Caddo Parish Commission - May 20th 2014 Meeting Minutes

[outsydthebox]

Thanks for this as it shows the numbers are really starting to swing in Elio's favor. It is now obvious Elio Motors truly does have access to all the money they need to complete the design, engineering, and testing phases of this project. They do need to raise more money to get the plant operational for production however as you pointed out the funding gap is narrower than it was. It should also be much easier to raise money for a project with a production facility secured and a fully engineered and tested vehicle which is what EM will have now that they have all the funding in place to complete these steps.

I believe most people have missed the one key item in the minutes which could be a huge game changer for Elio Motors. The CAFE credit sales idea is brilliant as it could make Elio Motors profitable even if they only break even on the direct sales of these vehicles. EM is estimating they can sell the credits at about $2,400 per Elio sold. This would give them a great profit margin per vehicle as the business plan from two years ago only lists $1,000 profit per base vehicle. Heck even if Elio Motors only sold 50,000 vehicles a year and made $2,000 from each vehicle from CAFE credit sales this would still bring in $100 million which would be more than enough to keep them in business and generate a profit for investors.

Some may argue that Elio Motors has no chance of getting the CAFE rules changed however I would say they have a very good chance as this change would actually benefit the big auto makers. The large auto manufacturers who wish to buy the CAFE credits from Elio Motors benefit directly from supporting this rule change and I would expect them to use their considerable lobbying clout to help push this through.

When Elio Motors gets the CAFE rules changed, with the assistance of the big automakers wanting to buy those credits, they will have no trouble lining up any needed investment as this will make them more profit than the vehicles themselves.

2 likes for saying it so well. I too, don't think they are chasing rainbows, with the cafe credits. That is why I don't think they will raise the price on the first year production.

 

[Rickb]

I am definitely one of many that love the Elio as a design. As a past Mechanical Engineer and Industrial Designer for many years, building and designing very complex mixed technology products, the Elio design itself, is about as close to home run as it gets in this modern 3 wheel form factor, it has integrated some very pleasing design language and appears to have thought out ergonomics. So if this were my only experience, I'd likely even be bought in, but its not.

Mechanically its a big unknown, the new ground up build of the IAV engine is a huge unknown, as to how reliable it will be and actually performs, and then how that will translate into the unique actual driver experience within a tightly enclosed moving chassis/body. So its a huge unknown as to whether the mass market will really gravitate to it in volume, because of the dramatically different platform and driving experience, versus driving either a car, or a motorcycle. It is very difficult to believe people would actually choose this tight space as a commuter, where you would want to be the most comfortable in what is most often very frustrating commuting traffic.

Further, Paul has stated clearly, the Elio is an "and" vehicle, its seen as an addition to what you drive now, not an “or” vehicle, not to replace your car. So its admittedly difficult to imagine there is a mass market for an "and" vehicle that you may look at and really like, but likely not want to actually, or preferably drive, let alone commute in.

This is where I see the breakdown in the mass retail sales process. I see a lot of initial mass market interest, or curiousity, and maybe a brief spike in sales to a tiny group that will buy anything new, but I do not foresee a sizable and willing mass market that will adopt an entirely new driving platform, its too different, and then people start to rationalize what they would much rather spend money on for an "and" vehicle, and that usually comes down to owning something a lot more fun, like a real motorcycle, or a convertible. This is how the mass market thinks out there, which is not inside this forum of gadgeteers. People want to be comfortable when they are driving, even more so when commuting and in traffic, they want to be more in an oasis of a space, and not within a tight and highly likely noisy space.

So, this is the main rub. If, Private Equity/Investors really believed this was the next mass market big thing, that the masses would realy buy this "and" vehicle en masse, so they could see a nice ROI on their investment, they would of ALREADY closed the 150M funding gap to get to launch. They know they would have to see 100K+ reservations by now, to consider pulling the trigger. Sure, I know and expect some here will disagree with the brief thesis here, but they always forget they are just part of the tiny NON mass market early adopter group, that doesn't fully grasp the mass market mindset and landscape.

This is where my additional career experience intervenes to control my emotions over this vehicle, which is how Private Equity/investors think, because I've worked with many of these groups, and its all about business analyses, which involves detailed psychographic and demographic analyses, before PE ever writes the check, and if they don't believe the analyses and the projected numbers with a confident probability behind it, there are far better options to consider in funding.

Its about as simple as I can explain it here, other than saying there is a big difference between a great design versus a great business. There is nothing I can offer or suggest further to change or influence the success factor of this enterprise. With no further funding to 200M its game over. Without hundreds of millions of funding thereafter flowing in quarterly, its game over. Its really only a question of when if fails unfortunately. You also have to keep in mind here, even if a bonafide miracle arrives and they start selling AND producing in volume, one of a few big automakers will intervene, either by producing a competing platform for less, or even more likely influencing the political landscape that enacts legislation that stops EM altogether in several ways.

A great design, yes...............a great business......the future will tell.

 

[eddie66]

new old news, but news.
http://www.arklatexhomepage.com/sto...porters-positive/26062/SMb07aPsg0261pr5RKriLw

 

[Kuda]

Thanks for this as it shows the numbers are really starting to swing in Elio's favor.
When Elio Motors gets the CAFE rules changed, with the assistance of the big automakers wanting to buy those credits, they will have no trouble lining up any needed investment as this will make them more profit than the vehicles themselves.

I don't think Elio needs to get any 'Cafe' rules changed per se. As there is 'precedent' for 3 wheeled 'vehicles'
getting "Cafe Credits". They need confirmation they qualify & we need to keep in touch w/Joel as to
how that is going along with getting the States to recognize 'Autocycles' for exemption from the MC
endorsement & Helmet requirements. By the time production starts (4th Qtr of 2015) these issues
should be resolved JMO................

 

[whattheelf]

Thanks for this as it shows the numbers are really starting to swing in Elio's favor. It is now obvious Elio Motors truly does have access to all the money they need to complete the design, engineering, and testing phases of this project. They do need to raise more money to get the plant operational for production however as you pointed out the funding gap is narrower than it was. It should also be much easier to raise money for a project with a production facility secured and a fully engineered and tested vehicle which is what EM will have now that they have all the funding in place to complete these steps.

I believe most people have missed the one key item in the minutes which could be a huge game changer for Elio Motors. The CAFE credit sales idea is brilliant as it could make Elio Motors profitable even if they only break even on the direct sales of these vehicles. EM is estimating they can sell the credits at about $2,400 per Elio sold. This would give them a great profit margin per vehicle as the business plan from two years ago only lists $1,000 profit per base vehicle. Heck even if Elio Motors only sold 50,000 vehicles a year and made $2,000 from each vehicle from CAFE credit sales this would still bring in $100 million which would be more than enough to keep them in business and generate a profit for investors.

Some may argue that Elio Motors has no chance of getting the CAFE rules changed however I would say they have a very good chance as this change would actually benefit the big auto makers. The large auto manufacturers who wish to buy the CAFE credits from Elio Motors benefit directly from supporting this rule change and I would expect them to use their considerable lobbying clout to help push this through.

When Elio Motors gets the CAFE rules changed, with the assistance of the big automakers wanting to buy those credits, they will have no trouble lining up any needed investment as this will make them more profit than the vehicles themselves.

Well, wouldn't count those chickens just yet. The numbers are not in favor until there are investors, not reservations. The equipment hardware they plan to sell to gather just half of what they still need is a huge unknown, and don't expect they'll sell that for as nearly much as they'd like to project.

Additional reservations aren't likely to keep up the pace, as there is a huge gulf between now and a launch sometime next year, reservations will stall.

You have to ask the big question, after all this time, how can private equity actually believe the mass market will come? Any swak at getting at the mass market means massive dealer buildout, and a guranteed final price as advertised, which is doubtful. So all the hype will stall significantly over the next 9 months, not the kind of motivation private equity needs to see.

So, no the numbers are not in the least swinging in Elio's favor. The question is just how long til they run out of funds. Engineering phase may be mostly out of the design phase, but the engine build phase is just beginning. Expect big problems and delays. They need considerably more cash than just the 200M to launch, they have to concurrently build out the sales and marketing strategy if they have any hope whatosoever.

No steady massive real funding in the bank, just into launch, no Elio., party over.

 

[Rickb]

Well, wouldn't count those chickens just yet. The numbers are not in favor until there are investors, not reservations. The equipment hardware they plan to sell to gather just half of what they still need is a huge unknown, and don't expect they'll sell that for as nearly much as they'd like to project.

Additional reservations aren't likely to keep up the pace, as there is a huge gulf between now and a launch sometime next year, reservations will stall.

You have to ask the big question, after all this time, how can private equity actually believe the mass market will come? Any swak at getting at the mass market means massive dealer buildout, and a guranteed final price as advertised, which is doubtful. So all the hype will stall significantly over the next 9 months, not the kind of motivation private equity needs to see.

So, no the numbers are not in the least swinging in Elio's favor. The question is just how long til they run out of funds. Engineering phase may be mostly out of the design phase, but the engine build phase is just beginning. Expect big problems and delays. They need considerably more cash than just the 200M to launch, they have to concurrently build out the sales and marketing strategy if they have any hope whatosoever.

No steady massive real funding in the bank, just into launch, no Elio., party over.

After asking the question.............I agree that the numbers are swinging in Elio's favor. When they roll out the P5's for regional test drives reservations will significantly increase...................tapping into the anxiously awaiting mass market.............Word will spread like Wildfire...........The Elio 'Wildfire' Limited Edition.

 

[eddie66]

All that being said:
This press conference was posted a year ago when the silver prototype came out. It involved the introduction of some of the suppliers, and was what got me excited about this vehicle originally. I thought it deserved a repost for those who had not seen it. I'm still a believer.

 

[Rickb]

eddie, Thanks for sharing that. It was worth watching a second time! Elio is a totally new vehicle platform as well as Elio Motor's approach of developing a new and different business model to insure it's success. Frankly, back in 2008 I thought it would turn to vaporware like so many other three wheeler concepts. But, after watching this concept evolve since 2008........it's come a long ways in just the past year in reaching it's production goal with some expected setbacks. I am still a believer too!

 

[whattheelf]

After asking the question.............I agree that the numbers are swinging in Elio's favor. When they roll out the P5's for regional test drives reservations will significantly increase...................tapping into the anxiously awaiting mass market.............Word will spread like Wildfire...........The Elio 'Wildfire' Limited Edition.

As said earlier, there will be a tentative spike in reservations, that is if you see many P5s being exhibited at various venues, but the spike will be rather limited to those that actually fit the early adopter profile, whom are willing to take a risk to own an extra "and" vehicle, thats it.

To accomplish meaningful volume reservations and sales, EM needs to have brick and mortar point of sales outlets, similar to Tesla, some kind of shoe box people can go to and evaluate whether they can really or readily, adapt and accept an entirely new driving platform. The Elio may be a tiny baby step for most of us here, but I assure you it is a huge giant step for the mass market mindset, an entirely different transition in driving, not just an inexpensive car, and mass market consumers always want MORE than what they pay for.

If EM was smart, by having a real marketing strategy, they would of already announced where these POS centers will be in terms of just the first cities, that they are scouting locations, which would be true because it can take months to find the right locations, and then they would need a team dedicated to such an expansion focused 100% on that, and making numerous press releases now on this rollout.

Next, say If EM was even smarter, these POS centers would be riddled with flat screen TVs throughout, showing videos and demonstrations of the crash testing, cutaway views of the engine and cool modeling videos demonstrating the technology/engineering behind the Elio, coverage of happy smilling people at public events, 2-3 well tested demo Elios running in and out of the showroom, BUT MOST importantly, videos playing over and over of the factory in action, interviewing the factory teams, videos that sell the Elio without having to be convinced ad nauseum by a salesman. Information overload has to be the idea at these centers for sales to be effective, to build mass market confidence, because after 1-2 months, all the early adopter buyers will be gone.

However, none of this starts without next round launch funding, and launch has to include or INDICATE some thoughtful serious investment into strategic sales centers, its not a want, its a must, there is no way to steadily build mass market demand without POS centers, and this will steadily consume hundreds of millions to buildout, setup, staff, insure, and deliver Elio models to, and it can't be done on the cheap, or the mass market will smell a rat. This is how mass market retail is done, and it can't be piece mealed the way they are doing it now, just can't.

Ideally say if EM could "build in" POS centers within Pep Boys' retail centers, potentially a great idea, so that the mass market buys and services at the SAME place, but of course Pep Boys would have to take on some major risk in giving up square footage, and either be paid too well to even entertain this little experiment, and/or become a principle here investor of sorts, but this would take an EM CEO with a real business vision instead of just a product idea to make it happen. An idea like this comes from an Elon Musk type for instance, so something innovative and creative to seriously build an entirely new type of business, but something like this isn't going to happen with the current team roster.

Bottom line, business 101 again. Any company runs only on two processes, the first is order acquisition (how you get the order), and second is order fulfillment (how you produce and deliver the order). So far this six year old experiment is a FAIL on both accounts.

 

[outsydthebox]

X2 , Thank you for posting the video! I had not seen it before now. WOW, to be a part of a"team" that is not driven by ego and profits...I am envious. But, I am content to support them by purchasing MORE than one... (eventually)!

GO ELIO ! ! !