LeTV says will develop electric auto

Online video company trying to diversify business model

LeTV Information Technology Co announced on Tuesday it will research and develop a new electric car featuring Internet technologies, a move analysts said is to adjust business structure amid intense competition in the online video sector.

"Through developing the smart Internet electric vehicle and establishing a connected automobile ecosystem, we aim to overtake the traditional European, American, Japanese and Korean giants of the industry," Jia Yueting, CEO of the Beijing-based company, said on his Sina Weibo account Tuesday.

The price of the smart electric car developed by LeTV will be set much lower compared with prices of electric vehicles currently on the auto market, LeTV said in a statement e-mailed to the Global Times Tuesday.

Analysts said LeTV is trying to transform its business model due to serious competition in the online video sector.

"Challenges for LeTV are tough, partly because regulations on online video programs are strict and operation costs for the video industry are huge," Zhang Yi, CEO of Guangzhou-based iiMedia Research Institute, a mobile Internet consulting agency, told the Global Times Tuesday.

The State Administration of Press, Publication, Radio, Film and Television criticized LeTV for violating regulations and the media regulator notified several licensed content distributors to stop cooperating with LeTV, according to media reports in July.

In response to the media reports, the company admitted that its Internet-based set-top boxes violated regulations and it was making rectifications with its partner China Central Television (CCTV), according to a statement posted on the Shenzhen bourse in July.

Moreover, the company also said it has suspended set-top box device sales.

The tie-up with licensed content distributors other than CCTV will be halted during the rectification and will be resumed afterward, said the statement.

The company also noted that the regulation policy does not change LeTV's business model, therefore, the company's advantages are not damaged by the policy.

LeTV announced it would halt trading on the stock market starting from October 27 because it was planning some important events, and it resumed trading on Monday with its shares rising by the daily limit.

Boosted by the announcement of the new electric vehicle, shares of LeTV continued to rise by 0.46 percent to 37.03 yuan per share despite a dramatic dive in mainland indexes Tuesday.

Although investors from the capital market generally showed confidence in the business restructuring of the online TV company, some drivers had the opposite view about the new electric car.

"I will not buy an electric auto developed by LeTV," Yu Xinquan, founder and CEO of Inner Mongolia Langlaile E-commerce Limited Co, who was one of the first batch of Tesla Model S owners in China, told the Global Times Tuesday.

Yu explained that currently electric autos still have some shortcomings such as short running distance on a single charge, and a lack of supporting facilities, including public charging stations.

Yu also complained that the Tesla Model S had a hidden safety issue.

Yu said another Tesla Model S owner had experienced a problem with his display screen as it stopped working several times when he drove his car from Beijing to Taiyuan in North China's Shanxi Province.

"Even Tesla, one of the most advanced electric vehicles globally, has so many drawbacks, [so it would be worse for] these newcomers which lack related experience and technology," Yu said.

"Developing smart electric vehicles based on Internet technology is the trend in the auto sector, even though electric vehicle technology is still less developed globally," Zhang noted.

LeTV invested in a US electric auto design company Atieva this summer, and became the second-largest shareholder of Atieva, according to the statement by LeTV.