Tesla Challenger LeEco Looks To Sell 49-Acre Silicon Valley Property Due To Painful Cash Crunch
LeEco, an ambitious Chinese technology conglomerate that signaled its entry into the United States in October of last year, is known as the Netflix of China. However, in addition to its video streaming service, the company also owns a massive portfolio of businesses across several industries, including smartphones, virtual reality, and electric cars.
LeEco was actually tagged as a possible challenger to Tesla in the electric vehicles industry after it unveiled the LeSEE electric car concept in April 2016. However, the company's mission to dethrone Tesla might have already ended before it even started due to massive cash problems.
LeEco Selling Silicon Valley Land
According to an exclusive report by Reuters, LeEco is selling its 49-acre property in Silicon Valley after less than a year has passed from the company's purchase of the land from Yahoo. The company previously said that the land will be used for a so-called EcoCity that will house 12,000 employees.
Sources claim that LeEco is making such a move due to the ongoing financial troubles of the company, with the painful cash crunch currently sidelining LeEco's lofty goals that include overtaking Tesla in the business of premium electric cars.
A month after LeEco announced its plans to launch in the United States in a grandiose event in San Francisco, billionaire CEO and founder Jia Yueting said in a letter addressed to staff that LeEco was suffering from a cash crunch due to expansions going at an unexpected rate.
LeEco is now looking to sell the Silicon Valley property to Genzon Group, a little-known Chinese developer, for the sum of $260 million, a $10 million increase from the land's price tag when LeEco purchased it, a source claimed.
Genzon confirmed that it was involved in discussions for acquiring the property but did not confirm the possible purchase price. The company also did not reveal its intention with the land, but its website shows that Genzon is looking to construct a 140,000-square-meter office building within Silicon Valley named Burlingame Point.
LeEco, meanwhile, did not admit that it is looking to sell the land, claiming that it is still only in the initial planning phase on what to do with the property and that the company is still looking for a development partner.
LeEco's Cash Struggles
LeEco will be using the money to help repay its growing mound of debt to business partners and suppliers, with the property sale just one of the moves that LeEco is making to ride out the cash crunch.
According to sources, the workforce of LeEco in the United States has been at least halved at its current office in Silicon Valley. Headcount reduction have also been seen in LeEco's various business units in its home country of China, with its India workforce also said to have been reduced by almost 80 percent.
Back in January, Jia said that the financing problems of LeEco would be solved in three to four months. However, that was before LeEco received a capital injection of $2.2 billion from property development group Sunac China Holdings.
The investment by Sunac, however, was for the entertainment units of LeEco. The company's electric car division, which is developing premium electric cars with likewise financially struggling Faraday Future, looks like it will not be challenging Tesla any time soon.