There has been some mystery surrounding how Elio Motors would be getting the massive amount of funding required to start up their assembly plant in Louisiana in order to build the Elio car. When we talked about the hokey financials laid out by Elio last year when they were convincing the Caddo parish council to buy the $7 million plant for them. Having successfully done that, they are now seeking the funding to get the car built, which is likely a far more arduous task.

Arduous because Elio’s plans are to make slim profit margins on each car, which means that it would be years, perhaps a decade or more, before they could pay off any loans they’ve taken to get the car rolling. With roughly $200 million required and $250 in total loans and funding given and a mere $1,000 per unit in profit.. the math is easy to do. What entity would be willing to loan that kind of money for that long a period on a car that may or may not sell well for the long term?

elioorange_front

Ahh, yes. Government. Elio just announced that they’ve completed the first review phase for an Environmental Protection Agency (EPA) loan for $185 million under the government’s Advanced Technology Vehicle Manufacture loan program.

So let’s do some more math. This time, we’re going to do a little algebra involving finding “X.” Let’s assume that the EPA does approve the Elio loan. X is “actual production starts,” by the way.

X = (TimeToGetBureaucratsToApprove + TimeToPurchaseAndReceiveParts) + Road&RealWorldTestingOfVehicle

Keep in mind that Elio wants to start production in 2015 and has had a tendency for several years now to repeatedly use the phrase “18 months away” when describing plans for producing the car.

I’m sure Elio proponents will point to the “35,000 reservations” for the car that the company claims. They may have those, but that’s not proof that the car will be built. Nor is it proof that the car will be profitable. It’s not even proof that 35,000 of them will be made. It’s just proof that 35,000 people may think that the car will be built and are interested in acquiring one. At a cost, it should be noted, that does not profit the company as the discounts given for early reservations negate any profit margin the car might have had.

We here at CarNewsCafe would love to see the Elio built and would love even more to own one (I’ll take orange, please), but are dubious about the business plan for the vehicle as it’s been presented thus far.

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An automotive enthusiast for most of his adult life, Aaron has worked in and around the industry in many ways. He is an accredited member of the Rocky Mountain Automotive Press (RMAP), the Midwest Automotive Media Association (MAMA), and freelances as a writer and journalist around the Web and in print. You can find his portfolio at AaronOnAutos.com.

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8 thoughts on “Where Elio Plans to Get Funding: the EPA”

  1. First and foremost I am a huge believer in innovation and a small company doing what the big companies should be doing but aren’t, I would truly love for Paul Elio and his company to succeed but there are too many strong reasons why it might not. First and foremost profitability, it’s been discussed in length for a reason and it is the most important ingredient in a small companies success. At Best the design of this vehicle becomes a huge hit and achieves commercial success what’s to stop the big automotive companies from coming out with their own version and due to lower manufacturing costs produce one that’s less expensive to buy. Being of small and nimble nature it should be higher priced and more performance oriented, hopefully it will evolve to that category of vehicle. There are definitely some handling / cornering challenges that this type of three wheeler will face, please reference the fantastic work of Robert Q. Riley if you would like to learn more. Moving forward any type of reverse trike style of motor vehicle really should lean and tilt as it turns through a corner. Again, best of success Mr. Elio.

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