Friday's The Big Day ... Or Is It?

[goofyone]

I've been hearing about EM selling the equipment, but how long does it take? There can't be 1000s of buyers for the kind of stuff. What's the hold up? Have they actually put the stuff up for sale or waiting on something? Nobody really wants that stuff?

Catch word is expected. Expected doesn't put the bacon on the table.
I think Elio is making a big mistake on relying on the sale of used equipment that not many would not want.

Some of it does have a limited market which is why EM is using the expertise provided by using Comau who also has deals with equipment resale brokers to find buyers. EM has already told us that what we see on Ebay is only about 10% of what they actually have to sell. Comau is refurbishing equipment as needed and deciding the best way to sell it all.

Unlike those of us discussing this on the internet Comau would actually know what sells where and for what general price points as this is part of what they do for companies all over the world. I will trust the experts to get the job done and continue treating the commentary from amateurs on the internet as my source of entertainment.

 

[Ekh]

Assuming the "official first start" ceremony actually takes place , you can bet the engine has been running flawlessly for weeks .
It would be akin to suicide if anything goes clunk .
Does anyone else think that $240 Million is an excessive amount just to begin production ? I'm no automotive manufacturing expert , but it seems to me they could at least begin to build with far less . Once the Elio is seen on the streets and demand begins to skyrocket , additional funding should be easier to glean .
C'mon , Tucker built 51 cars and the hideous clown car, Corbin Sparrow . was 300 strong .

View attachment 4641

Tucker was unable to make the cars for a cost-effective price, so he went out of business.

Here are three very scary quotations from Wikipedia's article on Tucker. Really, really scary. Even the Road Tour comes straight out of Tucker's venture:

Having raised $17,000,000 in a stock issue (equal to $179,551,416 today), one of the first speculative IPOs, Tucker needed more money to continue development of the car. He sold dealerships and distributorships throughout the country. Another money maker was the Tucker Accessories Program. In order to secure a spot on the Tucker waiting list, future buyers could purchase accessories, like seat covers, radio, and luggage, before their car was built. This brought an additional $2,000,000 (equal to $21,123,696 today) into the company.

With the final design in place, Preston Tucker took the pre-production cars on the road to show them in towns across the country. The cars were an instant success, with crowds gathering wherever they stopped. One report says that Tucker was pulled over by a police officer intent on getting a better look at the car.

To prove the road-worthiness of his cars, Tucker and his engineers ran several cars at the Indianapolis Motor Speedway in several endurance tests. During this testing, car #1027 was rolled three times at 95 miles per hour (153 km/h), and the driver (chief mechanic Eddie Offutt) walked away with just bruises. During the crash, the windshield popped out as designed, verifying Tucker's safety features were effective. Afterwards, upon replacing a damaged tire, the car started up and was driven off the track.​

Engine problems at "first run demo":

The world premiere of the much-hyped Tucker '48 car was set for June 19, 1947. Over 3,000 people showed up at the Tucker factory in Chicago for lunch, a train tour of the plant, and the unveiling of the first Tucker prototype. The unveiling appeared doomed, however, as last-minute problems with the car cropped up. The night before the premiere, two of the prototype's independent suspension arms snapped under the car's own weight. (The prototype was extremely heavy; much heavier than the other Tucker '48's.) Minor engine problems were fixed, and the car was presentable by the time of the premiere. However, the experimental 589 engine was extremely loud. Tucker told the band to play as loud as possible to drown out the noise. As the car was driven on to the platform, the liquid coolant boiled over and some steam escaped from the car, but no one seemed to notice.[8]
​

As development costs soared, Tucker tried raising money by selling accessories prior to the availability of the car, leading to an SEC investigation:

One of Tucker's most innovative business ideas caused trouble for the company, however. His Accessories Program raised funds by selling accessories before the car was even in production. After the war, demand for new cars was greater than dealers could supply, and most dealers had waiting lists for new cars. Preference was given to returning veterans, which meant that non-veterans were bumped down on the waiting lists indefinitely. Tucker's program allowed potential buyers who purchased Tucker accessories to obtain a guaranteed spot on the Tucker dealer waiting list for a Tucker '48 car.​

This concept was investigated by the U.S. Securities and Exchange Commission and the United States Attorney, and led to an indictment of company executives. Although all charges were eventually dropped, the negative publicity destroyed the company and halted production of the car.​

Here, but for the grace of actually listening to history, goes Elio. Let's just hope Paul does it better than Tucker did.

​

 

[pistonboy]

The media has finally corrected the $240 million misinformation they had put out earlier. The total cost of the project is $240 million however the amount EM still needs to raise is $175 million. The used equipment EM is selling right now is expected to bring in $100-$120 million so what EM actually needs to raise is only about $75 million.

The truth is that EM's financial situation is not nearly as dire as some are trying to present it. Even without the ATVM loan all EM must do is sell off the used equipment and raise about $75 million via private investment over the next year and they will have all the money they need for volume production of this vehicle. EM's sales broker has already begun selling and advertising this investment opportunity to potential investors.

Volume production is what is needed to keep the cost per vehicle low enough to make this vehicle worthwhile. Otherwise the cost per vehicle can easily double or triple as low volume production is more expensive, as it does not benefit from the economies of scale of volume production, and requires a much higher profit margin per vehicle to make the reduced number of sales worth the effort. This is why vehicles such as the Polaris Slingshot are so expensive.

Thank you for stating the actual amount needed is about $75 million. I always thought it was $240 million minus the amount of the equipment sales. It was good to see someone do the math publicly and state the correct amount publicly. We all should quote this correct amount more in our postings so people get the correct picture. I suspect they may arrange a "line of credit" beyond $75 million to cover expenses in case the equipment sales takes some time.

In a previous posting I asked a question that did not come across correctly. I have always known they were using private placement before the 8 month delay. But, were they using a firm similar to Corporate Fuel, or were they doing it on their own? Do firms like Corporate Fuel, calm jittery investors when snags come along like the 8 month delay, and thus help keep these jittery investors from walking away with their money? Hind sight is always 20/20.

If the one Caddo parish commissioner had not initiated her lawsuit, would the eight month delay occurred?

 

[Rickb]

EM's statements over the last year indicated they had the necessary funding for the 2015 production start. Apparently that was only potential cash the experts thought they had from various funding options that didn't materialize, including the sale of equipment, none of which materialized. Nothings changed. The equipment has value but needs a buyer. Discussion of it's value is meaningless. Equipment sold! ATVM Loan approved! A big score investor from the new Financial Partner! is the news I'm waiting to hear. We can continue to trust the experts to get the job done, but their lack of doing so, in terms of funding, is the direct source of our entertainment package. The discussion hasn't been that entertaining lately.

The biggest concerns for me is the very tight time frame and fact that there is not enough cash on hand to get the prototype buillds underway. The prototypes are the most critical element that requires adequate time for testing and factory tooling well in advance of production.

The big day isn't the engine running, but rather Paul running to the bank along with a secured funding announcement.

 

[Ty]

Todays world, regulations ,employee start up cost, local issues. You can bet the environment people will want a cut. 240 million is pocket change.
Likely not to be enough. Everyone will be standing there with their hands out. Suppliers are going to want payment upfront or on delivery at first, they are not stupid they are watching.
Projects I get involved in now often cost more in legal costs than the entire work and material does and can delay work years. EPA will have to approve the new engines emissions.
Just because you have a building and permits, does not mean you can use them there is always a judge that will shut you down ,add restrictions if one of his groups files a suit.
ELIO has mentioned that unexpected legal cost has help create some of the funding and time line issues they have experienced. It never as easy as it looks once the rubber hits the road.
Your prefect plan is fine until it butts up to someone else agenda.

The EPA doesn't have much to do with the engine here. No emissions on motorcycles still.

 

[Ty]

Tucker was unable to make the cars for a cost-effective price, so he went out of business.

Here are three very scary quotations from Wikipedia's article on Tucker. Really, really scary. Even the Road Tour comes straight out of Tucker's venture:

Having raised $17,000,000 in a stock issue (equal to $179,551,416 today), one of the first speculative IPOs, Tucker needed more money to continue development of the car. He sold dealerships and distributorships throughout the country. Another money maker was the Tucker Accessories Program. In order to secure a spot on the Tucker waiting list, future buyers could purchase accessories, like seat covers, radio, and luggage, before their car was built. This brought an additional $2,000,000 (equal to $21,123,696 today) into the company.

With the final design in place, Preston Tucker took the pre-production cars on the road to show them in towns across the country. The cars were an instant success, with crowds gathering wherever they stopped. One report says that Tucker was pulled over by a police officer intent on getting a better look at the car.

To prove the road-worthiness of his cars, Tucker and his engineers ran several cars at the Indianapolis Motor Speedway in several endurance tests. During this testing, car #1027 was rolled three times at 95 miles per hour (153 km/h), and the driver (chief mechanic Eddie Offutt) walked away with just bruises. During the crash, the windshield popped out as designed, verifying Tucker's safety features were effective. Afterwards, upon replacing a damaged tire, the car started up and was driven off the track.​

Engine problems at "first run demo":

The world premiere of the much-hyped Tucker '48 car was set for June 19, 1947. Over 3,000 people showed up at the Tucker factory in Chicago for lunch, a train tour of the plant, and the unveiling of the first Tucker prototype. The unveiling appeared doomed, however, as last-minute problems with the car cropped up. The night before the premiere, two of the prototype's independent suspension arms snapped under the car's own weight. (The prototype was extremely heavy; much heavier than the other Tucker '48's.) Minor engine problems were fixed, and the car was presentable by the time of the premiere. However, the experimental 589 engine was extremely loud. Tucker told the band to play as loud as possible to drown out the noise. As the car was driven on to the platform, the liquid coolant boiled over and some steam escaped from the car, but no one seemed to notice.[8]
​

As development costs soared, Tucker tried raising money by selling accessories prior to the availability of the car, leading to an SEC investigation:

One of Tucker's most innovative business ideas caused trouble for the company, however. His Accessories Program raised funds by selling accessories before the car was even in production. After the war, demand for new cars was greater than dealers could supply, and most dealers had waiting lists for new cars. Preference was given to returning veterans, which meant that non-veterans were bumped down on the waiting lists indefinitely. Tucker's program allowed potential buyers who purchased Tucker accessories to obtain a guaranteed spot on the Tucker dealer waiting list for a Tucker '48 car.​

This concept was investigated by the U.S. Securities and Exchange Commission and the United States Attorney, and led to an indictment of company executives. Although all charges were eventually dropped, the negative publicity destroyed the company and halted production of the car.​

Here, but for the grace of actually listening to history, goes Elio. Let's just hope Paul does it better than Tucker did.

​

Tucker actually started selling cars before he even had a final transmission or engine in place. A lot of what killed his dream was trying to innovate too much, too quickly. With the Elio, there is nothing new here. Sure, the engine is a new design but everything about it has been done before.

 

[RUCRAYZE]

"We learn from failure, not from success"
Bram Stoker, Dracula

 

[outsydthebox]

Catch word is expected. Expected doesn't put the bacon on the table.
I think Elio is making a big mistake on relying on the sale of used equipment that not many would not want.

"Expected" is the right word to use. We need to remember that Comau is professional and respected. If they were to "exaggerate" the expected income, or lie about the values of this equipment...It would be suicidal. However, there are factors that are beyond their (or anyones) control. IMO, Comau is still going to be the best bet for finding new homes for much of the equipment.

 

[Bilbo B]

Assuming the "official first start" ceremony actually takes place , you can bet the engine has been running flawlessly for weeks .
It would be akin to suicide if anything goes clunk .
Does anyone else think that $240 Million is an excessive amount just to begin production ? I'm no automotive manufacturing expert , but it seems to me they could at least begin to build with far less . Once the Elio is seen on the streets and demand begins to skyrocket , additional funding should be easier to glean .
C'mon , Tucker built 51 cars and the hideous clown car, Corbin Sparrow . was 300 strong .

View attachment 4641

Oooooo. Yellow! Purple! Pink!???

 

[Ekh]

Next Friday -- what comes out of it? An investor? Your thoughts?