Elio Motors Needs Just $64M More to Bring Trike to Life
Remember Elio Motors? If you’ve ever expressed any public interest in its economical three-wheeler, the company’s aggressive social media campaign has ensured Elio is a household name in your life. You may also recall the company pushing back the vehicle’s release date every single year since 2014. With a revised launch of 2018, surely Elio Motors is on track to deliver the affordable and eco-friendly little trike this time — right?
Don’t bet on it.
After an assessment showing the company had $123 million in debt with only $101,000 in the bank as of September 2016, the future is now even more dire. Elio Motors’ U.S. Securities and Exchange Commission filing shows the company needs $376 million — $64 million more than the original previous $312 million estimate — to begin production, reports Jalopnik.
Worse still, it only has 76 weeks to find the money if it has any hope of maintaining its self-imposed deadline.
Elio’s debt climbed through the end of the year and is now estimated to be well in excess of $141 million, though it did manage to chuck a few grand into the bank before the end of the fourth quarter — not that it matters. The company’s solution to its growing financial emergency is to gain funding through “venture equity, debt arrangements, and capital leasing of equipment.”
According to the SEC filing, the company managed to secure supplier commitments to help soften the blow. Aisin agreed to supply transmissions, Linamar Corporation committed to manufacture and supply the 900 cc engine assembly, and Hyundai DYMOS will supply seats. However, those commitments only account for a fraction of the finances needed, and Elio Motors seems convinced it can procure additional investments via reservations once a prototype and testing models are finalized.
Currently, there are around 65,350 pre-orders with 2017 showing a much less impressive growth rate than 2016.
The company is also selling non-essential equipment obtained through the purchase of the former General Motors plant it plans to use for assembly in Shreveport, Louisiana.
Through December 31, 2016, sales of excess equipment yielded approximately $5.08 million for Elio. The filing lists another $1.27 million in excess equipment it could part with.
Elio hasn’t officially laid off anyone in its relatively minuscule workforce, but many have gone on an extended vacation since the start of this year.
“In order to reduce costs, effective January 1, 2017, the Company furloughed a significant portion of the engineering, manufacturing, and sales and marketing workforce,” reads the SEC documents. “At this time the Company is focusing its efforts on raising capital through a combination of debt and equity offerings. Once capital has been raised, the Company will resume engineering, manufacturing, and sales and marketing efforts.”
There are also some outstanding bills with suppliers.
When Paul Elio pitched this alternative vehicle, he promised it would create 1,500 jobs and offer economical and reliable transportation for $6,800. Now it looks like his staff of 28 is in danger of being let go and the vehicle’s estimated base price has climbed to $7,450. The company has only managed to cover a small portion of the interest on its initial loan.
We hate to see an interesting concept like this fizzle, but even some of Elio’s former supporters are urging the company to just give up. The comments section of the brand’s Facebook page is littered with snarky comments and accusatory language. Many have suggested Paul Elio give up his $250,000 and deliver on his promises or begin refunding pre-order investments. Quitting is likely the last thing Elio wants to do with this much debt on the books.
[Images: Elio Motors]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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$64M is not that much. Hell, $376M is not that much. GM blew a billion on the Alpha platform. I think the timing is bad, is all. The idea doesn't seem that off, though the govt really needs to ease up on the whole 3 wheel vs 4 wheel thing. Makes no sense that I can ride a motorcycle, but if I add 2 more wheels to it it needs crumple zones and airbags to not be a one-off kit car.
Who could have known that bringing a vehicle to market from scratch would be hard?