For Paul Elio to get the government loan he has to convince the lenders that Elio Motors is a viable business even if he did not get the loan. Can he do that? If not, he doesn't have enough cash to set up a vehicle manufacturing factory.
...he still doesn't have a final, or near final, prototype, and he is still not recruiting for engineers (or anybody else) on his web site...So, can he really show that his dream has business viability?
Dan
2012 Viper Red Rt
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note: it differentiates types of capital invested. It specifically states that the loan provides only expansion capital, not working capital. As a result Paul Elio must come up with enough cash to run his factory until sales revenue come it.
For example, if you are running an ice cream shop, the acquisition of your store front, furniture, fixtures, and appliances is financed with "expansion capital". Of course if you rent the store front, the needed amount of expansion capital will be less than if you buy it. Working capital is the money needed to fund your ice cream inventory, pay for electricity, payroll and other things between the time of business formation and the time money is available from sales to pay for these items.
In the case of an ice cream shop, this would be only the money needed to pay for the ice cream the day you open, and a set aside for salaries and expenses until money from ice cream sales reached such a level that the shop had a positive cash flow.
In the case of a major fixed goods manufacturer, such as a vehicle manufacturer, the amount of money needed would be that required to buy the raw materials, hire staff, develop the machinery, train the staff, from opening day until the money from sales is available to fund operations.
Elio Motors does not have an engine designed yet, has no engineering staff, and very few employees. It's management team is inexperienced and untested in creating new business models. They have very little entrepreneural experience. This is a an important management skill. Not all experienced executives have that skill. Bill Gates has that skill, Lee Iacocca did not.
The DOE, by stating the loan application from Elio Motors has passed the first phase of review only means that the application materials are now complete, and only now will the DOE start a formal review process. This is similar to when a prospective student enrolling in college. First the student must fill out the application form, then he must take the SAT and send the results to the school, then he must submit his transcripts. After all of that, the student still has to get written references and write his own essay. Only after all of that is complete will the school "accept the application" and start reviewing the student's background to see if they think the student will be successful at that particular university.
So far, Elio Motors has completed phase one: the application has been accepted. Phase two where the student is assessed for chances of success is just now starting. Then phase three where the student is assessed for an overall fit with the school's desired outcome is studied. After passing all the phases, the student will get an admittance letter.
Elio Motors has had its loan application accepted. It has a loong way to go to get the cash needed to set up operations.
Will it be successful? I do not know. I flunked Clairvoyance 101. However, My opinion is that it will not be successful in achieving a DOE loan.
Last edited by Dan_Ashley; 10-24-2014 at 02:36 PM.
Dan
2012 Viper Red Rt
upgrades:
Baja Ron's Anti-Sway
Diamond-R Arm Rests
Gloriders
High mount brake light
chrome front fender garnish
Bad Boy Horn
Chrome Deflector Rack
Chrome Scuff Nose Accent
Handlebar Grip Fringe
Gremlin Bells
note: it differentiates types of capital invested.
What do you think Dan? According to what I read this AM, they have passed the first hurdle of three to get their 185 million loan.
If they get the financing, then it will be interesting if they are able to do what they said they would.
I will remain a bit skeptical until I see the deliveries being made to the now 35,000 people that they say they have orders from. I also want to see how the product is holding up after 6 months or so of ownership and 10K plus miles on the units.
I still remember the Solarian (?) debacle where the company got almost a billion of the taxpayer money to produce solar panels and then promptly went bankrupt. No one even went to jail over that one.
Last edited by ARtraveler; 10-24-2014 at 02:14 PM.
Currently Owned: 2019 F3 Limited, 2020 F3 Limited: SOLD BOTH LIMITEDS in October of 2023.
What do you think Dan? According to what I read this AM, they have passed the first hurdle of three to get their 185 million loan.
If they get the financing, then it will be interesting if they are able to do what they said they would.
I will remain a bit skeptical until I see the deliveries being made to the now 35,000 people that they say they have orders from. I also want to see how the product is holding up after 6 months or so of ownership and 10K plus miles on the units.
I still remember the Solarian (?) debacle where the company got almost a billion of the taxpayer money to produce solar panels and then promptly went bankrupt. No one even went to jail over that one.
i absolutely agree with your scepticism. As Tesla has shown, starting a new car company is not easy, it takes a lot of investment, and a lot of time. Remember Apterra? That was a much snazzier design. What about the Edsel, De Soto, Fleetwood motor homes, Cushman, Delorian? It takes a lot of money, time and management expertise to make a car company successful.
Also, if this were as simply doable, one of the majors would have done it. Toyota is coming out with a three wheeler, they call the i-Road, with an expected price point of about $10,000. But it is electric and goes only (I think) 30 MPH max--or so.
I reviewed the CV of the Elio Motors executives. They are not bad, but they are not "venture capitalist entrepreneurs." I akso do not see how it is remotely possible to create and market a car at the $7,000 price point. Perhaps at the $10,000 price point, but $7,000 seems too low--especially when there is no dealer network, no other flanking or guarding products, and no corporate expertise outside of a single man. Elio Motors cannot leverage their existing organizational structure, skills, or expertise. Therefore a single-product venture into the car market is highly uncertain and very risky.
so, even if he actually gets funding, I would be surprised if it were successful.
If I had $1,000 to "invest" in super risky schemes, I would probably visit Las Vegas slot machines before I would buy Elio Motors stock.
Dan
2012 Viper Red Rt
upgrades:
Baja Ron's Anti-Sway
Diamond-R Arm Rests
Gloriders
High mount brake light
chrome front fender garnish
Bad Boy Horn
Chrome Deflector Rack
Chrome Scuff Nose Accent
Handlebar Grip Fringe
Gremlin Bells
Hi Dan,
Thanks for the very clear explanation of what may lie ahead for them.
I got the "first part of the" part of the release, but didn't understand what was involved in the other two...
Or how the money could be spent!
i still hope that they can pull this rabbit, out of a hat!
What I'd like to know is what are their plans for paying back this $188 million. How many Elios do they have to sell to pay this back assuming a net profit of %10. At $7800 a pop and a $780 profit it's gonna take a long time to pay any of that back. Plus they've got to pay all those T shirts they gave out to their "Investors".
Love my
Statistics show that most motorcycle accidents are caused by a defective nut holding the handlbars.
The people behind the Elios used to be called Snake Oil salesmen or Flim Flam artists. Same scam, different century.
I think it is more a case of enthusiasm and hope exceeding the probability of success. Kinda like when a teenager says she is going to grow up and be a Broadway star and raise three kids. It can happen, but the odds are agin it.
Dan
2012 Viper Red Rt
upgrades:
Baja Ron's Anti-Sway
Diamond-R Arm Rests
Gloriders
High mount brake light
chrome front fender garnish
Bad Boy Horn
Chrome Deflector Rack
Chrome Scuff Nose Accent
Handlebar Grip Fringe
Gremlin Bells
What I'd like to know is what are their plans for paying back this $188 million. How many Elios do they have to sell to pay this back assuming a net profit of %10. At $7800 a pop and a $780 profit it's gonna take a long time to pay any of that back. Plus they've got to pay all those T shirts they gave out to their "Investors".
Pay back, I don't think so in our lifetime. They have not even started to build them yet.
I won't say more because I have answered and spoke to many of the number things in previous threads. My background is accounting and cost accounting. Dan Ashley has also addressed the numbers issues in this and other threads. He has similar background.
Currently Owned: 2019 F3 Limited, 2020 F3 Limited: SOLD BOTH LIMITEDS in October of 2023.
Reponse from a member of the Elio team .... not me.
Yeah.. lots of experts that pass judgment without even taking a peek at the full business plan. Wow.
ATVM
1.Equipping, expanding or establishing manufacturing facilities in the United States to produce ATVs or qualifying components or 2.Engineering integration performed in the United States of ATVs or qualifying components.
Hey.. in the least, that frees up a lot of our capital for operations. All of these costs we currently are paying ourselves.
We DO have an engine designed.. will be dry spun, then completely tested mid November.
Our own engineers? It was faster to hire firms with the expertise than running our own. I laugh about how one can criticize our supposedly lack of managerial skills, then criticize Elio for not having our own engineers. How about IAV designing our drivetrain? They did the Bugatti and a host of other high end vehicles. Good enough for me. Altair does work for all the majors. This isn’t either of these firms first rodeo. It is by far the best approach.. hiring those who have done this 1000’s of times. GM has their own “engineers” How many recalls did they have this year….. so far?
Management Team? Not good enough? No experience? BoD: The previous CEO of Chrysler(also on Sirius BoD, Snap-On and a host of others.? The previous CEO of Lear Corp(also on a number of other boards)? A previous VP of Mercedes Benz, President of SMART USA and launched the SMART here? Paul Elio owned his own engineering firm with 40 plus engineers working for him. He did new product development for the auto industry. I will take that team anytime..
Aptera? They want to compare us to Aptera? Over 40K for an electric vehicle.. range 100 miles. Because of the curved design I don’t think the windows would even roll down. No wonder it didn’t make it. Not even close to functional. 4,000K reservations tops.. $100 refundable. And they could only get 4000K somewhere around two years or more? Compare that to Elio. Over 35,000 reservations with the vast majority Non Refundable form 100-1000.00. Compare that to sales last year of the VOLT (23,094) The Leaf (22,610) The Tesla (17, 650) There is huge acceptance of a vehicle that costs 6800.00 84 MPG and a 672 mile range. And our windows roll down.. I talked to a previous exec of Aptera who said: “You are going about this in exactly the right way… we didn’t”
A backwoods’ analysis of Elio Motors doesn’t impress me much.. not when I know that the 34 of the automotive companies top suppliers all did their own DD on Paul Elio, Elio Motors business model, the viability of that model, and chose to partner with Elio Motors at a time when they didn’t need the business. So did investors do their own DD.. so did Racer Trust.. So did Comau who is our factory design partner(one out of every 3 autos in the world is manufactured with a Comau designed plant.)
One thing for sure, no matter what the issue or potential bumps in the road, Elio Motors always has several other pathways to success. Most of the critics never ask the “how” they just inject their doubts based on opinion.. we are used to that.
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Well that's not good... 
Originally Posted by Rando
They have not even started to build them yet. 
