Friday Blog Is Out

[RSchneider]

Interesting, in retrospect, that Paul and Co. put that much effort into that engine: it would have had to be extraordinary (to the point of impossible) to be still Internal combustion and ‘Advanced Technology.

I had a conversation a while back with a guy who worked for Carbon Motors. They applied for an ATVM loan. If you don't remember, it was going to be a purpose built police car that was going to have the drivetrain and suspension from a BMW 535D. They had a working prototype and a plant in Indiana to build it. Plus they had interest from police departments. The key was, that it was going to give better mileage than the Crown Vic, which at the time was the police car of choice. They applied and was relying on that $310M loan to get going. After three years of going through the process, they were rejected. Thus they closed up shop. Even though the CEO claimed it was because of politics, he knew it had to do with the company not having the backing to repay the loan if they failed (which was one of the requirements). Thus within a week they shut the doors and it didn't end very well either.

His opinion was Carbon used the ATVM loan as a carrot which allowed investment to come in in the form of grants from the state of In and to get a plant (which they leased) and to generate interest from various police departments because it was pretty much, we have a great possibility to get the loan and once we do, we start making cars. Lots of people liked that. Plus with the pre engineered driveline and suspension, R&D costs were going to be low. In essence, it was to be a 535D with a new chassis.

Also, Elio Motors applied for ATVM loan #1 back on 12/18/09 and didn't get it. There must have been a reason. Along with that Hari and V-Vehicle (which became Next Automotive) applied for an ATVM loan on 5/19/10 and got turned down. They closed up shop.

On the other hand, Rivian applied and got rejected and as you see now, the money came flowing in from investors. As you see it took 9 years for them to now have the money to make it a reality. Brammo Motorcycles got rejected but got picked up by Polaris and then more recently sold to Cummins. Even the failed Vehicle Production Group (which got a $50M ATVM loan and then went out of business after making 2500 units) got picked up by AM General and it's still made. So there's a good chance that if Elio keeps at it, they will get the investment from a big company or get bought by someone else. Maybe that's the plan. Never give up and if it takes another 10 years, keep at it. The knight in shining armor might come but it might take many years.

 

[Ty]

Interesting, in retrospect, that Paul and Co. put that much effort into that engine: it would have had to be extraordinary (to the point of impossible) to be still Internal combustion and ‘Advanced Technology.’

You mention scooters, I have three and have had quite a few motorcycles. My experience has always been sacrificing mind puzzling inefficiency for basic fun: they all seat one, two pillion, light etc. my 150 cc Vespa s150 gets about 64 mpg, my gt200 gets about 54 mpg, have no idea what my 49cc gets and most my old bigger bikes never got more than 50 mpg and with all they are still mostly ‘all engine’ weight.

By any standard, designing and producing a new powerplant unless with some great new patentable technology was a poor decision considering there are alternatives. One of the basic ‘must haves’ was ‘off the shelf’ if I’m not mistaken.

The engine, like the Elgin dash, were all ego driven with no business acumen.

Regarding Patents: there is nothing keeping anyone else from re-engineering the entire vehicle, and avoiding millions of dollars of debt and numerous other liabilities. ELio Motors can fit in a ‘thumbdrive,’ except for a handful of obsolete prototypes, a trailer, and some banner signage. Not a single ‘investor’ will overlook this fact. Every single one of us would happily drive any other comparable vehicle, if we could get it. Continuing to profess that a high demand for this type of vehicle is fruitless if the original business plan was so poor to incur such huge losses that make future investment impossible. Would we not be happy with any comparable trike? Isn’t it really now all about the deposits and dashed hopes?


It’s all old news now...

The ATVM also had a part where they were supposed to be there to help companies whose products were a certain percentage more efficient than current offerings. Also, Once GM stopped making the little Geo motor, there were no other simple and cheap motors available at anything like the rates that Elio was hoping on needing. Buying into a more powerful engine would increase costs quite a bit. When you are selling a $7,000 vehicle, an additional $700 ups the cost by 10%. So, it made since to build a simple motor that you could cast in-house with minimal engineering because simple motors are pretty well understood and Elio didn't need to reinvent the wheel. Anyway, at the time, manufacturers didn't have excess capacity in small engine lines. Now, however, Ford has killed off the small vehicles and GM is not far behind so both of them have capacity and may jump at the chance to build a bunch of motors rather than shutter plants. And it looks like Elio has at least gotten the initial agreement from one of the top guys to supply engines. Time will tell.

 

[RSchneider]

Once GM stopped making the little Geo motor, there were no other simple and cheap motors available at anything like the rates that Elio was hoping on needing

That's incorrect. You need to look at the global market, not the US market. There were at least 10 other engines that were more efficient that Elio could have used. It's that everyone just kept thinking "Geo Metro" because that's all they knew. Also, the EU made a special case for emissions and tax breaks for sub 1000 cc motors to be used in cars. Thus the reason why Ford went all out to build that 3 cylinder engine because that's a big seller in Europe. Along with Ford, other major manufacturers did the same. Thus why you see the big names in the car industry make sub 1000 cc 3 cylinder motors and that started before Elio was in business.

I know that if you want to buy engines from manufacturers, that when you order X amount of them, you have to pay up front if you are a newbie (i.e. Elio Motors). Elio probably decided to do their own engine because when they were done, they only needed to pay as the needed since the engine plant was going to be in the Elio Plant. This, verses buying 50K engines at a time and having to pay before you get them. Honestly nothing changed from 2013 to today when it comes to what Elio is looking for.

Elio could have easily sourced the engine from India (just like their wheels) and they would have been set with a motor that would be better than what they were wanting to develop. The major problem is that the 90% USMCA Content would be going down because a motor takes a good chunk of that. The only USMCA engine that I can think of that would work would be a FCA engine that was previously used in the US version Fiat 500. It's made in Michigan but it's a 1.4l, 4 banger. Other than that, I can't think of a suitable engine that is made in the USMCA.

 

[Watashiwah]

The ‘ninety percent American parts’ (was it 90?) opened the door to even more creative and artful interpretation: North / Central / South America all qualify. Not sure if any candidate engines would come from there, but as for parts content, a non American (Indian) engine could have always been disingenuously counted as one part.

 

[airforceguy6]

The ‘ninety percent American parts’ (was it 90?) opened the door to even more creative and artful interpretation: North / Central / South America all qualify. Not sure if any candidate engines would come from there, but as for parts content, a non American (Indian) engine could have always been disingenuously counted as one part.

The statement has always been "North American content", and yes 90% is the percentage, however we will see if that maintains.

 

[RSchneider]

The statement has always been "North American content", and yes 90% is the percentage, however we will see if that maintains.

At this point I think if it was 50% USMCA/NAFTA/North American content, nobody would care. It's not like everyone celebrated when VW started building the Passat here in the America, employing about 2K Americans and using 85% North American Content starting in 2012. So, I doubt it's a deal breaker for Elio at the moment.

 

[Johnny Acree]

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[RUCRAYZE]

Ya gotta start thinking outside the usual- think INDIA

They produce great small vehicles, at a price, I'm sure , to match E.

 

[Ty]

That's incorrect. You need to look at the global market, not the US market. There were at least 10 other engines that were more efficient that Elio could have used. It's that everyone just kept thinking "Geo Metro" because that's all they knew. Also, the EU made a special case for emissions and tax breaks for sub 1000 cc motors to be used in cars. Thus the reason why Ford went all out to build that 3 cylinder engine because that's a big seller in Europe. Along with Ford, other major manufacturers did the same. Thus why you see the big names in the car industry make sub 1000 cc 3 cylinder motors and that started before Elio was in business.

I know that if you want to buy engines from manufacturers, that when you order X amount of them, you have to pay up front if you are a newbie (i.e. Elio Motors). Elio probably decided to do their own engine because when they were done, they only needed to pay as the needed since the engine plant was going to be in the Elio Plant. This, verses buying 50K engines at a time and having to pay before you get them. Honestly nothing changed from 2013 to today when it comes to what Elio is looking for.

Elio could have easily sourced the engine from India (just like their wheels) and they would have been set with a motor that would be better than what they were wanting to develop. The major problem is that the 90% USMCA Content would be going down because a motor takes a good chunk of that. The only USMCA engine that I can think of that would work would be a FCA engine that was previously used in the US version Fiat 500. It's made in Michigan but it's a 1.4l, 4 banger. Other than that, I can't think of a suitable engine that is made in the USMCA.

I should have said "American made" in there. I wasn't looking overseas for engines because that is a big part of the car and would have killed the mostly American made tag Elio is after.

 

[RSchneider]

I should have said "American made" in there. I wasn't looking overseas for engines because that is a big part of the car and would have killed the mostly American made tag Elio is after.

In the end, Elio has said, "North American Content". The reality is, Paul was right and many people just removed the word "North" and were happy. Technically, 90% of the content could be made in Mexico and the remaining 10% in Brazil. That would fulfill what Paul said legally. As for assembly, it's in America. Just like the VW Passat. 85% North American Content and assembled in America. The motor for the Passat is made in Puebla Mexico, the transmission in Essen Germany and the car assembled in Chattanooga, USA.

Since we eliminated NAFTA, now everything we buy for manufacturing products has gone up. The USFCA rules dictate that it costs more because widgets made in Mexico need to be built by Mexicans that make at least $15/hr. So companies that already have those plants in Mexico, will never move then but just pay those people more and charge more. It can help for new manufacturing projects but for all of the old ones, that's another story. I just wonder how Elio Motors will deal with USFCA? I'd love to hear Paul give a talk on that as it would really help out the company if he did.