowdown in smartphone sales. Prior to this capital infusion, LeEco had recently secured $600 million in funding from a cohort of investors including Heilan Group, Man Wah Holdings, and Luye Group.
LeEco’s co-founder Jia Yueting has acknowledged that it grew at an uncontrollable pace and has already put into effect measures that’ll help it lid the expansion plan and focus on the growth of their business. Yueting is now taking necessary precautions to protect the business, with one of them being slashing his salary to just 1 yuan (15 cents). And today’s development assures us that LeEco is heading in the direction of stability.
Until today, there was also no word on how the company plans to employ the capital infused into their business. But it has now announced that it has started the construction of its electric car plant in Zhejiang province on Wednesday. This production plant will soon be utilised to produce the LeSee electric vehicles, which were shown off earlier this year. The work on the first phase of the plant covering 133 hectares is already underway and will require a massive $11 billion yuan investment.
LeEco further says that the said facility has been designed to have an annual production capacity of 400,000 cars and will cost the company 20 billion yuan (approx $2.87 billion) in the coming months. More than 90 percent of the work in the factory will be accomplished to robots but the remaining 10 percent that accommodates intelligent wearable devices will be completed by employees.
Talking about the same in a live broadcast, Zhang Hailiang, the head of LeEco’s China car unit said that the company aims for its electric car to compete against premium vehicle makers — Tesla, Chevrolet, and others. The company is planning to mass-produce these e-cars as early as 2018.