Paul Elio Wishes Folks Would Look On the Bright Side

As TTAC reported recently, Elio Motors disclosed in its most recent annual report to the Securities and Exchange Commission it needs an additional $64 million to begin series production of its first vehicle at a former General Motors assembly plant in Shreveport, Louisiana. This is on top of the $312 million it previously stated it required to bring the high-mileage trike to reality.

That isn’t the worst news.

In the filing, Elio Motors announced it was laying off sales and engineering personnel to conserve resources as it focused on securing more financing, primarily through the sale of stock and taking on more debt. An unnamed vendor is also in a payment dispute with Elio Motors, and the company is running a $100+ million deficit.

“Sure, there’s bad news,” Elio said on a phone call with TTAC, “but there’s also good news in the annual report that people are ignoring.”

Elio Motors’ success is looking increasingly bleak. However, there is a pattern. Each time Elio makes some kind of financial report or the topic heats up locally, journalists take note, write about the problems, and Elio’s stock price drops.

The latest financial news comes on the heals of local politicians in Shreveport complaining Elio has tied up a facility that could’ve been leased to going concerns.

By now, Elio’s publicly traded stock has dropped from a steady $20/share to below $7, making it even harder to find financing.

$100 million in the hole

“All startups have a deficit. Have you looked at Tesla’s deficit lately?” Elio answered.

Tesla has a large deficit on the books and isn’t yet profitable. The bonds it recently sold as part of the $1.15 billion it raised through equity and debt (the same way Elio hopes to raise a smaller amount of cash) have been described by Forbes as “junk”.

However, unlike Elio Motors, Tesla has built and delivered tens of thousands of cars, Paul Elio pointed out, whereas his own firm hasn’t yet even finished the 25 final engineering prototypes it must complete, let alone a single production vehicle.

Unpaid vendor and committed suppliers

Elio wouldn’t identify the unpaid vendor, but he said the amount in dispute was “relatively minor” compared to the financial commitments to the project made by some very large vendors in terms of engineering and equipment costs.

For example, Aisin, which will be supplying the Elio trike’s five-speed manual and automated-manual transmissions, committed $36.6 million to the project. Linamar will be in charge of engine assembly at the Shreveport plant and has said it will provide $45 to $50 million in general manufacturing equipment to support production. And Hyundai DYMOS will supply seats from a satellite assembly line in the Shreveport plant. That supplier has committed $1.8 million for needed equipment and renovations.

Primary investor doubles down

Elio pointed to another section of the annual report that stated Stu Lichter — the company’s primary backer, real estate broker, and holder of the lease on the Shreveport factory — “advanced” Elio Motors over $6,250,000 since the start of 2016.

Additionally, Lichter recently purchased $200,000 worth of Elio Motors common stock at $5.98 a share.

None of that reduces the $376 million Elio Motors needs to raise if it has any chance of starting production by the end of 2017, a date pushed back so many times that many of Elio’s 64,000 or so reservation holders simply don’t believe it anymore — or any of Paul Elio’s other promises.

Marked for death?

It may be time for an Elio Motors Death Watch, but it won’t be because Paul Elio is a scam artist.

Instead, Paul and his associates, for all their previous experience in the auto industry, may have simply failed to accurately estimate how long it was going to take to develop their vehicle, and how much money it was going to take to get it to series production.

One could understand it if Paul Elio threw in the towel, but he’s not giving up on his three-wheeled dream just yet.