Fun With Numbers

[Ekh]

As to the "$7600" inflated base price...

Based on the latest SEC filing from EM, that is the "Actual" sale price of the base car, if they are forced to operate at a low production run. But if they can hit their goal of 250,000 vehicles per year, then the economies of scale that come with that level of production will reduce the base price to $6800.

So the difference between the two price points doesn't have to do with being "over cost", it is just the realities of low production vs mass production. Assuming they hit their production capacity goal, then $6800 is already within their grasp.

Well ok, but the language used by them is "we're about $800 over our cost target of $6800." Of course it isn't a cost target, it's a price target, but that is what they commonly say.

 

[Marshall]

Ty, you're right that the base profit was originally to be $1,000/ car, so I'm a bit off -- the underlying profit is 15%, not 20, but that doesn't undercut my basic point that the company is financially sound based on today's reservations -- if they can get the doors open.

I do remember reading that the basic cost of the Aisin automatic is between $500 and $600 -- which means Elio is making double cost on every unit. If the figure as to transmission cost is correct -- I think it was supplied by G-1, who is careful about such things -- that's an additional $500 / car. That's a 50% margin on that item, and a whopping difference to EM's bottom line. I used 90% as the acceptance rate for the automatic, but my digging around a few weeks ago suggests that it's between 93 and 95% for all vehicles offering a voice of trannies... even for sports cars, paddle shifters are in and clutch pedals are out. So that's a further little boost to the profitability of The Elio. If even only 3% of buyers (in addition to the 90% I claimed) buy the automatic, that's an extra $27.6 MILLION in profit... just from today's reservation holders.

This gets kind of scary, doesn't it?

I can easily see that $500 Aison coupled with $350 in labor getting to $850 cost plus 20% profit ($170) which gets to $1,020. That's pretty close to the target for options.

 

[KD]

Elio Motors is still struggling to get cars built, tested, and into production. They’re working as hard as they can to make it happen … but there’s a chain of events that leads to success.

As of now, Elio needs $240 million more to open the doors. Sources of funding are

1. Reservations
2. ATVM loan guarantee
3. Private investors / venture capitalists
4. Crowd funding / Reg A+ investors

The sequence of events that needs to occur is 1. Get test cars built and tested. If test results indicate the car gets more than 75mpg, and that the final selling price of the car is profitable then the ATVM loan will (likely) happen. If the ATVM loan happens, reservations soar, private investors come on board, and another Reg A+ campaign will succeed.

Now comes the fun with numbers part.

Assume the final selling price of the base car is $7,600, which is highly likely according to official Elio comments about being $800 over the $6,800 target.

At that price, the value of today’s 55,200 reservations is $419.5 MILLION. That’s without revenue from options, CAFÉ credits, or anything else. Just on the base price of the car.

Elio estimates gross profit at 20%, or $83.9 million on cars that are already sold.

Elio is expecting to produce 240,000 cars per year at full volume. Let’s assume in the first year they only produce 125,000 cars. At $7600 / car, the gross sales are $950 million. That’s right, just under 1 BILLION DOLLARS in the first year.

Profit on the 125,00 cars is $190 million. At full production, the profit is $364 million. Paying off the ATVM loan, plus additional loans for operating capital, is a piece of cake.

So, fuel efficiency of the car is the first concern of DOE. Second is the financial viability of Elio Motors. The current book of business (based on actual reservations) is so strong that repayment of the loan is a virtual certainty. Risk to the Feds is minimal (which really matters to them after Fisker and Solerna, or whatever the photovoltaic panels company was called). The requirement that the company be able to succeed without further Federal loans has already been demonstrated by the existing reservations.

So here’s the real fun with numbers: thanks to the reservation program, the company is already worth enough to be very attractive to some investors. If the ATVM loan guarantee comes through, it becomes a magnet for additional lenders and investors.All they have to do get those test cars through their paces. The rest will follow.

All the above is based on the bare-car selling price being $7,600. But how many cars will be bare? Answer – under 10% at most. That’s because over 90% of buyers will order automatic transmissions at $1100, which have about a 50% margin built into them).

So let’s assume an actual average sales price of $8,400 per car. Now the numbers really climb:
55,200 current reservations now are worth $463.7 million. Profit on those reservations is $92.3 million (at least).

Now assume Elio needs not only the $240 million to open the doors, but another $120 million to keep them open for the first year. Total is $360 million dollars, while the current orders are worth $463.7 million.

In other words, if the actual average selling price of the car (including options, but excluding delivery, taxes, and licence fees) is $8,400 per car, the entire first year of operations, plus repayment of DOE and working capital, is already covered.

Who wouldn’t want to get in on a deal like that?

If orders ballooned to 200,000 cars the first year (a stretch, but feasible), that’s gross revenue of $1.7 BILLION dollars (at $8,400/car). At that point, dividends can be paid and the entire operation becomes self-funding.


Cha-ching!

Wonderful play on numbers, I like it.

Except I see no allowances for the repayment of current debt, which is substantial to say the least. Some of which I recall is at 18%, a crazy amount of interest in today's market..

Then there is the looming end of July, beginning of August targets that will potentially add more penalties from Caddo Parish and Racer Trust for not meeting employment numbers in Shreveport. I believe those numbers could be quite large also, unless they are able to restructure those agreements of course. That may be doable as they have been hitting their announced goals pretty regular since the debut of P5.

Let us keep the Elio faith!

 

[Ekh]

I can easily see that $500 Aison coupled with $350 in labor getting to $850 cost plus 20% profit ($170) which gets to $1,020. That's pretty close to the target for options.

Labor for manual and auto will be about the same and its almost certainly going to be dropped in with the engine before the body is added. No way it will cost $350 to install.

 

[Coss]

Wonderful play on numbers, I like it.

Except I see no allowances for the repayment of current debt, which is substantial to say the least. Some of which I recall is at 18%, a crazy amount of interest in today's market..

Then there is the looming end of July, beginning of August targets that will potentially add more penalties from Caddo Parish and Racer Trust for not meeting employment numbers in Shreveport. I believe those numbers could be quite large also, unless they are able to restructure those agreements of course. That may be doable as they have been hitting their announced goals pretty regular since the debut of P5.

Let us keep the Elio faith!

He put it slightly above center in that page:

"Profit on the 125,00 cars is $190 million. At full production, the profit is $364 million. Paying off the ATVM loan, plus additional loans for operating capital, is a piece of cake."

Racer's Trust is owned by Stuart Lichter Info on Racer's Trust (name sound familiar? He's on the EM Board of Directors)
I think you'll find that link interesting.

And we have been over the deal with RT and the Parish a number of times, do a search on it, and you'll learn a lot about the whole agreement

 

[Gregw]

Here is my version of "Fun with numbers" US perimeter road trip. 9,361 miles / 75 mpg = 125 gallons x $2.28 = $285. I can afford this kind of epic road trip. Do it over the course of 3 months, it would be one hell of a summer.
https://www.google.com/maps/dir/Sed...33b98221683c1!2m2!1d-122.23611!2d48.50389!3e0

 

[Ekh]

Here is my version of "Fun with numbers" US perimeter road trip. 9,361 miles / 75 mpg = 125 gallons x $2.28 = $285. I can afford this kind of epic road trip. Do it over the course of 3 months, it would be one hell of a summer.
https://www.google.com/maps/dir/Sed...33b98221683c1!2m2!1d-122.23611!2d48.50389!3e0

You'd have a lot more fun if you didn't take all those interstates!

 

[Marshall]

You'd have a lot more fun if you didn't take all those interstates!

Agreed. You'd miss the Texas Big Bend country and Valley and you wouldn't want to do that.

 

[Ekh]

All you really see from an interstate is the ass of the truck in front of you. I favor secondary roads and gravel roads wherever possible. They slow you down and make you pay attention to your environment.

 

[larryboy]

Elio Motors is still struggling to get cars built, tested, and into production. They’re working as hard as they can to make it happen … but there’s a chain of events that leads to success.

As of now, Elio needs $240 million more to open the doors. Sources of funding are

1. Reservations
2. ATVM loan guarantee
3. Private investors / venture capitalists
4. Crowd funding / Reg A+ investors

The sequence of events that needs to occur is 1. Get test cars built and tested. If test results indicate the car gets more than 75mpg, and that the final selling price of the car is profitable then the ATVM loan will (likely) happen. If the ATVM loan happens, reservations soar, private investors come on board, and another Reg A+ campaign will succeed.

Now comes the fun with numbers part.

Assume the final selling price of the base car is $7,600, which is highly likely according to official Elio comments about being $800 over the $6,800 target.

At that price, the value of today’s 55,200 reservations is $419.5 MILLION. That’s without revenue from options, CAFÉ credits, or anything else. Just on the base price of the car.

Elio estimates gross profit at 20%, or $83.9 million on cars that are already sold.

Elio is expecting to produce 240,000 cars per year at full volume. Let’s assume in the first year they only produce 125,000 cars. At $7600 / car, the gross sales are $950 million. That’s right, just under 1 BILLION DOLLARS in the first year.

Profit on the 125,00 cars is $190 million. At full production, the profit is $364 million. Paying off the ATVM loan, plus additional loans for operating capital, is a piece of cake.

So, fuel efficiency of the car is the first concern of DOE. Second is the financial viability of Elio Motors. The current book of business (based on actual reservations) is so strong that repayment of the loan is a virtual certainty. Risk to the Feds is minimal (which really matters to them after Fisker and Solerna, or whatever the photovoltaic panels company was called). The requirement that the company be able to succeed without further Federal loans has already been demonstrated by the existing reservations.

So here’s the real fun with numbers: thanks to the reservation program, the company is already worth enough to be very attractive to some investors. If the ATVM loan guarantee comes through, it becomes a magnet for additional lenders and investors.All they have to do get those test cars through their paces. The rest will follow.

All the above is based on the bare-car selling price being $7,600. But how many cars will be bare? Answer – under 10% at most. That’s because over 90% of buyers will order automatic transmissions at $1100, which have about a 50% margin built into them).

So let’s assume an actual average sales price of $8,400 per car. Now the numbers really climb:
55,200 current reservations now are worth $463.7 million. Profit on those reservations is $92.3 million (at least).

Now assume Elio needs not only the $240 million to open the doors, but another $120 million to keep them open for the first year. Total is $360 million dollars, while the current orders are worth $463.7 million.

In other words, if the actual average selling price of the car (including options, but excluding delivery, taxes, and licence fees) is $8,400 per car, the entire first year of operations, plus repayment of DOE and working capital, is already covered.

Who wouldn’t want to get in on a deal like that?

If orders ballooned to 200,000 cars the first year (a stretch, but feasible), that’s gross revenue of $1.7 BILLION dollars (at $8,400/car). At that point, dividends can be paid and the entire operation becomes self-funding.


Cha-ching!

Very true and very well written. Now consider this. The last numbers I have seen for the # of people who are familiar with the Elio was a little over 6%. The people familiar with the Elio may well be weighted towards gear heads, motorcycle riders and hypermilers but of the 94% of the people who have not heard of the Elio some will want to buy one as soon as they become available. When you see the Elio on the front pages of magazines and newspapers and featured on popular TV shows demand will explode and you can well double or triple the numbers in the post above. I can hardly wait!