Financing Elio Motors Development And Production

[Smitty901]

That is a good one NADA is some how behind the requirement to use a dealer to sell new cars. Where in the world do they come up with this stuff.
Direct sales would make franchises worthless. While it maybe time to move away from it the laws served a purpose for a long time.
Do some home work not everything is a conspiracy:

"
II. The Auto Dealer Franchise System
Early in the evolution of the auto industry direct manufacturer sales to consumers were not uncommon. At that time, production processes had not yet been standardized and industry sales volumes were low. Introduction by Ford of the assembly line technique early in the twentieth century enabled high-volume production and ushered in the era of mass-market sales in the United States. Ever since then manufacturers have sold cars through franchised dealerships.
Selling through dealerships has offered several benefits to manufacturers historically. Auto production is a capital-intensive business and a franchise system allowed manufacturers to concentrate their resources upstream while accessing capital through franchise fees from independent entrepreneurs at the retail level. Economies of scale in auto production also required having relatively few, large manufacturing operations located near essential supplies like steel. This contrasted with the nationwide distribution network needed to reach consumers, who could be more effectively served through local dealerships in a better position to assess demand in particular markets and to provide service and repairs.
Since running a dealership can require making a substantial investment in real estate and assets like showrooms and service facilities, the franchise system also had to offer terms that would make it attractive to dealers. This was accomplished voluntarily by contract, through franchise agreements, even prior to enactment of state franchise laws. Typically such franchise agreements give a dealer exclusive rights to a particular geographic sales territory of a manufacturer. This type of arrangement allows dealers to realize a return on their investment while giving them incentives to undertake advertising and promotional activities and to provide services, like showroom displays, test drives and other types of consumer information, valuable to manufacturers in marketing their vehicles.
With the advent of the internet, some of the mutually beneficial nature of the franchise system for manufacturers and dealers has diminished, as information and access to services historically provided primarily by dealers has become more readily available. Online buying services are an obvious example. In addition, a variety of auto information, including pricing data and reviews, can be found online from sites like Edmunds and Consumer Reports. This raises the prospect of disintermediation, broadly defined as direct-to-consumer sales through reduction or elimination of the role of retailers. With respect to autos, unlike the situation with books and CDs, most customers probably will continue to want some hands-on contact with the product before purchasing, likely implying a continuing, though possibly changed, role for dealers. Since the internet can potentially provide manufacturers with better information on consumer preferences than the traditional local franchised dealer, direct manufacturer sales may be one way through which that changed dynamic occurs.

 

[Rickb]

I think cost becomes a decision maker when it comes to dealer service. I accept their overhead costs, but there are many private companies that can easily match mechanics skills at much less the price for labor, and the worst- jacking the price for the exact same parts.

I agree. If I buy a new car it's covered by a warranty and full maintenace service for three years, so it's dealership exclusive for that period. After the warranty period I usually continue routine maintenance at the dealership because it's convenient and they seem competitive, but any major repairs I use a trusted private shop certified mechanic to do that work. I've always liked the independent automotive shop environment of a skilled mechanic.

 

[goofyone]

Has been (not recently) mentioned that EM will do financing. Anything about EM insurance?

EM has said they will have various financing options available, traditional and the EM fuel card idea, and that extended warranty plans will be available as well. I would be surprised if they did not offer more insurance options as well as these are done via partnerships with EM of course receiving a cut of the action. EM will have plenty of ways to make money on top of the base vehicle margin.

 

[Rickb]

Paranoia about the Auto companies wanting to derail Elio
is misplaced. Elio's success is in their interest as long as
they want to sell average mileage Trucks, SUV's, etc. hence
the "Cafe Credits" concept, which is still in play, as log as Elio
survives &/or congress decides against Autocycles, which to
my knowledge hasn't happened yet............

I'm not concerned about big auto companies actively derailing Elio, but rather paranoid about some politicians and their political motivations.

CAFE Credits still in play? Paul Elio stated that they were actively making an effort to have the Elio classified as a "CAR" at a Caddo Parrish Commission Meeting so EM could qualify for CAFE credits. He also said they have buyers in line for the credits. Do you or anyone else know if EM is actively involved in pushing for legislation to qualify the Elio for CAFE Credits? I would like evidence that they are doing so as it would be a huge profit maker. EM would be a profitable company on just CAFE credits and wouldn't have to make any profit on the $6800 Elio.

 

[RUCRAYZE]

That is a good one NADA is some how behind the requirement to use a dealer to sell new cars. Where in the world do they come up with this stuff.
Direct sales would make franchises worthless. While it maybe time to move away from it the laws served a purpose for a long time.
Do some home work not everything is a conspiracy:

"
II. The Auto Dealer Franchise System
Early in the evolution of the auto industry direct manufacturer sales to consumers were not uncommon. At that time, production processes had not yet been standardized and industry sales volumes were low. Introduction by Ford of the assembly line technique early in the twentieth century enabled high-volume production and ushered in the era of mass-market sales in the United States. Ever since then manufacturers have sold cars through franchised dealerships.
Selling through dealerships has offered several benefits to manufacturers historically. Auto production is a capital-intensive business and a franchise system allowed manufacturers to concentrate their resources upstream while accessing capital through franchise fees from independent entrepreneurs at the retail level. Economies of scale in auto production also required having relatively few, large manufacturing operations located near essential supplies like steel. This contrasted with the nationwide distribution network needed to reach consumers, who could be more effectively served through local dealerships in a better position to assess demand in particular markets and to provide service and repairs.
Since running a dealership can require making a substantial investment in real estate and assets like showrooms and service facilities, the franchise system also had to offer terms that would make it attractive to dealers. This was accomplished voluntarily by contract, through franchise agreements, even prior to enactment of state franchise laws. Typically such franchise agreements give a dealer exclusive rights to a particular geographic sales territory of a manufacturer. This type of arrangement allows dealers to realize a return on their investment while giving them incentives to undertake advertising and promotional activities and to provide services, like showroom displays, test drives and other types of consumer information, valuable to manufacturers in marketing their vehicles.
With the advent of the internet, some of the mutually beneficial nature of the franchise system for manufacturers and dealers has diminished, as information and access to services historically provided primarily by dealers has become more readily available. Online buying services are an obvious example. In addition, a variety of auto information, including pricing data and reviews, can be found online from sites like Edmunds and Consumer Reports. This raises the prospect of disintermediation, broadly defined as direct-to-consumer sales through reduction or elimination of the role of retailers. With respect to autos, unlike the situation with books and CDs, most customers probably will continue to want some hands-on contact with the product before purchasing, likely implying a continuing, though possibly changed, role for dealers. Since the internet can potentially provide manufacturers with better information on consumer preferences than the traditional local franchised dealer, direct manufacturer sales may be one way through which that changed dynamic occurs.

"Technology"makes franchises worthless. Not government protected monopoly Corporations.
Know any owners VHS/BETA movie rental business?- worthless

Although the business model worked then,--- When new, faster, less costly, and better quality product entered the marketplace, companies that stayed the course, were/are doomed to failure- Radio Shack comes to mind!
I admired (GM Saturn ) their policy of no price negotiations. The price you see is the price you pay. Woman loved it! I remember how I "squeezed" the floor mats and a full tank of gas to close a car purchase and what a great deal I had made!
Now with the click of buttons, you can find a great deal without the salesperson/manager b.s., know the exact otd price, finance and insure and even get it delivered to your doorstep without leaving home . Hummmmm sounds so familiar ah yes it's E.M.s plan isn't it?

 

[Chris F]

I think Paul is doing everything he can to move EM forward without losing control of his company to the venture capitalists. I want him to succeed, and I want my Elio. Here's how I think this could be accomplished - Paul should gift every first year reservationist a small amount of EM stock when the future owner pays the full $6800 up front. This money would be fully refundable up to the first day of production. Let's say Em is capitalized at 1,000,000 shares, and up to 6 percent is dedicated to the potential 60,000 1st year reservationists. That's 1 share per autocycle. If EM can get to the point of building 250,000 Elios per year ($250 M profit), then the company will be worth a very conservative 2.5 billion, and that one share will be worth $2,500. What does this do for EM? 60,000 reservationists X $6,800 = $408 M in the bank waiting for production to start. Don't you think they might be able borrow substantially (as opposed to giving up equity) against that collateral? Paul could even make things more interesting by committing all 60,000 shares no matter how many reservationists take part. In other words if only 1 person plunks down the $6,800 then when production starts they'll get all 60,000 shares. In addition, maybe the people who participate in this program might become eligible to become citizen salesmen with compensation. We know a lot of people will be showing off their Elios and giving test rides. They might as well get paid for it.

Maybe Paul is just another greedy hustler, but he's never come across that way to me. The more collaborative a relationship he can have with his first year customers, the better off EM will be.

Sorry, but that won't work. Companies can't "gift" stock to the public without a registration with the SEC. That would cost money they don't need to spend. Add to that the cost of compliance (ie, annual reports and proxy statements) to 60,000 holders of 1 share each? Way too much. Now, if EM asked reservationists to escrow money now, refundable if the car isn't built, that could work.

 

[Rickb]

"Technology"makes franchises worthless. Not government protected monopoly Corporations.
Know any owners VHS/BETA movie rental business?- worthless

Although the business model worked then,--- When new, faster, less costly, and better quality product entered the marketplace, companies that stayed the course, were/are doomed to failure- Radio Shack comes to mind!
I admired (GM Saturn ) their policy of no price negotiations. The price you see is the price you pay. Woman loved it! I remember how I "squeezed" the floor mats and a full tank of gas to close a car purchase and what a great deal I had made!
Now with the click of buttons, you can find a great deal without the salesperson/manager b.s., know the exact otd price, finance and insure and even get it delivered to your doorstep without leaving home . Hummmmm sounds so familiar ah yes it's E.M.s plan isn't it?

I actually prefer doing my homework on a car's value and negotiating a price, along with a few "squeezed" options 'thrown in' to close the deal at the local DEALership where I am going to have my new car serviced.

The one price sales model is best for the manufacturer, although they would like us to believe it's convenient no hassle car buying for the consumer.

 

[Smitty901]

Where do they come up with this stuff.
If someone or group with the cash wanted to take ELIO away from PE . He would lose it. They simply buy up his debt and then call it due and PE is history. That simple. Not that anyone would want to , but if they did there is nothing PE could do to stop them . As a privately held company it is ever easier than a publicly trade one. He does not have the resources to do anything .

 

[RUCRAYZE]

Where do they come up with this stuff.
If someone or group with the cash wanted to take ELIO away from PE . He would lose it. They simply buy up his debt and then call it due and PE is history. That simple. Not that anyone would want to , but if they did there is nothing PE could do to stop them . As a privately held company it is ever easier than a publicly trade one. He does not have the resources to do anything .

I must have missed something? what is your comment referenced to?

 

[LillyMayPatterson #1685 & #5648]

Where do they come up with this stuff.
If someone or group with the cash wanted to take ELIO away from PE . He would lose it. They simply buy up his debt and then call it due and PE is history. That simple. Not that anyone would want to , but if they did there is nothing PE could do to stop them . As a privately held company it is ever easier than a publicly trade one. He does not have the resources to do anything .

I don't know where this fits into this conversation but it was the most interesting comment made, lol. I didn't realize this, but it makes sense, cents, what ever. Thanks ! Gee just what I needed more to pray about tonight. (better than worrying)