Send Email To Dop To Show Support For Elio Motors Loan.

[Rickb]

The reason that Tesla paid back the loan so quickly is by selling carbon credits. All of Musk's current companies require the governments help to keep them afloat

Sorry, but Tesla was able to pay the loan back due to good business strategy and increased Model S sales and profitability.

I hope EM has a similar business philosophy and shared success in getting the loan with an early payback. Go Elio! Go Tesla on the Gen3 due out in 2017.

 

[jetpack54]

Here's some of EM's direct replies when asked about the ATVM loan.
EM - "Our plan B is continuing along as we have been as we are in PRETTY GOOD STANDING as it is. Completion of this loan will help us accelerate bringing the ELIO to the market".
EM - "We are able to do it (start production) WITHOUT the ATVM loan".
Now that to me is very encouraging indeed straight from the horses' mouth!

 

[tonyspumoni]

Here's some of EM's direct replies when asked about the ATVM loan.
EM - "Our plan B is continuing along as we have been as we are in PRETTY GOOD STANDING as it is. Completion of this loan will help us accelerate bringing the ELIO to the market".
EM - "We are able to do it (start production) WITHOUT the ATVM loan".
Now that to me is very encouraging indeed straight from the horses' mouth!

Something about this doesn't make sense. If they can start production but DON'T need the money then what about getting the loan helps accelerate bringing it to market? Producing it and bringing it to the market are the same thing. I'm not disputing your views, just parsing the quotes for the background meaning.

 

[Rickb]

Something about this doesn't make sense. If they can start production but DON'T need the money then what about getting the loan helps accelerate bringing it to market? Producing it and bringing it to the market are the same thing. I'm not disputing your views, just parsing the quotes for the background meaning.

The good news is EM may have the funds to start production............but needs additional funding to ramp up production to expedite the 35,000 + reservation Elios and to meet market demand once people see the smile on your face while driving down the road. Also, setting up and staffing the Elio Stores is going to take some money. Most startups will see minimal if any profits in the early years and needs cash flow.

 

[goofyone]

Here's some of EM's direct replies when asked about the ATVM loan.
EM - "Our plan B is continuing along as we have been as we are in PRETTY GOOD STANDING as it is. Completion of this loan will help us accelerate bringing the ELIO to the market".
EM - "We are able to do it (start production) WITHOUT the ATVM loan".
Now that to me is very encouraging indeed straight from the horses' mouth!

Something about this doesn't make sense. If they can start production but DON'T need the money then what about getting the loan helps accelerate bringing it to market? Producing it and bringing it to the market are the same thing. I'm not disputing your views, just parsing the quotes for the background meaning.

The way I interpret this is not that EM has the money in hand right now to begin production but instead that EM's investors have committed to providing the money if the ATVM loan does not work out. The issue which likely slows the process for EM is that private investors generally do not release all the funds at once but instead have milestone requirements which EM needs to complete before the investors release additional funds.

The reality is that it is likely that through private investment Elio Motors will not be able to do much work on the plant itself until after they have a fully developed vehicle which according to the current timeline will not likely happen until sometime in the third quarter of next year. On the other hand receiving the ATVM loan would allow EM to immediately begin outfitting the plant for production in parallel with the vehicle development program.

The issue is that now that the engine and final vehicle development program is underway the investors would likely rather wait to see what happens with ATVM loan before throwing in more of their own cash and/or bringing in more investors which would dilute their share of the company. Many of us have noticed Paul Elio has been a bit guarded about the whole ATVM loan and this is likely due to a combination of the political nature of the process and the fact that his investors have likely given him no choice but to go through this process.

 

[tonyspumoni]

The way I interpret this is not that EM has the money in hand right now to begin production but instead that EM's investors have committed to providing the money if the ATVM loan does not work out. The issue which likely slows the process for EM is that private investors generally do not release all the funds at once but instead have milestone requirements which EM needs to complete before the investors release additional funds.

The reality is that it is likely that through private investment Elio Motors will not be able to do much work on the plant itself until after they have a fully developed vehicle which according to the current timeline will not likely happen until sometime in the third quarter of next year. On the other hand receiving the ATVM loan would allow EM to immediately begin outfitting the plant for production in parallel with the vehicle development program.

The issue is that now that the engine and final vehicle development program is underway the investors would likely rather wait to see what happens with ATVM loan before throwing in more of their own cash and/or bringing in more investors which would dilute their share of the company. Many of us have noticed Paul Elio has been a bit guarded about the whole ATVM loan and this is likely due to a combination of the political nature of the process and the fact that his investors have likely given him no choice but to go through this process.

G1 - that's as good a line of reasoning as any. Unfortunately DOE simply has no history of reaching ATVM (or any other decision involving investment) decisions quickly, so EM and its major investors cannot be both looking to ATVM as a surrogate for implementation funds AND hoping to meet their timing objectives to have the vehicle marketed by next fall. Simply put, if they are to go live next fall ATMV has to be an 'and' not an 'or'. DOE has made noise about a 'fast track' but Moniz won't relish the opportunity to have to testify before Congress about why DOE approved Elio's loan two weeks after seeing the complete application but took, say, 8 months for some supplier in Congressman Cashinhand's state. If DOE sets a new standard for rapid review, they'll have to maintain that standard. I would give the probability that this loan funds in 2014 as maybe 1 in a 100 and that it funds in Q1, 2015 as 1 in 10. Q2 sounds reasonable for approval and funding.

If EM believes they can do this and have a plan to do it, then plant investment/development would happen in parallel to vehicle investment/development. Delay means risk.

 

[tonyspumoni]

I'm sure the founders are wrestling with the standard decision founders face when investing early. Risk versus reward and how much risk they want to bear.

They are already on the hook for probably $50M. If they get too greedy and want to maintain the company as closely held, then they will have to double down and pony up the funds to get into production. That won't be milestone based in the conventional sense because they are already on the management team and they would be fully informed on progress on the vehicle. We can safely assume that every major founder is represented on the board, either in person or by proxy.

I still think ATVM is a clever ploy. Second round capital - evaluating the opportunity to invest today - would have to have in the back of their minds the possibility that ATVM funds and Elio no longer needs them, which would worsen their position with respect to current shareholders. Think of it as greenmail the current investors are using. Would Lichter like to see his shares remain undiluted and yet get someone else to bear the risk? Um, yeah, he would. But his investment could go south if he relies on ATVM and thinks that unless ATVM happens he won't throw in more cash.

Still, time is short to either get enough cash to make this a going concern for fall of 2015 deliveries from the founders, keeping their share of ownership undiluted but with them bearing all the risk, or go out to second round investors, reducing their risk but also diluting their ownership stake.

And before anyone says something foolish like 'Elio won't let them own the company' let them offer Paul $1M for, what, a share of future profits? Anyone who invests will get a share of the company. Period.

 

[Chris F]

I have lots of experience dealing with the government. Keep in mind that it is always safer for a bureaucrat to say "no" than to say "yes." The ATVM program gives them three tries to deny the loan. The easiest (for the bureaucrat) is to deny the application because it is incomplete for some reason that may or may not be apparent to the applicant. They don't have to make any judgments on the merits of an application, just on whether it's complete. EM has jumped this hurdle, which is a lot harder than it sounds.

 

[goofyone]

I have lots of experience dealing with the government. Keep in mind that it is always safer for a bureaucrat to say "no" than to say "yes." The ATVM program gives them three tries to deny the loan. The easiest (for the bureaucrat) is to deny the application because it is incomplete for some reason that may or may not be apparent to the applicant. They don't have to make any judgments on the merits of an application, just on whether it's complete. EM has jumped this hurdle, which is a lot harder than it sounds.

This is pretty much what Jerome and his wife Pam were telling us this past weekend in Birmingham. They told us that the first step is actually the hardest and is really two steps in which the government can find many excuses to knock applicants out. To pass the fist step not only does the applications have to be complete but the DOE also has to determine that the applicant is eligible to receive the loan which is where applicants can easily be kicked to the curb.

 

[Ty]

Something about this doesn't make sense. If they can start production but DON'T need the money then what about getting the loan helps accelerate bringing it to market? Producing it and bringing it to the market are the same thing. I'm not disputing your views, just parsing the quotes for the background meaning.

Perhaps bringing it to market would require Paul Elio to sell a percentage of his business to the "investor" which would result in less control of the company. If they get the government loan, they maintain 100% control (and profit). It just makes sense to wait. The acceleration? Perhaps the investor(s) are only offering up $80M or so and the loan is for more which would allow for Paul to hire more people sooner or get things done faster.

EDIT: I forgot to put in my disclaimer... This IS my opinion. Everyone has one but this one is mine.