Elio Engine Development Proceeds but Trike's Production Start Pushed Back to 2016

While there has been ample skepticism of the Elio Motors enterprise, I’ve personally been one of the more optimistic, or at least less skeptical voices concerning the project. All along, though, I’ve said that there were benchmarks that had to be met, like progress on the IVL led Elio engine development program and the beginning of hiring in earnest for Elio’s facility in the former General Motors plant in Shreveport, LA, and that the time for skepticism would begin if and when those benchmarks weren’t met. Elio isn’t trying for a moonshot, just a 1,200 lb 55 horsepower reverse trike using mostly proven components, so whatever barriers to getting the enterprise off of the ground are mostly financial, not technological. Now, it seems that Elio will be missing one of those benchmarks, or at least moving the goalposts, as it scrambles to put together the almost quarter billion dollars Paul Elio says he needs to start production.

First the bad news. At the monthly public meeting held by Caddo Parrish commissioner Ken Epperson last Thursday, Paul Elio announced that the start of production is being pushed back to the beginning of 2016. The reason given is financing, or more properly a lack thereof. So far, Elio has raised about $65 million of the $240 million or so that it will need to start making the three wheeler. The company has started to sell off equipment in the Shreveport plant that Paul Elio purchased in a leveraged deal and it is hoping that the sale of the tooling and equipment from the recently renovated factory will help make up some of that shortfall. In an interview with The Truth About Cars, Paul Elio would not provide a dollar figure on what’s already been sold, other than to say that Comau, which is managing the equipment sale as well as providing production engineering services to Elio Motors, has already listed for sale millions of dollars worth of equipment.

While Paul Elio insisted to me that the company has a number of alternative routes to the $185 million it needs to raise but that Plan A is borrowing that sum from the Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) loan program. Elio said that the ATVM loan application is going as well as they can hope for it to go at this point of the process.

To the company’s credit, Elio was forthcoming and transparent about the current lack of financing. As a matter of fact, it was Paul Elio who volunteered to TTAC the information that they’d be delaying production, ahead of the public announcement, when I contacted him about the status of the development of Elio’s proprietary 3 cylinder engine.

IVL is in charge of developing the Elio triple, an updated version of the Suzuki motor from a Geo Metro that’s been used in the Elio prototype mules. Paul Elio told me that the prototype engine has been assembled, checked for clearances and possible interferences and then disassembled for inspection. Subsequently, the motor has been reassembled for compression testing and then hot testing on the dyno. It’s passed the compression test, but due to the delays that happen when you’re building a prototype, they missed their window for access to IVL’s engine dyno facility, so they have to wait until a time slot opens up.

For the time being, though they haven’t yet arranged financing for production, the company doesn’t appear to be in a precarious financial situation. Bills from IVL are being paid, as is the note on the loan Paul Elio took out to buy the GM plant’s equipment and tooling.

One potential problem is that Elio Motors will almost certainly miss a 2015 deadline to reserve the third of the factory’s floor space that it intends to sublease from the real estate investment firm that has leased it from the parish, which bought the plant from the RACER trust that is disposing of the assets from GM’s bankruptcy. Real estate developer Stu Lichter said that there is a possibility that Elio may lose its place in the facility. Elio isn’t the only company interested in the property, with a team from one possible tenant scheduled for a visit early next month.

“I’m really committed to doing everything I can to get this car into production,” Lichter told the Shreveport Times, “But, at the same time, we have a facility. We have investors that we have to be responsible to so I can only go so far.”

Discussions about the about to expire deadline are taking place and Lichter held out hope that an extension can be negotiated. I’m pretty sure that Lichter is one of Elio Motors’ private investors so I’m guessing that extension will indeed be negotiated. Still the announcement that production is delayed and the fact that Elio appears to be relying on government financing is making me more skeptical about whether the overall enterprise will succeed. As far as my journalistic ethics allow me, I’m rooting for Elio and would love to see their vehicle become a working man’s Morgan Three Wheeler, but with Elio pushing back production (and hiring) I’m less optimistic now than I was when I drove the P4 prototype last summer.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS