Smith's black 2000 Mercedes-Benz 420E was found in a Simi Valley, Calif., storage facility last month. After the car was inspected, police announced that the case had taken a new turn.
"The condition of the vehicle in conjunction with cooperating witness statements indicates he was killed," Lt. Dave Dolson said in a press conference. "At this time, the evidence leads us to believe he was murdered." His body has yet to be found.
For the first time, police also named a person of interest in the case: John Creech, 40, a convicted drug dealer currently serving time at L.A. County Men's Central Jail, who detectives have yet to interview. The storage facility was rented to a friend of Creech.
Police also confirmed that the married Smith, 57, had met Creech's wife, Chandrika, 39, in rehab in 2009.
"They had a relationship," L.A. Sheriff's spokesman Steve Whitmore confirms to PEOPLE, "but we're not going to characterize what kind it was."
Asked if this was a revenge killing for an affair, Whitmore would only say: "Our detectives have a good idea what the motive is, but we're not going to say at this time."
Vanished in Thin AirSmith, involved in distributing Avatar and the Star Wars films, vanished the evening of May 1, 2012 after driving away from a friend's L.A.-area home where he'd been staying, leaving behind his shaving kit, cell phone charger and other belongings.
According to a source close to the family, Smith had been having marital problems at the time, which his son, Evan, alluded to in a April 14 Tweet: "Thoughts and prayers out to my amazing Mom and bros plz," Evan wrote. "My dad decided to leave the family last nite. Real family sticks together."
But the Smith family later downplayed the marital drama, saying it wasn't anything out of the ordinary that the couple couldn't work out, the source said.
Meanwhile, Chandrika Creech has spoken to detectives on many occasions about the disappearance, police added, but they declined to elaborate. Approached by a reporter at his drug sentencing last year, John Creech denied that he ever met Smith.
Regarding the discovery of her husband's car, Lisa Smith said in a statement: "We are both saddened and heartened by the discovery of this crucial evidence, and know that the sheriff's department will help us acquire a measure of justice."
Lisa Smith also told the Los Angeles Times that murder was what she and their three sons had suspected all along.
"For the rest of the world to know that he didn't leave us is huge," she said. "He would have never done that. We knew from the get-go that something horrible had happened because he just wouldn't do this."