Paul Elio CEO and founder of Elio Motors is sitting sideways in driver's seat (Courtesy of Elio Motors)
A car with three wheels, two seats and a $6,800 starting price could hit the roads next year.
Elio Motors, a Phoenix-based startup wants to revolutionize the
American transportation industry—and it’s off to a good start: It
already received more than 53,000 reservations for its ingenious
vehicle. Also nice: It was the first startup to go public through
crowdfunding.
Founded by Paul Elio in 2008, Elio Motors invented a prototype for a
three-wheel, two-seater vehicle. It is a highly fuel-efficient car that
can get up to 84 miles per gallon, which is twice the mileage of a
standard compact car. How does it do that? Slim design and a light
weight.
It is a highly fuel-efficient car that can get up to 84 miles per gallon.
“Our product is compelling and that is the part of the reason why
people reserve. People also know that what we are doing is important.
This project really needs to happen. We will be creating tens of
thousands of new American jobs,” said Elio.
Elio graduated from General Motors Institute (now Kettering
University) in 1996 with a degree in mechanical engineering. After
graduation, he founded ESG Engineering, an automotive consultancy firm.
Elio’s dream to invent a new car began in 2008 when ESG started
designing the three-wheeled vehicle now known as the Elio. He was
motivated by rising vehicle prices, volatile fuel prices, and a
struggling industry in general.
As an automotive engineer, his vision was to tap America’s know-how
in design and manufacturing. Upon realizing the potential of the Elio,
he created Elio Motors and started to look for funds for his dream.
Raising Capital
It was not a good time as the U.S. automotive industry was already in
turmoil. His consulting company ESG, which had been backing the Elio
project started to struggle financially.
Elio could not find any funding for his project until 2012 when he
met Stuart Lichter, a billionaire real-estate developer and founder of
Industrial Realty Group.
Paul Elio, CEO and founder of Elio Motors is standing behind Elio Vehicle. (Courtesy of Elio Motors)
Lichter bought some of the assets spun off from General Motors during
its bankruptcy, including the plant in Louisiana. He leased out the
plant to Elio. He has also invested $20 million in debt and equity to
support the project.
In total Elio has raised $96 million including capital from Stuart
Lichter and ESG Engineering, funds through crowdfunding and deposits
from potential customers.
Elio Motors is the first company to have its shares traded publicly through crowdfunding.
Out of the total amount raised, $17 million came through a Regulation A+ stock offering on the StartEngine crowdfunding platform in February 2016. Elio Motors (OTC: ELIO) is the first company to have its shares traded publicly through crowdfunding.
In March 2015, the Securities and Exchange Commission (SEC) finalized amendments
to Regulation A under Title IV of the 2012 Jump Start Our Business
Start-up (JOBS) Act, paving the way for private companies to raise up to
$50 million from non-accredited investors.
Elio Motors was one of the first companies to launch a formal stock
offering utilizing Regulation A+, after receiving qualification from the
SEC.
“Funding is often a significant roadblock for bringing big ideas to
the market. Regulation A+ allows entrepreneurs a quicker and more
efficient method for raising capital,” said Elio in a press release
after the offering.
Since Elio is now a publicly traded company, it has to disclose all company information in SEC filings.
After the offering, Elio shares jumped to $60, giving it a market valuation of $1.5 billion in two trading days.
“It is a luxury to be a private company, but the access to capital
far outweighs that luxury. Now that we are a publicly traded company, we
have many tools to raise the rest of the dollars. It has been
absolutely the right call for us,” said Elio.
After the offering, Elio shares jumped to $60, giving it a market valuation of $1.5 billion in two trading days. Elio shares are now trading at $22, which implies a market valuation of $550 million.
“On our Regulation A+ experience, the one thing I would do
differently if I had to do over again is to get analyst coverage engaged
during the process. Right now there is no one recommending our stock
and we are working to solve that problem,” said Elio.
Elio also launched an online reservation mechanism in January 2013,
similar to Tesla’s pre-order system. The company has taken reservations
from over 53,000 customers and took in $21 million in deposits so far.
The company has taken reservations from over 53,000 customers.
Potential Elio buyers can make a refundable or nonrefundable deposit
ranging from $100 to $1,000 to secure their spot on the vehicle waiting
list. Non-refundable reservations take priority over
refundable reservations, so these depositors get the car earlier.
A New Concept: Autocycle
Elio calls the vehicle an “autocycle” because it blends the elements
of an automobile and a motorcycle. It has one door, two seats behind
each other similar to a motorcycle, and has three wheels—two in the
front and one in the rear.
It is even classified as a motorcycle by the U.S. government.
However, the vehicle has all the safety features of a car, like
anti-lock brakes, three airbags, a reinforced roll-cage frame, and 50
percent larger crush zones than similar vehicles. Drivers won’t be
required to wear helmets or have motorcycle licenses in most states.
The Elio has a three-cylinder, 0.9-liter engine, and a top speed of more than 100 miles per hour.
“Elio gets up to 84 mpg on the highway because of its unique design.
Gas mileage is determined by how much wind resistance there is on a
vehicle. Because Elio is half the width of a regular car, it gets twice
the mileage,” the company says on its website.
That means about $1,500 a year in fuel savings for an average driver.
“Bottom line, your Elio pays for itself… or more accurately, your local
gas pump does,” claims the company.
It means saving billions of gallons of gas and it cuts down on
billions of pounds of CO2 emissions. “After five years, when we hit our
sales targets, we can reduce the total U.S. gas consumption by nearly
half a percent. That is an impressive number,” said Elio.
Paul Elio CEO and founder of Elio Motors is sitting sideways in driver’s seat (Courtesy of Elio Motors)
When we hit our sales targets, we can reduce the total U.S. gas consumption by nearly half a percent.
, Elio Motors
The vehicle will be built at a former General Motors plant in
Shreveport, Louisiana. “Elio is American-made, targeting utilization of
90 percent North American content,” said Elio.
Elio Motors will deliver a base model to customers, but it will also
allow them to personalize the vehicle by choosing and paying for only
the options they want and need.
The Elio base model will sell for $6,800, offered in a choice
of seven colors: Rocket Silver, Sour Apple, Creamsicle, Red Hot, True
Blue, Licorice, and Marshmallow.
Grit and Determination
The production of Elio has been postponed several times in the past
due to funding constraints. However, Mr. Elio’s grit and determination
kept this project alive since its inception in 2008.
The company is targeting to start the production in 2017.
The company wants to start production in 2017. In order to do that,
it needs to raise an additional $300 million in capital. Elio is hoping
to raise capital through a combination of outside investment and a
government loan called the Advanced Technology Vehicles Manufacturing (ATVM) loan.
“I am very excited about ATVM. I think we are a natural fit. But we
do not totally rely on the government loan. We always maintain a
completely private solution to our funding,” said Elio.
“Other startups that try to produce a vehicle will spend about $1
billion. We are spending $300 million. And that is a big part of the
reason why we can do it without the government loan.”
For Elio, the startup cost is lower compared to other manufacturers
thanks to the former GM production plant, which is up and running with
its machinery and equipment.
“Acquiring that site was a huge win for us,” said Elio. “Another
reason why we can do this with low cost is because there is no new
technology on Elio. All the parts already exist and that really helps to
reduce the startup costs.”
With respect to competition, Elio thinks the vehicle is not easy to
duplicate and it will take some time for competition to enter the
autocycle segment. “It is incredibly difficult to start a new car
company. And to get the global supply base engaged is the secret of our
success,” said Elio.
There are people who don’t believe we landed on the moon, arguing that it was staged by Hollywood.
, Elio Motors
Due to funding constraints and delays in the production timeline, the Elio project has generated some controversy and criticism.
“What we are doing is hard. However, we have way more support than
skepticism. Skepticism is healthy depending on the level. There are
people who don’t believe we landed on the moon, arguing that it was
staged by Hollywood,” said Elio.
“Vast majority of skeptics are way more reasonable than that. And as
we achieve each milestone, more and more people will believe in what we
are doing.”
0 comments:
Post a Comment