Em Danger Period

[pistonboy]

I think the most dangerous time for EM will be shortly after they start production. The reservations will buy all the vehicles made for a while. After these are filled, the plant will be producing 1,000 vehicles per day and relying on store orders to buy the vehicles being made, at least those are the plans. Demand for cars is not constant and varies with time. Will public demand for the Elio start out slow and have to grow or will it be immediately at 1,000 per day?

Will the store orders buy 1,000 vehicles per day? I think the vehicle is absolutely great, but that does not mean other people will see it that way. The vehicles we reservationists drive on the road will be great advertisement. The media will talk about these unusual vehicles on the road which will also be great advertisement. But will that be enough.

When demand decreases, the assembly line can be slowed down. That drives up the price per vehicle but the large auto manufacturers have large cash reserves to weather these things out. EM will be a young company at this point and not have large cash reserves.

What do these companies do when demand is less than production and the dealer lots are full? There will be no dealer lots to act as buffers, though there will be the lots of the marshaling centers to act as buffers. If a shift is shut down, the manufacturing cost per vehicle goes up and important workers may be permanently lost when they do want to restart the shift.

Perhaps Ty has seen these things.

Oh Ty, where art thou?

 

[Critter]

I think it will be like the mazda miata. The ones that did not get a spot in line had to wait months to get one. This vehicle should be as in demand as the vw bug or the model A ford. An affordable means of transportation that many people need.

 

[Gas-Powered Awesome]

This is why I've said it's dumb to ramp-up to big production numbers in such a short period of time without solid sales to back it up. There are enough experienced people on the board to know this is dumb, so hopefully they have a plan.

 

[skychief]

This vehicle should be as in demand as the vw bug or the model A ford. An affordable means of transportation that many people need.

Keep in mind the Elio is an "AND" vehicle. Its not designed to function as the family car. The VW bug and the Model A were. The Elio has a very specific target consumer group; commuters who drive long distances, students who need cheap, reliable transportation, and mid-life crisis hacks (like me) who are just plain bored driving their Tahoes, Pathfinders, and Explorers.

I think the demand for production will decline somewhat after the initial stampede of reservation holders take delivery of their Elios.

The Elio is a special-purpose vehicle. Only special people can appreciate the beauty of them.

 

[electroken]

An $8k vehicle as fun as the Elio will be is going to be the motorcycle for guys whose wives won't let them have one. This is not idle speculation, as I have several friends and co-workers that fall into this category. They may even need two of them once their significant other has driven one.

 

[pistonboy]

In California, the fact they can be driven in the carpool lane will be a big attraction, at least at first.

Of course, California, with its "need" to regulate everything to death will take care of that quickly and restrict the lane to two wheeled motorcycles.

 

[Ekh]

I think you're right about the first six months being the most dangerous time for Elio Motors. They're going to face debt service costs on their start-up loans and will need additional working capital to see them through the first year. There's so much profit built-in to the Elio that if sales grow as hoped, they'll be fine, and in a couple of years have their debt cleared (except for operating capital loans). But that could be a very rocky couple of years.

Elio's second problem, acknowledged in their IPO offering documentation, is the rapid growth in electric cars. That's where the true competition lies ... and if the price of batteries continues to drop (as Elon Musk is doing his damnedest to see that it does), Elio's going to find its market nibbled at by price competitive, small electric sedans.

Elio is going to have about 5 to 7 years max before they have to morph into something else. Possibly the electric eelio! But that can't happen until the technology is available (and the cost) changes.

That's why the folks at DOE are looking so hard at financial viability.

So maybe there are NEVER more than 1.5 million Elios ever produced. That's enough to help a lot of people, maybe be truly profitable, and certainly to repay us all for our long wait.

On the sunnier side, if EM can survive the first year, profit comfortably for the next 3, and develop "the next great thing" in small, personal transportation ... well, maybe Paul's dream really will come true. It's not impossible!

PS -- I foresee autonomous Elio rental fleets as a certainty, if Elio survives at all. Why? Because the price point is so low that Uber-style autonomous commuter cars can be profitable. You wouldn't want one to pick up your family, but if you just need to buzz around doing errands or get to your office or dentist, they'd be a great way to do it on the cheap. Call your car, climb in when it arrives, and tell it where to take you. Snooze.

 

[Ekh]

Keep in mind the Elio is an "AND" vehicle. Its not designed to function as the family car. The VW bug and the Model A were. The Elio has a very specific target consumer group; commuters who drive long distances, students who need cheap, reliable transportation, and mid-life crisis hacks (like me) who are just plain bored driving their Tahoes, Pathfinders, and Explorers.

I think the demand for production will decline somewhat after the initial stampede of reservation holders take delivery of their Elios.

The Elio is a special-purpose vehicle. Only special people can appreciate the beauty of them.

The Elio is an "and" vehicle for some, but it will be an "only" for lots of folks who don't need to haul a ton of crap around with them all the time. You can always rent a heap if you need to do that -- far cheaper own an Elio and rent a hulk occasionally then to pay for the hulk full time. Money down the drain!

 

[pistonboy]

Another factor is fleet sales. I have heard, on this forum, that fleet sales were counted in the total reservation sales in the early days, but then kept in a separate tally as time progressed. Do we know how many fleet reservations there really are?

Perhaps this is in the SEC filing. ( I have to go to work now and can not look, but will.)

 

[Ty]

I think the most dangerous time for EM will be shortly after they start production. The reservations will buy all the vehicles made for a while. After these are filled, the plant will be producing 1,000 vehicles per day and relying on store orders to buy the vehicles being made, at least those are the plans. Demand for cars is not constant and varies with time. Will public demand for the Elio start out slow and have to grow or will it be immediately at 1,000 per day?

Will the store orders buy 1,000 vehicles per day? I think the vehicle is absolutely great, but that does not mean other people will see it that way. The vehicles we reservationists drive on the road will be great advertisement. The media will talk about these unusual vehicles on the road which will also be great advertisement. But will that be enough.

When demand decreases, the assembly line can be slowed down. That drives up the price per vehicle but the large auto manufacturers have large cash reserves to weather these things out. EM will be a young company at this point and not have large cash reserves.

What do these companies do when demand is less than production and the dealer lots are full? There will be no dealer lots to act as buffers, though there will be the lots of the marshaling centers to act as buffers. If a shift is shut down, the manufacturing cost per vehicle goes up and important workers may be permanently lost when they do want to restart the shift.

Perhaps Ty has seen these things.

Oh Ty, where art thou?

I'm hoping that you'll see the first couple of months production driving a huge increase in orders. I really don't see selling 1,000 cars a day though. I know, bad Elio Fan, bad. But, I hope they do. They won't be able to shut down a shift and start it back up on a whim. But, like most things, demand will be high at first and then probably taper off. I can see Elio starting with one shift and going to two for a while until it shows there isn't quite the demand for two shifts worth of production. They can throttle the lines though so it isn't all or nothing. Instead of popping an Elio out every 54 seconds, they can lengthen that a bit. Let's say they stretch it out to 90 seconds a vehicle. That would have each shift producing 320 vehicles rather than 533 that the line can run. That's a difference of 426 per day. So, Elio can handle a 60% swing in demand. By the time that comes to pass, they'll have a really good feel for demand. They should look into exports to Canada by then and THAT will allow them to keep the second shift.

Look at the bright side - if they go down to a single shift, they'll be able to pick and chose the best between shifts.