LeEco cuts most of US workforce as it continues its downward spiral

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Chinese conglomerate LeEco is laying off a majority of its US workforce, the company announced today. Around 70 percent, or 325 employees, will be cut from its stateside operations, with LeEco citing a lack of funding as the reason for the reduction. The company will keep operating in the US, but with a “focus on the narrower segment of Chinese-speaking households,” according to CNET. The news comes just one day after CEO Jia Yueting announced he was stepping down from running Leshi, LeEco’s holding company, in order to focus on LeEco.

LeEco got its start around 2004 as a video streaming company called LeTV. But it rebranded to LeEco last year ahead an expansion into smartphones, smart bikes, and even a supposedly self-driving electric car. In July, the company announced it was acquiring TV maker Vizio for $2 billion. And in October, LeEco held a big event in San Francisco

But those grand ambitions were short-lived. Less than one month after its October event, Jia Yueting wrote in a letter to employees that he was scaling back LeEco’s efforts. “We are starting to see signs of big company disease, such as low individual performance and organizational redundancies,” he wrote at the time.

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LeEco is also known for bankrolling Faraday Future, the California-based automotive startup that came out of stealth mode in 2015. Faraday, which unveiled an all-electric car called the FF 91 at this year’s Consumer Electronics Show, has spent the last year or so dealing with its own major financial and organizational struggles. But the company claims the LeEco layoffs won’t have any negative effect on its own business.

“This decision does not impact FF’s daily operations, the development of FF 91, nor our manufacturing plans in North Las Vegas in any way,” a representative for Faraday Future tells The Verge. “Similarly, no layoffs are planned for FF employees.” He added that the company is “working on securing rounds of funding with new investors.”

Faraday Future’s global chief financial officer also issued a statement:

Hearing about layoffs at our strategic partner LeEco is discouraging. However, I want to be clear that these layoffs have no impact on Faraday Future. We remain committed to our immediate goals of diversifying FF’s investment sources and getting FF 91 on the road in 2018, and we remain confident in the outlook for diversifying FF’s global investment.

While it’s unclear exactly how much money Faraday Future was getting from Jia, we know that once-monthly stipends from him stopped months ago. At the time, an ex-Faraday employee told The Verge the relationship with LeEco was like “indentured servitude.”

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