Reservations: 65341 As Of 6/20/2017

[wizard of ahs]

As I've said in the past... IF they can keep the price below 10K ...they have a winner

 

[Sethodine]

I just had a thought; an alternative interpretation of the facts.

What if 65,000 represents the first year of production, with a slower start-up than previously envisioned? As in, perhaps only 1 shift operating on less machinery than the fully-engaged factory would later be able to do. In that case, once they hit 65,000 then they would say, "Alright, that's it for year-one production." and open up reservations for Year Two.

This could significantly lower start-up costs, ensuring that several thousand Elios hit the road next year, further increasing demand for the second-year run at full factory capacity.

 

[Ty]

I just had a thought; an alternative interpretation of the facts.

What if 65,000 represents the first year of production, with a slower start-up than previously envisioned? As in, perhaps only 1 shift operating on less machinery than the fully-engaged factory would later be able to do. In that case, once they hit 65,000 then they would say, "Alright, that's it for year-one production." and open up reservations for Year Two.

This could significantly lower start-up costs, ensuring that several thousand Elios hit the road next year, further increasing demand for the second-year run at full factory capacity.

I don't think that would lower start-up costs. All the machinery is already paid for. A single shift producing only 65,000 cars a year would double the labor costs per vehicle not to mention any big discounted parts that are cost-tied to how large of a batch are bought.

 

[Rob Croson]

All this after they announced that the price was....higher than anticipated?

Higher by a bit, but also guaranteed. "Guaranteed $7300" is a lot different than "Maybe $6800", and a lot easier to justify.

 

[Jambe]

"Elio Motors: Anyone without a reservation, anyone with a Want In reservation, and anyone that places an All In reservation after 65,000 total reservations are placed have a targeted base price of $7,300."

Note the use of "targeted base price".

 

[AriLea]

I just had a thought; an alternative interpretation of the facts.

What if 65,000 represents the first year of production, with a slower start-up than previously envisioned? As in, perhaps only 1 shift operating on less machinery than the fully-engaged factory would later be able to do. In that case, once they hit 65,000 then they would say, "Alright, that's it for year-one production." and open up reservations for Year Two.

This could significantly lower start-up costs, ensuring that several thousand Elios hit the road next year, further increasing demand for the second-year run at full factory capacity.

Well yes, this is a funding limited solution. However, it's totally unknown to us how much of the 270million is required to do that. Since the parts can be paid for later in the year's run by money collected for sales a short time prior, it's very hard for us to know how much a limited production would trim off from the full funding they projected. That is and still maintain the efficiency required. Just to roll out the first car they needed a substantial percentage of it.

Anyway, as you suggest, there is no reason to cut the reservations off anywhere below 240k. Having started at 65k,( IMHO ) they can always ramp up in response to reservations as they come in, so long as they are upfront about the delivery projections. It seems there are plenty of people willing to wait if the price stays attractive.

But it's a very sure bet there will be more than double the reservations by the time production starts, so like I say, EM can just project a longer delivery schedule and see where it goes.

Expansion paid for only by Elio sales suggests in my estimates only a funding of 20% capacity increase each processing cycle of 30 to 60 days. That would allow expansion from 65k to 240k units in 8 cycles, or 8 to 16 months. This is provided that the 65k level technology is scalable, which I think by design, is true.

EM is only promising delivery inside of 1 year, so they definitely can start at a 65k rate, ramp up and fulfill all orders beyond 130k that I suggest they will have collected by day1.

 

[Sethodine]

Well yes, this is a funding limited solution. However, it's totally unknown to us how much of the 270million is required to do that. Since the parts can be paid for later in the year's run by money collected for sales a short time prior, it's very hard for us to know how much a limited production would trim off from the full funding they projected. That is and still maintain the efficiency required. Just to roll out the first car they needed a substantial percentage of it.

Anyway, as you suggest, there is no reason to cut the reservations off anywhere below 240k. Having started at 65k,( IMHO ) they can always ramp up in response to reservations as they come in, so long as they are upfront about the delivery projections. It seems there are plenty of people willing to wait if the price stays attractive.

But it's a very sure bet there will be more than double the reservations by the time production starts, so like I say, EM can just project a longer delivery schedule and see where it goes.

Expansion paid for only by Elio sales suggests in my estimates only a funding of 20% capacity increase each processing cycle of 30 to 60 days. That would allow expansion from 65k to 240k units in 8 cycles, or 8 to 16 months. This is provided that the 65k level technology is scalable, which I think by design, is true.

EM is only promising delivery inside of 1 year, so they definitely can start at a 65k rate, ramp up and fulfill all orders beyond 130k that I suggest they will have collected by day1.

Essentially, that is what I am suggesting. They have "all the machinery" at the factory, but by starting at a lower rate they only need one set of dies for the steel stamping machines, one assembly line, one shift crew, etc. All the prerequisite engineering would need to be complete, so I doubt that 65,000 scales evenly with 240,000 (so, it would certainly need more than a scale-value of $72.9 million).

I guess the other half of my thoughts came from the "$7300" price lock. Folks here are assuming that after 65,000 the price will go up...but what if it doesn't? What if the goal of $6800 is still possible at full capacity (240k), but they had to raise the price up to $7300 in order to remain profitable while starting at a lower capacity?

 

[Elio Amazed]

I can't possibly imagine EM trimming the price back down once they hit full stride.
@ $7K and $7.3K are already in the realm of the absurd for what this vehicle actually will be.
On top of that, don't forget bout the bonus liabilities that EM will have to absorb for all the all-ins.

I really don't think that's going to happen unless EM wants to become a short-lived charitable institution

 

[Sidecar Bob]

After 65K orders: no bonuses and $ 7300. base? That is a $ 250 increase in income / autocycle.

 

[wizard of ahs]

Yes it is ☺