Elio Motors seeks crowdfunded success, against the odds
Starting a new car company from scratch is incredibly difficult, but that hasn’t discouraged Elio Motors for trying.
Most established car companies had their start before World War II. In the years since, few new independent car companies have been able to stick around. The pages of history are filled with well-publicized automotive failures like Delorean, Fisker and Vector.
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Tesla is the only new car company to achieve anything remotely close to mainstream success in the past 20 years. Despite the odds, new automotive companies have started to pop up, no doubt trying to become the next Tesla.
Enter Elio Motors
Elio Motors is one of those companies. Company founder and CEO Paul Elio plans to sell a three-wheeled car for less than $6,800. The car is powered by a small, 0.9L 3-cylinder engine sourced that produces 55 hp and is expected to get up to 84 mpg.
The idea of a small, cheap and efficient vehicle sounds like a great proposition for people who only need basic transportation. Plus, it could be a game changer for those who need basic transportation to get to work in our ever-growing world. Even more revolutionary, Elio seeks to build this company up from crowdfunding, not venture capital or investments from other companies.
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But is Elio the next big thing to hit the road or is it all just a pipe dream?
Elio vs. the odds
Elio has a long road ahead. Although the company has raised at least $75 million, Elio recently stated in its filings with the Securities and Exchange Commission that it will need at least another $200 million. Even with its recent $25 million stock offering, Elio must raise a lot of cash before their stated production-start date of “late 2016.”
One bright spot for Elio is the potential to receive a $200 million loan from the federal government’s Advanced Technology Vehicle Manufacturing program, which helped Tesla Motors get on the road. If Elio can secure that loan, it may be able to get its product to market. But there’s no guarantee Elio will get that loan.
The problem: Elio is not a conventional car. Technically, it’s a motorcycle. That means a number of issues could sink it before it leaves port. Although the engine is said to get up to 84 mpg, it’s not going to be a “green” car. Unlike Teslas, the Elio still has a gas engine, and since it’s a motorcycle, it’s not constrained by the restrictive vehicle emission standards of cars. The federal government may not like that, when it could invest its dollars on a company that could develop a successful alternative-energy-powered vehicle.
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Elio’s ambitious target
Elio plans to eventually build and sell 250,000 of these cars a year. That’s almost the same number as the ubiquitous Toyota Corolla. Elio hopes American car buyers will forsake their current cars with four seats and ability to carry objects of size and flock to its small two-seat model.
Because it’s a motorcycle, buyers will have to get a motorcycle license in some states, although Elio says it continues to seek exemptions through state legislatures. Elio is also seeking an exemption from helmut laws, with two states yet to agree, the company says.
Yes, 84 mpg and a $6,800 price tag may seem alluring, but the rest of the product has to prove it’s good enough to capture investment.
The crowd to the rescue?
Will crowdfunding work out for Elio? Elio itself has said that the vehicle may never successfully be developed in its SEC filings, and the company faces a long road ahead. Given the success rate of new car companies, Elio will need skill and luck to avoid joining Fisker and DeLorean in the pages of history.
About the writer: Will Kinton thinks life is too short to drive boring cars, and enjoys sharing his passion for them. For more, follow him on Twitter:@willkinton247.
Photo Credit: Elio Motors
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