After Job Losses Local Lawmaker Wants Elio Investigation

[Elio Amazed]

I feel for all who are disabled. I try to imagine what it would be like to loose even some of the mobility I have...
And I don't think I would handle it well. However here is the key to this... Sometimes it's all in the phrasing.

I was so excited to purchase this vehicle for myself and my companion dog.

Use of the phrase "purchase this vehicle" is probably the mistake that insures that this particular suit will go nowhere.

The same goes for Jimmybob's complaint.

The phrasing of the complaints infers that these were purchase/sale contracts and that at some point in time EM promised to deliver product.
I do agree that it would probably be in EM's best interest to at least show up. Stranger things have happened and have had to be appealed.

Thanks for posting. Very Interesting.

 

[booboo]

Responding to Caddo Commissioner Matthew Lynn’s call for an investigation of Paul Elio and Elio Motors, Commission President Steven Jackson tells 101.7 / 710 KEEL’s Robert and Erin his thoughts, and also whether folks who invested in the company should get their money back.
http://710keel.com/should-elio-motors-be-investigated-video/

 

[Rob Croson]

http://www.ktbs.com/story/35447384/elio-reservation-holder-sues-for-deposit-back

Some interesting nuggets in this:

Elio collected $2,340,000 for refundable deposits. Non-refundable deposits amounted to $45,623,236.​

20 times more non-refundable than refundable. Pretty impressive.

The representative also couldn't explain why Elio had to sue PAYPAL, an online payment center, to release money it was holding from paid Elio non-refundable reservations.​

We've heard several times that EM's credit card processor was holding back several million in funds, but there was never any explanation as to why. This is the first time I've heard that credit processor named.

 

[Ty]

Ty,

I thought I had been keeping up with all of the SEC filings and Shreveport news stories, but I hadn't caught this yet. This is far from trivial. Do you have a source? I missed it.

I'm looking. I DID find where they've already accounted for the $7.5M though:

General and administrative expenses increased $8.2 million or 185%, primarily resulting from: (1) a onetime charge of $7.5 million resulting from our agreement with Racer Trust to create 1,500 new jobs by July 1, 2017.

 

[Rickb]

I'm looking. I DID find where they've already accounted for the $7.5M though:

General and administrative expenses increased $8.2 million or 185%, primarily resulting from: (1) a onetime charge of $7.5 million resulting from our agreement with Racer Trust to create 1,500 new jobs by July 1, 2017.

The Reg A+ funding was offered to generate the funding needed and earmarked to complete the E builds and testing........not to sock away $7.5 Million for pending fines because EM couldn't meet the contract agreement. Had EM focused on E build validation and their 15 month production schedule, there would likely be no fines pending July 1, 2017.

That's $7.5 Million taken out of the production funding pool, and WHO is getting that $7.5 Million in fines?

Heck, $7.5 Million, let alone $141 Million, should have built a driveable production ready Elio prototype and or E Build validation needed to attract the ATVM loan and the rest of the venture capital needed for production. IMO

 

[Neal]

My opinion, Nate has a legit complaint. I do hold this against him.
(We who made a non refundable reservation, have an expectation that it is not a donation.)
A company that wants to be the size Elio wants to be will have to get used to unhappy people, and how to handle them properly.

Not a legit complaint. It's not a donation, it was an investment. Anyone who honestly read the agreement knows that they have no obligation to buy and the company has no obligation to sell. It's very cut and dry in the wording. Anyone who thought they were guaranteed a car is very naive. I am still hopeful, but I also realize there is a chance I may never get one. I knew the risk going in.

 

[Frim]

I thought it was on topic, just because of the similarities in the businesses' financial risk and likelihood of success, versus the disparities in local governments' behaviors around each.

TL;DR
Even my local government, comprised of morons and martinets, hasn't been as stupid as the twits down in Shreveport, faced with an analogous situation.

Car company, startup, with trouble financing, acquires a plant that was shuttered by an established manufacturer, and as yet has no product offered for sale. (Rivian is even further back, with no working concept car or prototypes to view and sit in.) Local labor base still largely present, and looking for work. Nonetheless, the totality of objections here consisted of an article written by a student citing concerns over the company's past and funding, and two locals pleading for caution at a town council meeting. A former rep for the UAW also spoke (in favor) and incentives along with the purchase were approved. The mayor even said- more or less- that should this company prove to be worthless, they can at least use their purchase of the plant to stave off having to raze the facility, and maybe find another buyer down the road. (Maynards Industries, I think it was, had bought to property, either to sell or to demolish, and the property and property taxes to fund local schools had been significantly depreciated as a result.) It was also pointed out that no one else had expressed any interest, neither when Mitsubishi was trying to find a buyer nor when Maynards took on the same task.

The plant is in Normal, IL, and immediately adjacent is Bloomington, which is State Farm's corporate headquarters, so even without a longer view like that, it would be unlikely to completely tank the local economy. There would still be a decent, stable income base, but municipal and county funding might drop off somewhat without the additional tax revenue.

To be clear, I'm not even in favor of the plan, and think it's very likely that Rivian will fail spectacularly, but at least it hasn't been complete complacency and single-mindedness, a absolute dearth of realism. A gamble, but a decently understood and acknowledged one.

Contrast that with the rhetoric we hear from Shreveport every couple of weeks when the local pols get stir crazy. No planning, no realism, no contingencies for if Elio failed. Just a blind assurance that jobs were guaranteed, and then the outrage of the entitled when it didn't happen as very-optimistically planned. It makes me think these people have no place in local governance, and no business in business, regardless of my affinity for Elio's proposed platform and other little cars. They made no alternate plans, and that's a guarantee for abject failure in any endeavor over a sufficient span of time.

The odds have been and remain firmly against Elio Motors, too, as a startup and in particular as a new automotive company, but it seems that that was never fully grokked and still can't be accepted by the very people whose job it was to appreciate that reality and to plan and manage expectations accordingly, given their decision to entertain the prospect.

It strikes me more as convenient scapegoating than anything else. If they had another business waiting to move in and take over, then their antagonistic attitude might make sense from a consequentialist perspective, at least, but they don't even seem to have that.

This seems like a good place to insert a comment from Elon Musk.

[Musk has a well-documented tendency to promise Mars and deliver the moon. His electric car company was, by his own admission, a gamble. Musk said starting a car manufacturer from scratch was likely “the worst way to earn money, honestly”, though he caveated that “maybe rockets are a bit worse”. He said: “On a risk-adjusted return basis, an auto company has to be the dumbest thing you could possibly start.”]

There you have it from a man who is taking some of the same risks PE. Go Elio!!

 

[booboo]

Not a legit complaint. It's not a donation, it was an investment. Anyone who honestly read the agreement knows that they have no obligation to buy and the company has no obligation to sell. It's very cut and dry in the wording. Anyone who thought they were guaranteed a car is very naive. I am still hopeful, but I also realize there is a chance I may never get one. I knew the risk going in.

I agree with you and raptor. It is all spelled out in black and white in the reservation agreement.
You and I understood this, that does not mean everyone else did.
An agreement is not a law, and a contract is only as good as the person who argues its validity against the current laws.

 

[Rickb]

This seems like a good place to insert a comment from Elon Musk.

[Musk has a well-documented tendency to promise Mars and deliver the moon. His electric car company was, by his own admission, a gamble. Musk said starting a car manufacturer from scratch was likely “the worst way to earn money, honestly”, though he caveated that “maybe rockets are a bit worse”. He said: “On a risk-adjusted return basis, an auto company has to be the dumbest thing you could possibly start.”]

There you have it from a man who is taking some of the same risks PE. Go Elio!!

Not a good comparison, since Elon Musk invested $70M of personal venture capital. Musk had something to lose, increasing his motivation to get it done. Paul Elio invested $45.5 Million of all-in reservationist's funding. PE has no risk except for his reputation while earning his $250,000 yearly CEO salary. However, the small investor with no guarantee has something to lose. You may be giving Paul Elio too much credit after a decade. Regardless, I agree with Go Elio!

 

[Elio Amazed]

I'm looking. I DID find where they've already accounted for the $7.5M though:

General and administrative expenses increased $8.2 million or 185%, primarily resulting from: (1) a onetime charge of $7.5 million resulting from our agreement with Racer Trust to create 1,500 new jobs by July 1, 2017.

They've accounted for it as part of their outstanding debt.
That means they've simply recognized and declared it as part of that debt.
They have not "set it aside". Not have they paid it.
They simply do not have it.