As part of the deal, Evergrande fully acquired Season Smart, which owns 45 per cent of the joint venture that controls FF – Smart King. Through Season Smart, Evergrande has already made an initial investment of US$800 million in FF. It also agreed to pay another US$1.2 billion in two equal instalments in 2019 and 2020 respectively.

In August, Evergrande said the EV start-up had started assembling its first high-end car, FF91, at its US production base. FF also set up an operating headquarters in China for research and development and production in the country.

Nevertheless, in an exchange filing on Sunday night, Evergrande said FF demanded another US$700 million in July after spending the initial investment of US$800 million, following which it signed another agreement with the start-up to pay this US$700 million under certain “payment conditions”.

While “the payment conditions had not been fulfilled”, Jia “manipulated” his majority board seat position to begin an arbitration against Evergrande at the Hong Kong International Arbitration Centre on October 3, 2018, the filing said.

Jia was seeking to deprive Season Smart of its shareholder right to approve any future financing plan, while also trying to terminate all the other agreements with Evergrande, it added.

Evergrande said that it has already fulfilled its obligations under the relevant agreements and that the arbitration has severely damaged their rights and interests.

“Season Smart has engaged a team of international lawyers and will take all necessary actions to protect Season Smart’s continuing rights under the relevant agreements, and to protect the interests of the company and its shareholders,” it said.

FF responded on Monday afternoon denying the accusations.

“Contrary to what has been reported, Evergrande failed to make any of the promised additional payments beyond the original US$800 million, despite FF and its CEO complying with their obligations and meeting all required conditions for funding under the July 2018 agreement,” FF said.

“Instead, Evergrande held the payments back to try to gain control and ownership over FF China and all of FF’s intellectual property. At the same time, Evergrande is preventing FF from accepting any immediate financing from other sources.”

FF denied either Jia or anyone else had “manipulated” the board.

The start-up said Evergrande had a full understanding of why and when FF needed the additional US$700 million, which is to achieve production and delivery of FF91 in 2019.

Faraday Future is on track for mass output of FF91 electric cars, after cash lifeline by new owner

“Accordingly, the only reason ‘FF is trying to get out of the deal with Evergrande’ is because Evergrande has failed to live up to its end of the bargain and make the payments it agreed to make … Evergrande shouldn’t be permitted to withhold the funding and simultaneously prevent FF from accepting alternative financing or investments.”

FF added it will continue to take actions, including pursuing other funding opportunities.

Shares in Evergrande Health briefly skidded 37 per cent at Monday’s open, before paring losses to 16.4 per cent, to close at HK$8.78. Evergrande Group also lost 6.3 per cent to end at HK$20.95.

Still, Evergrande Health has gained 90 per cent from the level before the June announcement.

Faraday Future is considered key to Evergrande Group’s electric car ambition.

Hui Kayan, chairman of Evergrande Group, said in April the group plans to invest 100 billion yuan (US$14.5 billion) in the next 10 years in a wide range of hi-tech sectors like life sciences, AI, robotics, and alternative energy. Electric cars are an important part of the plan.

Evergrande said in August that Faraday Future aims to reach an annual production capacity of 5 million vehicles by 2028. The Chinese unit of Faraday Future has already been set up in Guangzhou city, with a registered capital of US$2 billion.

In September, Evergrande Group invested 14.5 billion yuan for a 41 per cent stake in Xinjiang Guanghui Industry Investment Group, one of China’s largest car dealers. The investment has been regarded as an effort by Evergrande to pave the way for Faraday Future’s car sales network in China.

Although Evergrande Health became the largest shareholder of the joint venture, it has less voting right than Jia because of the dual-class share structure.

Based on the June agreement, each share Evergrande Health owns equals one vote compared to 10 votes for each share held by Jia. Consequently, Evergrande Health only has 12 per cent of the voting right. Jia, who owns 33 per cent of the company, controls the rest of the voting rights.

Still, the agreement has a special clause, which stipulates that if the management is unable to perform its duties, Jia’s voting rights will be reversed to Season Smart. It would result in a full control of Faraday Future by Evergrande Health.

Evergrande pays US$853.85 million for stake in troubled electric vehicle maker Faraday Future

Faraday Future was founded in 2014 by Jia, chairman and CEO of the debt-saddled technology conglomerate LeEco.

Earlier this year, Jia defied orders from Chinese regulators to return to China and said he needed to stay in the US to focus on Faraday Future. He said his brother and wife had been empowered to handle matters relevant to the company.