Paul Elio Wishes Folks Would Look On the Bright Side

Ronnie Schreiber
by Ronnie Schreiber

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.

Ronnie Schreiber
Ronnie Schreiber

Ronnie Schreiber edits Cars In Depth, the original 3D car site.

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  • Voyager Voyager on May 10, 2017

    Let's face it. If Musk had his mind set on bringing three-wheelers, the whole venture would have been further. In many respects, what Musk did, is much more difficult.

  • Wumpus Wumpus on May 13, 2017

    Has he considered exporting to Germany? There's some sort of set of regulations that make it worth converting Golfs into three-wheelers. Might work if you need margins. $100M in the hole, before tooling up? I suspect you were paying consultants as fast as you could.

  • Teddyc73 As I asked earlier under another article, when did "segment" or "class" become "space"? Does using that term make one feel more sophisticated? If GM's products in other segments...I mean "space" is more profitable then sedans then why shouldn't they discontinue it.
  • Robert Absolutely!!! I hate SUV's , I like the better gas milage and better ride and better handling!! Can't take a SUV 55mph into a highway exit ramp! I can in my Malibu and there's more than enough room for 5 and trunk is plenty big enough for me!
  • Teddyc73 Since when did automakers or car companies become "OEM". Probably about the same time "segment" or "class" became "space". I wish there were more sedans. I would like an American sedan. However, as others have stated, if they don't sell in large enough quantities to be profitable the automakers...I mean, "OEMs" aren't going to build them. It's simple business.
  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.