Taking on Tesla: LeEco’s Jia Yueting aims to outmuscle Elon Musk | HT Tech

Taking on Tesla: LeEco’s Jia Yueting aims to outmuscle Elon Musk

Jia Yueting, founder of LeEco is among the new breed of Chinese using their technology expertise to re-engineering the automobile industry. And usurping Tesla Motors, a US pioneer in premium electric vehicle (EV) making

By:REUTERS
| Updated on: Apr 26 2016, 14:01 IST
image caption
Jia Yueting, founder of LeEco is among the new breed of Chinese using their technology expertise to re-engineering the automobile industry. And usurping Tesla Motors, a US pioneer in premium electric vehicle (EV) making (REUTERS)

Tomorrow's cars will be all-electric, self-driving, connected to high-speed communications networks ... and free. And probably Chinese.

That is the vision, at least, of Jia Yueting, the billionaire founder of LeEco is among the new breed of Chinese using their technology expertise to re-engineering the automobile industry. And usurping Tesla Motors, a US pioneer in premium electric vehicle (EV) making.

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"Tesla's a great company and has taken the global car industry to the EV era," Jia said in an interview at the Beijing headquarters of his company, LeEco. "But we're not just building a car. We consider the car a smart mobile device on four wheels, essentially no different to a cellphone or tablet.

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Beyond LeEco, Chinese tech heavyweights including Baidu, Alibaba, Tencent and Xiaomi have funded more than half a dozen EV start-ups
Beyond LeEco, Chinese tech heavyweights including Baidu, Alibaba, Tencent and Xiaomi have funded more than half a dozen EV start-ups (REUTERS)
image caption
Beyond LeEco, Chinese tech heavyweights including Baidu, Alibaba, Tencent and Xiaomi have funded more than half a dozen EV start-ups (REUTERS)

"We hope to surpass Tesla and lead the industry leapfrogging to a new age," said Jia, wearing a black T-shirt and jeans.

A wave of EV start-ups has emerged in China after the government opened up the auto industry to deep-pocketed technology firms to drive a switch to cleaner electric as an eventual alternative to gasoline cars. Sceptics wonder just how start-ups like LeEco will deliver on their grand visions.

"People questioned our idea, a small IT company building a car to compete with the BMWs and Teslas of the world, and laughed at us. It wasn't easy, but here we are," Jia told Reuters.

MADE IN NEVADA

LeEco hopes to start producing a version of the LeSEE in a few years at a plant being built near Las Vegas by US strategic partner Faraday Future, in which Jia has invested. Those cars would be sold in the United States and China. Further ahead, the plan is to produce electric cars in China, too, probably through a partnership with BAIC Motor.

Beyond LeEco, Chinese tech heavyweights including Baidu, Alibaba, Tencent and Xiaomi have funded more than half a dozen EV start-ups, such as NextEV and CH-Auto. It's widely expected China's bus, taxi and courier firms will be encouraged to go electric.

"We define our car in a whole new way ... instead of copying Apple and Tesla," LeEco co-founder and vice chairman Hank Liu told Reuters. "Our products are not upgraded from those that already exist. They are revolutionary ... products that never existed before."

Jia Yueting hopes to surpass Elon Musk's Tesla and lead the industry leapfrogging to a new age by selling autonomous electric cars in China and the US
Jia Yueting hopes to surpass Elon Musk's Tesla and lead the industry leapfrogging to a new age by selling autonomous electric cars in China and the US (AFP)
image caption
Jia Yueting hopes to surpass Elon Musk's Tesla and lead the industry leapfrogging to a new age by selling autonomous electric cars in China and the US (AFP)

FUNDING CLOUDS

While the entry barrier has been lowered as electric cars are, mechanically, relatively simpler to produce, sceptics query how China's start-ups will fund and make tens of thousands of industry-changing EVs - from design through to procuring the 10,000 or so parts and systems needed for the finished product.

Daimler said Hubertus Troska, head of its Greater China business, was invited to LeEco last month to get to know the company and its business model.

"I told Mr. Troska we're going to redefine the car," Liu told Reuters. "EVs for us are just another screen. We see cars in the future as an extension of the Internet, another entry point for us to sell web-based content and services."

Jia has also had to overcome questions on his funding. In the past three years, there was speculation he had disappeared and had his passport confiscated because of his ties to a brother of Ling Jihua, a high-ranking Communist Party official who was arrested last year and is under investigation for graft.

Jia says he did not go missing, but was in a California hotel researching Tesla and recruiting a team to develop EV technologies. "It was a difficult time for me because we faced a lot of external rumours and internal turmoil," he said, noting LeEco was then expanding beyond its streaming, mobile and TV businesses. "(If) any of those ventures failed, we could have gone belly up,' he said.

To help fund LeEco's EV push, Jia's sister sold her stake in the company and lent the money to him interest-free. He also sold part of his own stake.

He said Ling Wancheng, the disgraced official's brother, is a "mere financial investor" in LeEco; he never met Ling Jihua; and his passport was never confiscated.

The web-connected electric cars will have a
The web-connected electric cars will have a "disruptive" pricing model -- similar to phones and TV sets LeEco markets in China. LeEco, often called China's Netflix, will sell movies, TV shows, music and other content and services to riders of its cars (REUTERS)
image caption
The web-connected electric cars will have a "disruptive" pricing model -- similar to phones and TV sets LeEco markets in China. LeEco, often called China's Netflix, will sell movies, TV shows, music and other content and services to riders of its cars (REUTERS)

LONG ROAD

In 2003, he drove his used Toyota to Beijing, with 200,000 yuan (around $31,000 at current rates) in cash, seeking to grow his Sinotel Technologies business by adding simple mobile video streaming. He took the company public in Singapore in 2007. With Liu, he registered what is now LeEco - a group now employing 11,000 people in China, India and the United States. Its listed business had 2014 revenue of 6.8 billion yuan ($1.05 billion).

To vault from LeEco's IT background to the auto industry, Jia has built ties with California-based Atieva and Faraday Future, and has a partnership with Aston Martin and a cooperative relationship with BAIC.

Ding Lei, LeEco's auto chief and a former top official at General Motors' China venture with SAIC Motor, says part of LeEco's advantage in tomorrow's auto industry is that it carries no baggage from today's. Traditional automakers are too wedded to combustion engine technology to quickly jump to electric technology, he reckons.

"Look, this disruption can't come from traditional OEMs (automakers). But a company like us, we can go directly to pure electric cars."

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First Published Date: 25 Apr, 10:04 IST
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