Borrow $240 Mil, Or Borrow Alot Less And Start Out Slow?

[John Painter]

I'd be $100 all-in if you did. Has to be at least 2" dia. to count.

I need a new seat cover for my XR.... do you know how tempting that is?

 

[Richad]

I think I read some where Elio wants to borrow $240 mil to get production started? Would it make more sense to borrow a lot less, and start out production slow? I think starting out slow would be more beneficial, and a lot less risky, than borrowing big. When in the hole for big bucks, any hiccup in the economy or business plan could put them under real quick. Your thoughts?

I think your right plus if they did start on a smaller scale (due to necessity) there will be a lot more potential buyers who are currently on the fence who will come off the fence.

 

[outsydthebox]

I know who asked the question, the only info relevant was the response regarding the equipment sales question I was trying too clarify from another post. Lynch may be the smartest commissioner on the Caddo Parrish Commission in ther efforts to protect her counties $7.5 Million in risky public funding invested on the hope of a startup EM creating the 1500 high paying factory jobs. This while other Commissioners are saying "there is more than one way to skin a cat" as they they manipulate the political process to use the funds.

"We" all (I know...I am assuming) look at 7.5M as a lot of money for a municipality to "risk" on potential jobs. Here is an article that may help to put it in perspective...

http://askville.amazon.com/cost-build-road-mile/AnswerViewer.do?requestId=217129

 

[Graemexx]

I think your right plus if they did start on a smaller scale (due to necessity) there will be a lot more potential buyers who are currently on the fence who will come off the fence.

It would also bring in investors. Seeing the product and a revenue stream would inspire confidence

 

[WilliamH]

I got dragged away from this interesting thread because I had guest hunters that had to be dealt with so I apologize for not responding to some of the questions that were directed to me.
The current trend though is disturbing.
People seem to be asking "How do you start a large manufacturing company on a small scale?"
So lets address that.
How do you do a small scale engine line for the new Elio engine?
How do you do a small scale SMC panel shop?
And if you manage the small scale operation how do you expand it?
I don't think the starting small works that well.

 

[Rickb]

"We" all (I know...I am assuming) look at 7.5M as a lot of money for a municipality to "risk" on potential jobs. Here is an article that may help to put it in perspective...

http://askville.amazon.com/cost-build-road-mile/AnswerViewer.do?requestId=217129

$7.5 Million is a lot of City/County Money. Maybe Caddo Parrish will just have to put those 1500 people to work building roads.

 

[pistonboy]

I would think the only variable is the number of shifts at work. There could be one or two shifts, but for maximum efficiency, each shift should be operating at maximum capacity.

 

[eliothegreat]

I am confused...so, do you think that, (left alone) the engine would have developed itself???
It has been explained (add nauseum) that ....1) NO other engine currently in production, fit the requirements for this unique vehicle. 2) no other engine manufacturer is currently capable of meeting production volume that EM will require. 3) Even "if" point #1 was NOT true, in order to meet production volumes would require building larger facilities, which would need to be paid for by increasing the price of each engine produced. Then, when the initial contract expires, what prevents them from holding EM "hostage" by doubling the price? At that point in time, EM would have (IMO) 3 choices...1) pay the price, 2) start from scratch and design their own engine, or 3) go out of business.
I think you give EM too little credit for their intelligence.

Since you are confused, I'll try to type slowly and use small words. The ad nauseum part of the explanation is that is is based on deception and false information. 1) Hyundai's Kappa II 1.0L triple would be an ideal candidate. They also have a 0.8L engine with the 55hp/55lb-ft specs that Elio is looking for. Ford's Duratec 1.0L triple would also work well. There are others, such as Fiat's twin, that would also work fine. Paul's claim that no existing engine has the necessary capacity is simply false. It is not that hard for a professional to adjust the intake, exhaust, ecu, and cam to get the desired characteristics out of an engine. 2) These engines are being built in quantity. "Will require" is a big stretch. If Elio were in production, and had a steady stream of pre-orders, the engine manufacture would have no more trouble keeping up than all of the other suppliers. AFAIK, none of Elio's proposed suppliers is stockpiling a year or more worth of inventory just to be sure that Elio will not run out of parts. 3) While it is possible that all of the possible engine manufacturers are at absolute peak capacity, there is no evidence of this. Since the Shreveport plant has the space, it would be possible for Elio to supply the space in their facility for an engine manufacture to build to order there.

Part of Paul's nonsense is claiming that engine manufacturers are capitalists and would want to make a profit on the engine. In almost the same breath, he explains that the reason the MSRP can be kept so low is by using existing suppliers, and paying them a generous cost + 20% for their products, resulting in more profit for the suppliers, and lower cost for Elio. If that is true for the other suppliers, it would also be true for an engine supplier. If an engine supplier could/would hold Elio hostage at the end of the contract period, so could the transmission supplier, as well as all the others.

I never suggested that Elio should never produce their own engine. Since the project was designed to use as many off-the-shelf parts as possible, it goes contrary to that mindset to try do develop the single most expensive part of the vehicle. Many large and established manufacturers have outsourced their engines when introducing new vehicles or lines. Then they design, develop and build their own engines out of profits and/or expansion capital or loans (as opposed to startup capital or loans). Since Elio failed to take that more sensible approach, yes, I absolutely question their intelligence, judgment and even veracity in regards to the decision to build their own engine for the first few years of production.

I hope that alleviates your confusion.

 

[WilliamH]

Since you are confused, I'll try to type slowly and use small words. The ad nauseum part of the explanation is that is is based on deception and false information. 1) Hyundai's Kappa II 1.0L triple would be an ideal candidate. They also have a 0.8L engine with the 55hp/55lb-ft specs that Elio is looking for. Ford's Duratec 1.0L triple would also work well. There are others, such as Fiat's twin, that would also work fine. Paul's claim that no existing engine has the necessary capacity is simply false. It is not that hard for a professional to adjust the intake, exhaust, ecu, and cam to get the desired characteristics out of an engine. 2) These engines are being built in quantity. "Will require" is a big stretch. If Elio were in production, and had a steady stream of pre-orders, the engine manufacture would have no more trouble keeping up than all of the other suppliers. AFAIK, none of Elio's proposed suppliers is stockpiling a year or more worth of inventory just to be sure that Elio will not run out of parts. 3) While it is possible that all of the possible engine manufacturers are at absolute peak capacity, there is no evidence of this. Since the Shreveport plant has the space, it would be possible for Elio to supply the space in their facility for an engine manufacture to build to order there.

Part of Paul's nonsense is claiming that engine manufacturers are capitalists and would want to make a profit on the engine. In almost the same breath, he explains that the reason the MSRP can be kept so low is by using existing suppliers, and paying them a generous cost + 20% for their products, resulting in more profit for the suppliers, and lower cost for Elio. If that is true for the other suppliers, it would also be true for an engine supplier. If an engine supplier could/would hold Elio hostage at the end of the contract period, so could the transmission supplier, as well as all the others.

I never suggested that Elio should never produce their own engine. Since the project was designed to use as many off-the-shelf parts as possible, it goes contrary to that mindset to try do develop the single most expensive part of the vehicle. Many large and established manufacturers have outsourced their engines when introducing new vehicles or lines. Then they design, develop and build their own engines out of profits and/or expansion capital or loans (as opposed to startup capital or loans). Since Elio failed to take that more sensible approach, yes, I absolutely question their intelligence, judgment and even veracity in regards to the decision to build their own engine for the first few years of production.

I hope that alleviates your confusion.

And of course your first step is to offshore / outsource the single most expensive and complex part?
And of course you know these engines meet the requirements because...........?

 

[goofyone]

We need to clarify what Elio Motors and Paul Elio have said about the engine. What EM and PE have consistently said, which some people appear to be misunderstanding, is that EM could not find any existing engines available that could meet their requirements. To understand what this means it helps to understand the requirements. In basic form EM's requirements for their engine needs are:

1. The engine should be made in the USA
2. In order to keep the overall vehicle cost as low as possible the engine needs to be available in sufficient volume to meet EM's production needs
3. The engine installed in the vehicle must reach a minimum fuel efficiency target of 75 MPG as set by the ATVM program
4. The total engine price needs to meet EM's cost requirements

On many occasions, including the recent NYC press conference and Pennsylvania lectures available on Youtube, Paul Elio has detailed this issue by explaining that most companies will not even speak to EM as they do not want to deal with a start-up vehicle manufacturer. He further explains that the few companies which would even speak to EM have balked at the volume requirements.