Chinese tech tycoon sticks to electric cars as he quits troubled LeEco

Jia Yueting, the chairman of digital and hardware giant LeEco, has quit as chairman of its listed arm amid mounting financial woes.

He has fostered an image as China's answer to Elon Musk and will focus on the firm's electric car business.

At one point Jia's company was backing the latest movie by auteur Zhang Yimou, selling mobile phones, developing virtual reality technology, had a cloud computing unit, was involving in internet finance and, like every other major Chinese company, was deep into real estate.

After the courts seized the tycoon’s stake in the listed Leshi Internet Information and Technology unit, he will need more financing to retain any influence at all over the company he founded.

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Starting life as a streaming company, LeEco was one of the high-flying tech companies that emerged from the decades of economic boom in China.

In a statement his week, Jia accepted the responsibility for the company’s plight, which is hobbled by debt and said he would pay back all the money owed. He urged patience for the electric car unit, which has been a pet project of his.

“I sincerely ask everyone to give LeEco’s car business a little more time,” Jia said in a post on Weibo social media. “We’ll repay our debts to financial institutions, suppliers and everyone else.”

In May, he stepped down from his position as chief executive of Leshi.

In recent years, the electric car unit has been very high profile, as Jia wowed events like the Beijing car show with a joint project with Aston Martin on the RapidE.

Fast prototype

The company's co-operation with Faraday Future, the FF91, a prototype of which was unveiled in January in Las Vegas, led to a car that was faster than Tesla's Model S until Tesla upgraded its software to go faster.

“LeEco’s car business is sticking with its strategy and, no matter what the obstacles, they won’t detract from our dream to revolutionise the industry,” Jia said.

Some see in LeEco’s current debt woes a symbol of a wider malaise in the Chinese economy with companies overextending themselves with raised cash.

The company has always been known as a big spender but in the last few months has cut costs and sold assets to help with the cash crunch.

This week, the Shanghai High People's Court ordered a freeze on 1.24 billion yuan (€160 million) worth of assets held by three affiliates of the company, Jia and his wife, the official Xinhua news agency reported.

The ruling came after LeEco failed to pay interest due on loans despite several requests for repayment, prompting a Shanghai branch of creditor China Merchants Bank to seek a property preservation order.