Will It Happen

[NSTG8R]

Why was my comment deleted? I just shared what I believed and answered a question the OP asked. Im a fan of Elio, I would buy 1 if not 2. But I do not blindly believe this will happen. I don't believe its a scam or anything but those who are blind fanboys and strike me down when I say the world is not flat are in for big disappointment.

The numbers cant and don't work. I have more than a fair amount of experience with product production at higher levels, engineering levels and production levels.

For the amount of money that has already been lost. With the needed money the company currently does not have to start anything resembling production, and im talking in the hundreds of millions...your looking at a company that has been struggling for the last 5 years and will be 300-500 million in debt by the time they can have any kind of "production" unit roll off the line.

Of that projected 7k for each unit probably 10-15% at most can be profit, and that's being generous (unless its built in a 3rd world country). How long do you figure a small company can last. Especially with a small niche vehicle. Look at what a small 250 Kawasaki motorcycle cost.

Why it got deleted? Don't know...not my job.

The above highlighted/underlined opinion you posted is well thought out, and whether I agree or not, is conversation worthy.

Your initial post you came off as a jackass troll looking for a fight. And since you've been a member of the forum for better than a year and never posted a word, it just came off as troll-ish. Everybody's got an opinion on this topic, but an explanation after your "no..blah, blab" statement would have been appropriate....Just my opinion.

Sounds like you have some experience, please enlighten us.

 

[JEBar]

while its a fact that EM is deep in debt but at this point in time, its not a major a problem .... until a debt is called in, its simply a number on a piece of paper or computer screen .... a long line of news reports, over time, and various governmental filings indicate the debt is owed to RACER Trust .... RACER Trust is owned by Stuart Lichter who is a long time supporter of Paul an EM .... he's on the company's Board of Directors, take a look at his bio .... he has supported Paul and EM since early on and is reported to be totally committed to their vision ..... with untold tens if not hundreds of millions invested, if he was to call in the debt, the company would be gone and he'd lose it all .... common sense indicates that isn't likely to happen because he and the people running EM are in for the long run .... the stock sale gave them enough money to completed the E series and to get to production .... between now and then the federal loan guarantee and/or additional private funding should provide the money to begin production

 

[Marshall]

Just a point.

Getting out of debt from the start up cost is a multi year process. But current profitability will begin as soon as the current income exceeds current expenses and the startup costs can be addressed. At that point, the time it will take to pay off the startup debt will be determined. OVERALL PROFITABILITY may take several years and I think I saw a plan to do this in 5 under a realistic scenario with production in the 100,000 to 200,000 range per year.

I still think explosive growth will cut that by a factor of 5 if the targets are even close to being met. I can live with $7,500 and 75 MPG and not be disappointed. But $6800 and 84MPG would be better. I really could see Elio taking up 10% of both the new and used car market if anywhere near it's targets. It might take a couple of years to ramp up the production and max out the Shreveport facility and a bit longer to open additional plants. But this is the explosive growth scenario.

Now just a stroll down memory lane and high school bookkeeping:

Fixed costs (Capital Budget)
Plant
Equipment
D&D (Design and Development costs)

Production Cost (Operating Budget)
Parts
Supplies
Payroll
Depreciation (This is where a lot of creative financing occurs)

Operating profit is sufficient to continue production because it it the basis of paying down the Capital investment. Overall profitability will come, but how much and how fast is the bigger question after achieving an operating profit.

 

[Marshall]

Why was my comment deleted? I just shared what I believed and answered a question the OP asked. Im a fan of Elio, I would buy 1 if not 2. But I do not blindly believe this will happen. I don't believe its a scam or anything but those who are blind fanboys and strike me down when I say the world is not flat are in for big disappointment.

The numbers cant and don't work. I have more than a fair amount of experience with product production at higher levels, engineering levels and production levels.

For the amount of money that has already been lost. With the needed money the company currently does not have to start anything resembling production, and im talking in the hundreds of millions...your looking at a company that has been struggling for the last 5 years and will be 300-500 million in debt by the time they can have any kind of "production" unit roll off the line.

Of that projected 7k for each unit probably 10-15% at most can be profit, and that's being generous (unless its built in a 3rd world country). How long do you figure a small company can last. Especially with a small niche vehicle. Look at what a small 250 Kawasaki motorcycle cost.

I agree it would not survive as a small niche company. But as an explosive growth company it can.

I just made a spreadsheet based on the production forecast which indicates a first year production of 275,000 vehicles possible and a second year at 350,000 vehicles. That makes approximately three years to make 1 MILLION vehicles which is still a small part of overall auto sales. even at $300,000,000 in capital cost, this would make the per vehicle cost of the startup about $300 per vehicle and then it's overall profit. Even at 10% return, another $90 per vehicle makes profitability at about $390/vehicle.

But plug these numbers in at 50,000 vehicles/year and it won't work.

My WAG estimates are they need production costs below $5K, Sales and delivery below $1K in order to meet it's target price. That's also why I give it about $700 of fudge room on it's target before much impact on the sales. Almost every alternative is over $10K including reliable used vehicles.

 

[acentre]

I agree it would not survive as a small niche company. But as an explosive growth company it can.

I just made a spreadsheet based on the production forecast which indicates a first year production of 275,000 vehicles possible and a second year at 350,000 vehicles. That makes approximately three years to make 1 MILLION vehicles which is still a small part of overall auto sales. even at $300,000,000 in capital cost, this would make the per vehicle cost of the startup about $300 per vehicle and then it's overall profit. Even at 10% return, another $90 per vehicle makes profitability at about $390/vehicle.

But plug these numbers in at 50,000 vehicles/year and it won't work.

My WAG estimates are they need production costs below $5K, Sales and delivery below $1K in order to meet it's target price. That's also why I give it about $700 of fudge room on it's target before much impact on the sales. Almost every alternative is over $10K including reliable used vehicles.

Marshall
Very interesting analysis. What if the price of the Elio is raised to $9999. Would 50,000 units a year be financially feasible?

 

[wizard of ahs]

As I've said before, it would still be a great vehicle at $10K (which is what "I" am actually expecting )

 

[Marshall]

Marshall
Very interesting analysis. What if the price of the Elio is raised to $9999. Would 50,000 units a year be financially feasible?

Let's see, $300M plus $30M fixed cost spread out over 150,000 vehicles would be $2,200 per vehicle for fixed costs. But you lose the economy of scale on the production side. I doubt it, but it's possible if you keep production and sales cost down.

Of course the caveat to both scenarios is that a seven year time on return on investment is traditional.

 

[Maurtis]

While I too would pay $10k (loaded, out the door) for my Elio, that is because it is on paper the exact vehicle I have been looking for as a companion to my motorcycle for commuting. My "and" vehicle, since we have my wife's SUV for shopping, family hauling, etc.

But if we want it to be an explosive hit, it needs to be much cheaper than what is currently on the market. Smart cars are what I usually compare it to, small car with better gas mileage than a lot of other cars on the road, two person capacity with limited trunk space. And at $14k, looks like they are moving about 10,000 cars per year. Would double the MPG help that? I highly doubt it. But if it were half the price, I think they would be everywhere.

The Nissan Versa, much more practical for most families since it is not an "and" car, has a base MSRP of $11,600. Not the MPG queen the Elio should be, but can carry the spouse, kids, and a dog. Last year, it looks like they sold 144,000 Nissan Versas in the US: http://www.goodcarbadcar.net/2011/01/nissan-versa-sales-figures.html

Assuming the general public can be convinced the Elio is not a death trap, I really think it has to be priced significantly under something like the Versa to make up for the lack of utility. Much more than just $1,600 less.

 

[JEBar]

the Smart Car will appeal to segments of the market that the Elio will not .... the Versa will appeal to segments of the market that the Elio will not .... conversely, the Elio will appeal to segments of the market that the Smart and Versa will not .... I believe that the diversity of the market for an Elio is huge .... its looks alone set it apart from anything else .... EM has conducted market research that none of us as access to but which clearly leads them to base the future of EM on a large demand .... as a completely unscientific observation, the diversity of the people we have seen at two different tour events tends to confirm it

 

[Maurtis]

I agree completely, I was just responding to the possibility of pricing the Elio at $10k, versus $6,800. At $6,800 you are in a new car market of one, competing with used cars outside of their warranty and of dubious reliability. At $10k, you are perilously near new compacts with much more utility and slightly used cars still in their warranty period.

I am sure Elio's market research shows good numbers at the projected price point, it is one that makes sense on many fronts. I am sure that if they did the same research at $10k, the forecast would not look quite so good. At least until Elio is established in the marketplace and has a solid reputation. Then the premium Elio luxury and performance models can tickle that price point