(Yicai Global) Oct. 19 -- Evergrande FF Automotive Technology, the China arm of US electric car startup Faraday Future, has set up a unit in Beijing, suggesting the ongoing wrangle between Faraday Chief Executive Jia Yueting and chief backer Evergrande Health Industry isn't getting in the way of the Evergrande group's drive to promote the business.
Evergrande FF Automotive Technology Beijing was formed on Oct. 16 with registered capital of CNY50 million (USD7.3 million), according to the National Enterprise Credit Information Publicity System. The legal representative of the technology promotion and vehicle sales unit is Faraday Vice President Liu Hao.
California-based Faraday Future received a huge investment from Chinese real estate giant Evergrande Group for an indirect 45 percent stake, but recently the partners have had major differences. Evergrande Health yesterday said Jia initiated arbitration on Oct. 3 to terminate Evergrande Health's USD2 billion investment deal, claiming that Faraday's white knight failed to honor a commitment to provide USD700 million in July.
Setting up the new firm amid the dispute shows that Evergrande is determined to develop the auto business, an analyst told Yicai Global.
Another reason for establishing the new Beijing unit may be to accommodate the staff of Faraday's existing office in the capital. On Oct. 16, 60 of the branch's employees said they had not been paid. Evergrande said those staff had not signed an amended employment contract that involved moving to Guangdong province, with half of the remuneration to be based on performance, Tencent News reported.
Evergrande Health said in June it had agreed to splurge USD2 billion on a 45 percent stake in Faraday's parent Smart King, and would pay USD800 million this year, USD600 million next year and USD600 million in 2020. It had paid the initial tranche in May, and in July signed a supplementary agreement to make an advance payment on the later installments provided certain conditions were met.
Faraday claims that although the company and its chief executive have met all the payment requirements in the July contract, Evergrande Health has not paid up. Moreover, the healthcare manager has kept the car firm from taking in other investors.
Withholding the money would turn Evergrande Health the king of the hill. Jia's voting rights, which are weighted with a ratio of 1 to 10, will be transferred to Evergrande Health if Faraday is unable to begin mass production of its first car by the end of this year, or the investor believes that he is unable to perform his duties, according to an agreement signed by both parties.
Editor: Emmi Laine