Waffling On Base Price. Can They Make $6,800?

[Rickb]

I guess I should clarify, with the options I want (HR fenders, alloy rims, misc add-ons), tags taxes etc. 10 grand...

Me too!

 

[Jeff Porter]

If you wander through EM's website (and other publications), you'll notice an increased amount of waffling on the car's $6,800 base price. For instance, on the Fleet page, they now have a new bullet point: "Targeted $6,800* base price."

You see this same sort of backing away from the 84mpg/$6800 battle cry all over the place. It's quiet, but it's there. Is this a quiet way of saying "we ain't gonna make it," or just CYA in case they don't?

Good point Eric, I'm thinking their "Four Must Haves" page, http://www.eliomotors.com/features/#the-4-musts, has changed from the 4th bullet saying $6800 to it now saying Low Price.

I do think it's their quiet way of saying "we ain't gonna make it". Not the end of the world, but it is interesting.

 

[Ekh]

I agree with GPA, the title to this thread needs to be changed.
Here's what "waffling" means:
waf·fle1
ˈwäfəl/
informal
verb
gerund or present participle: waffling
1.
North American
fail to make up one's mind.
"Joseph had been waffling over where to go"

It's not like they have constantly been changing the price; they have always said the target was $6,800 and that is since day one. Here it is 8 years later (3 since it came out to the public) they have been consistent.
It's just been since it's come down to crunch time that they found hitting that target is going to be tuff.

An additional meaning of "waffling" is "hesitating," or backing away from a statement. And "waffling" is kinder than "weasel-wording," which some might consider these changes. I'm letting the title stand. But for the record, I posed a question about the significance of the wording changes around the price. Questions are not conclusions.

 

[AriLea]

I was sitting in the designers office, for the P4 before it was built, he was just finalizing the headlight design, and we talked a tiny bit about marketability based on price. The question came down to keeping the sales volumes up. So at that point in time either more perceived value in the car, accommodation to wider audiences or a lower price would move more product. So more features at $6800, better mileage, or lower price, what is the best affect?

Pretty much he and I figured the most primary features would be best if also under a $7500 price tag, at that price it wouldn't hurt sales volume much, but a lower mpg than 80+ would have hurt dramatically (gas was very expensive then). And (no you can't shoot me for this.. ) any more than the features he had built in up to that point wouldn't raise production volumes any more if it also moved that price point up past $7500.

Obviously they capped the feature set, and continued to optimize for price and mpg since.
Given the current fuel costs, I now think 75mpg is a must as well as under $7300 and of course the feature set they now have.

The real meal deal here is the overall monthly cost/benefit. Having the car pay for itself and still get you to work safely. That is some distance threshold fits some percentage of the work-force.

They really can't raise the price all that much and keep production levels up.

 

[Jeff Porter]

Something else to watch on the website: under "About Elio", there's the "How is $6800 possible?" If that gets re-worded in the near future, we'll know $6800 is a thing of the past.

 

[Ekh]

I was sitting in the designers office, for the P4 before it was built, he was just finalizing the headlight design, and we talked a tiny bit about marketability based on price. The question came down to keeping the sales volumes up. So at that point in time either more perceived value in the car, accommodation to wider audiences or a lower price would move more product. So more features at $6800, better mileage, or lower price, what is the best affect?

Pretty much he and I figured the most primary features would be best if also under a $7500 price tag, at that price it wouldn't hurt sales volume much, but a lower mpg than 80+ would have hurt dramatically (gas was very expensive then). And (no you can't shoot me for this.. ) any more than the features he had built in up to that point wouldn't raise production volumes any more if it also moved that price point up past $7500.

Obviously they capped the feature set, and continued to optimize for price and mpg since.
Given the current fuel costs, I now think 75mpg is a must as well as under $7300 and of course the feature set they now have.

The real meal deal here is the overall monthly cost/benefit. Having the car pay for itself and still get you to work safely. That is some distance threshold fits some percentage of the work-force.

They really can't raise the price all that much and keep production levels up.

You're talking about "price elasticity of demand," which describes how far you can raise prices before sales drop off. If you raise price too much, you eventually kill sales. If you lower it too much, you lose profit per unit. But assuming a constant feature set (same stuff included n the car), how high can you go before volume suffers?

In some businesses, volume with thin margins works great because the demand is there. In others, you need high margins because it's a low-volume product -- such as custom-made cars or (ahem!) photo restoration.

It looks as if Elio has it pegged right at $6800 with the current feature set, but it's unclear if volume will really suffer at $7200 or even $8500. Where you get into trouble is enriching the feature set too much in hopes it will stimulate demand. Added features may be a "sweetener" to improve demand, but the cost of including them erodes your margins.

So we're all guessing here -- including the guy you were talking to a few years back. Though my personal guess is that 80 mpg and the same feature set would be fine at &7,500 or even $8,000, that would only be a guess. Given the extra costs of delivery, taxes, licenses, and options, $9500 to $10,000 might be the edge of the thin ice in terms of PED. I know most of us have been figuring $10,000 at the end of the day, optioned-up. But we're the faithful. Who knows what J.Q. Public will think if the base price climbs much past $7100 or $7200. Most of us probably agree that $7,200 is a "safe" price increase if the mileage is 80 or better.

 

[outsydthebox]

You're talking about "price elasticity of demand," which describes how far you can raise prices before sales drop off. If you raise price too much, you eventually kill sales. If you lower it too much, you lose profit per unit. But assuming a constant feature set (same stuff included n the car), how high can you go before volume suffers?

In some businesses, volume with thin margins works great because the demand is there. In others, you need high margins because it's a low-volume product -- such as custom-made cars or (ahem!) photo restoration.

It looks as if Elio has it pegged right at $6800 with the current feature set, but it's unclear if volume will really suffer at $7200 or even $8500. Where you get into trouble is enriching the feature set too much in hopes it will stimulate demand. Added features may be a "sweetener" to improve demand, but the cost of including them erodes your margins.

So we're all guessing here -- including the guy you were talking to a few years back. Though my personal guess is that 80 mpg and the same feature set would be fine at &7,500 or even $8,000, that would only be a guess. Given the extra costs of delivery, taxes, licenses, and options, $9500 to $10,000 might be the edge of the thin ice in terms of PED. I know most of us have been figuring $10,000 at the end of the day, optioned-up. But we're the faithful. Who knows what J.Q. Public will think if the base price climbs much past $7100 or $7200. Most of us probably agree that $7,200 is a "safe" price increase if the mileage is 80 or better.

Well said. Not much can really be "set in stone" as the economy is in constant flux.
IIRC, Some time back, someone "in the know" was asked what EM would do if materials costs went up. The reply was something like..."we would probably make some (currently) standard feature (like A/C) an "additional cost option". This was (again, IIRC) in reference to after the first model year.

 

[Gas-Powered Awesome]

Yep, but they've only lately started softening up on their ability to reach it.

Well just go back to the beginning when they said it was $7500:
https://web.archive.org/web/20091006081735/http://www.eliomotors.com/

So OMGOMGOMG!!!!1! They've lowered teh price! W00T!

 

[Folks]

Well they said they were. I am looking at everything beyond just the car price.

Don't be so hard on your present vehicle. She may need to last you longer than that.

 

[Ekh]

Don't forget, that $6,800 goal includes $1000 profit built-in. Which means they're already there from a cost perspective. If they were willing to take a hit to their bottom line, they could still sell at $6,800, albiet with a lower profit margin (about $500 per Elio).
But if it came down to that, I would bet on them selling at $7,300 and still making their $1k profit, rather than reducing their profit margain.

With their debt load, they can't afford to reduce margin.