LeEco, China's answer to Netflix, Apple and Tesla, suffers new financial blow

Once described as the Netflix, Apple and Tesla of China, LeEco is starting to flounder. After cutting 7% of its US workforce, LeEco's billionaire co-founder has reportedly had his assets frozen by a Shanghai court.

Jia Yueting – who stepped down as chief executive of LeEco in May to take on the role of chairman – along with his wife and three affiliates, have had a combined 1.24bn yuan (£141m) frozen due to failing to pay interest on bank loans, state media reports citing court documents.

The assets were pledged as collateral in 2015 against a 2.4bn yuan loan taken out to help grow the company's smartphone business, which Yueting had hoped would take on Apple and Samsung. The devices tap into LeEco's Netflix-style video streaming service, which recently began producing its own content.

In all, LeEco controls 13 different brands stretching across finance, music, sports, automotive, televisions, cloud computing, retail and video production.

But waning finances forced the company to cut jobs shortly after pushing its smartphone business into the US. After switching from chief executive to chairman, Jia admitted to shareholders that LeEco's financial problems were "more severe than we expected".

A victim of growing too quickly without topping up its cash reserves, LeEco's shares, traded through listed unit LeShi, have fallen 14% since the start of 2017 and have been halted from trading several times; the most recent suspension began on 14 April and continues to the publication of this article.

LeEco is attempting to crack the electric car market on two fronts. First there is Faraday Future, the California-based startup pitching itself as a rival to Tesla. In May this year, four months after revealing its first production car at the CES technology show, Faraday Future began a search for $1bn of additional funding to act as a firewall between itself and LeEco.

LeEco also has the LeSEE, the company's own in-house electric and autonomous car. A saloon car similar in size to the Tesla Model S, the LeSEE has a foldaway steering wheel for when the driver wants to hand over control to the car. There is also a light on the front of the car that lets pedestrians know when it is available to be hired, suggesting LeEco has plans for an Uber-style taxi service. It does not take much imagination to picture an autonomous Uber service without the human drivers.