On March 5th, Red Star Capital Bureau reported that today, Jia Yueting, founder of Faraday Future (hereinafter referred to as FF), posted on Weibo that after a long period of investigation, evidence collection, and preparation, FF has officially filed a lawsuit against Ding Lei and Gao He Automobile for suspected illegal or even criminal acts of stealing and infringing on FF's intellectual property, technical data, and trade secrets.
On the same day, Gaohe Automobile released a statement by its founder Ding Lei, denying any allegations of plagiarism and unfair competition against FF. Since its establishment for 6 years, the company has not received any litigation notice from FF, stating that it will protect the rights and reputation of the company and its founders through legal means.
At the beginning of the the Year of the Loong, Gaohe Automobile announced that it would stop production for six months. Later, Jia Yueting left a message on his social media that Gaohe Automobile was a "disgrace to the industry". Compared to Gaohe, which has already delivered over 16000 new cars, FF has only delivered 11 so far. At present, FF is facing tight funds and has defaulted on rent. Due to its stock price being below $1 for a long time, in order to avoid delisting, it has had to reverse split its shares twice within 5 months.
An industry insider from an investment institution, Yang Zhou, told the Red Star Capital Bureau, "Jia Yueting's lawsuit against Gaohe Automobile at this time should still be for commercial interests, such as boosting stock prices and even litigation compensation. If Gaohe does indeed infringe on trade secrets, he will face high compensation."
Before the US stock market closed on March 5th, FF's stock price rose 1.3% to $0.186 per share.
Jia Yueting sues Gao He for infringing on trade secrets
Gao He denies plagiarism
On March 5th, Faraday Future (FF) announced that FF and its Chinese subsidiaries have filed a lawsuit against former FF executive and founder of Chinese Express, Ding Lei (along with other affiliated companies, hereinafter referred to as "Chinese Express"), with the Shenzhen Intermediate People's Court in Guangdong Province, citing infringement of trade secrets and unfair competition. The company requests the court to order compensation for the corresponding losses and further demands that Chinese Express immediately stop infringing on the trade secrets related to FF91, including but not limited to stopping the use of the trade secrets in question, designing, developing, producing, and selling suspected infringing products using the trade secrets in question, selling suspected infringing products, or providing after-sales services for suspected infringing products using the trade secrets in question, And immediately cease the alleged unfair competition behavior.
Jia Yueting wrote that Ding Lei, with an income of more than 30 million yuan, learned FF's new AI and Internet car building concepts and knowledge during his nearly two years in office, but by taking advantage of his position, he has been planning and implementing the theft of FF's intellectual property rights, technical data and business secrets. After leaving office, Ding Lei, together with Gaohe Automobile, continued to implement the above actions, which was far below the R&D delivery cycle required by industry laws, Launched plagiarism products in a very short period of time. The suspected illegal and even criminal behavior of Ding Lei and Gao He not only brought huge economic losses to FF, but also brought shame to the industry, seriously damaging the innovation source of the industry and distorting its values. FF is preparing to take further legal action globally, including in the United States.
Jia Yueting Weibo
This is not the first time Jia Yueting has accused Gaohe Automobile.
According to the Daily Economic News, a capital market insider recently shared an article on social media titled "Gaohe is on the brink of bankruptcy, the end of a new energy vehicle plagiarism era". Jia Yueting commented below: "The shame of the industry.".
On March 1st, Yang Yueqing, the engineering project director of Gaohe Automobile, responded to the plagiarism of FF in the "Gaohe Automobile Official Live Room": "We have not copied anyone, all engineers, original manuscripts, drawings, and patents are located in Shanghai Pujiang Park."
On March 5th, Gaohe Automobile issued a statement denying any allegations of plagiarism and unfair competition against FF. The company stated that there was no infringement between Gaohe Automobile and its founder Ding Lei and FF. The mass-produced X/Z/Y series models are independently developed or developed in cooperation with suppliers, and have complete independent intellectual property rights. The company also mentioned that it has not received any litigation notice from FF since its establishment for 6 years.
The statement also stated that Jia Yueting disregarded facts and maliciously slandered Ding Lei, as well as Chinese Express/Gaohe Automobile, using words such as "plagiarism," "theft," "crime," and "shame.". Ding Lei himself and Chinese Express/Gaohe Automobile will file a lawsuit against Jia Yueting for infringement of reputation rights in court to clarify the facts.
Screenshot from Weibo
The entanglement between Jia Yueting and Ding Lei
The enmity between Jia Yueting and Ding Lei has a long history.
According to public information, from 2015 to 2017, Ding Lei joined LeEco Auto founded by Jia Yueting. On September 10, 2015, Jia Yueting, then Chairman of LeEco Holdings Group, announced that Ding Lei had joined LeEco Super Cars as co-founder, global vice chairman, and CEO of China and the Asia Pacific region. At that time, he rated Ding Lei as a "leader in the automotive industry".
In 2017, LeEco was hit by lightning. In the same year, Ding Lei announced that due to health reasons, he would no longer hold positions such as Global Vice Chairman and CEO of China and Asia Pacific at LeEco Super Cars, and subsequently established his own business.
According to media reports such as Beijing Business Daily, there are rumors that Ding Lei poached a group of people from LeEco and obtained the full set of design data for the FF91. Therefore, when Gaohe launched its first car, HiPhi X, the appearance was very similar to Jia Yueting's FF 91.
Gaohe Automobile is known as the "luxury pure electric car ceiling". The starting price of Gaohe HiPhi X is as high as 570000 yuan, Gaohe HiPhi Z starts at 510000 yuan, and the cheapest Gaohe HiPhi Y starts at 339000 yuan. The sales in 2021 and 2022 were 4237 and 4349 respectively. According to third-party platform data, Gaohe Automobile's sales in 2023 were approximately 8000 vehicles.
This makes it difficult for Gaohe Automobile to sustain itself. Starting from the second half of 2023, Gaohe Automobile has continuously exposed unfavorable information, but it has been strongly denied by the authorities. On February 18th, Gaohe Automobile held an internal meeting and announced that it would suspend production for 6 months starting from today, highlighting its difficulties.
On February 22nd, Ding Lei appeared at the Shanghai headquarters of Gaohe and stated that the window period for the company's turnaround is at most three months, and he will make every effort to revive the company.
FF delivered only 11 vehicles in nine years
Reverse split twice within five months to avoid delisting
Regarding Jia Yueting's self proclaimed behavior of "exposing Li Gui and upholding justice", the attitude of netizens is mostly "When will Mr. Jia return to China to sue Gao He?" Some netizens said, "It is a joke to pay for 10 cars and a (company) that pays tens of thousands of cars is a shame."
Compared to the 16000 units delivered by Gaohe Motors, FF has only delivered 11 units so far, and the owner of one of them is still Jia Yueting himself.
Public information shows that FF was established in 2014, and the first mass-produced car, FF 91, took 9 years to go offline. The price of FF 91 exceeds 2 million yuan, and Jia Yueting has also created a "co creation delivery" model: industry expert FPO (Futurist Product Officer) fully pays the cost of FF 91 to book and receive vehicle usage training; FPO pick-up; Fully deliver after ramping up production capacity.
FF funds are tight due to slow delivery. According to media reports, the landlord Rexford Industries has accused FF of defaulting on rent, maintenance fees, and taxes for January and February, totaling $91000 (approximately 660000 RMB) in rent. The landlord is seeking to reclaim the building in a lawsuit.
According to the financial report for the third quarter of 2023, FF generated its first revenue of $551000, sales costs of $16.1 million, operating losses of $66.4 million, and a loss of $80 million for the same period last year. As of the end of the third quarter, the net assets were 261.8 million US dollars. In contrast, in an open letter released on February 25th, FF stated that the company has invested $3 billion so far.
FF plans to start the third phase of delivery at the end of the first quarter of 2024, which is to fully deliver vehicles to users; By 2024, the production of approximately 1000 cars will be achieved, subject to obtaining the necessary capital, supply chain capability and stability, and obtaining necessary licenses.
The poor financial condition and delivery situation make it difficult for the capital market to have a positive outlook on FF.
Last January, NASDAQ issued a warning letter to FF, stating that its stock's trading price had been below $1 for 30 consecutive trading days and would face the risk of delisting. In the middle of the year, FF's stock price rose to $22 per share through a combination of 80 shares, but fell below $1 two months later and received a warning letter again at the end of the year.
On February 25th, FF announced plans to conduct a reverse stock split of one to three in order to re qualify for listing. The stock consolidation is expected to take effect on February 29th. This is FF's second reverse split within 5 months.
