In 2009, engineer Paul Elio set out to build a tiny and affordable three-wheeled car for the masses, in founding Elio Motors. From the beginning, he promised an 84-mpg car for $6,800. Unfortunately, the Elio has become a distant dream as the company racks up debt while not producing a single production car.

Despite Elio’s claims, this three-wheeled thing is not a car. Originally, the U.S. government and many U.S. states classified it as a motorcycle, as most three-wheeled vehicles these days are. However, according to Elio, an Elio driver would not have to take the motorcycle driving and safety test, so long as you don’t live in West Virginia, which requires the examination and for any occupant to wear a motorcycle helmet.

Keep reading to learn more.

Much of the controversy surrounding the Elio is due in large part to the claimed date of manufacture. The release date for the Elio was originally 2014. Then, Elio postponed it to 2015, then 2016, then 2018 [4]. This led many of the 60,000-plus people who reserved an Elio to wonder if it will ever be built and if Paul Elio is, in fact, a snake oil salesman.

There was a lot of controversy surrounding the price of the car as well. Initially, Elio promised a base price of $6,800. In 2016, it was raised to $7,450. However, if you made a reservation, then you “locked in” a price of $7,300. If you committed to a binding agreement to purchase the car if it were to enter production, then you get a “reduced” price of $7,000 [5].

The Elio Fiasco Exterior High Resolution
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There was a lot of controversy surrounding the price of the car as well. Initially, Elio promised a base price of $6,800

This begs the question, why is Elio increasing the price of the car by nearly 10 percent? Well, if you take a look at Elio’s financial statements, you find the company has turned into a total money pit.

According to a filing with the Securities and Exchange Commission from March 31, 2017, Elio had just $208,748 in the bank. That is an increase from the $120,206 reported in their filing from December of last year. They also have $145,906,178 in accumulated deficit at the time of the filing, an increase from the $141,144,405 reported in their December filing. Looking at their filings from December of 2015, Elio had a much more substantial (if a bit meager) $6,870,044 in the bank with a considerably lower accumulated deficit of $88,424,632 [6]. Furthermore, according to their 1-K filing from May 1, 2017, Elio claims to need a whopping $376 million dollars to fund production [7]. Oh, and they were fined $545,000 in Louisiana for operating as an auto manufacturer without a license [8]. What a tragic oversight.

The Elio Fiasco Exterior
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The Elio’s alleged mass is around 250 kilograms lighter than the Geo Metro

It is understandable that research and development costs for a startup car company will be quite high. It isn’t understandable why a startup car company would spend the money to develop its bespoke engine. By bespoke, I mean a modified Geo Metro engine [9]. The stock Geo Metro already has a claimed combined fuel economy of 47 mpg [10]. The Elio’s alleged mass is around 250 kilograms lighter than the Geo Metro [11], which would almost certainly yield better fuel economy if the stock Geo engine were to be fitted. Even if it didn’t, 47 mpg is a respectable figure. If the Elio sold well, then they could deal with the funding and logistics associated with increasing the mpg. Why do they need their own, customized version of this engine? It doesn’t make any sense.

Even large manufacturers borrow parts from other manufacturers. Numerous manufacturers use transmissions from German outfit ZF, including Jaguar, Fiat-Chrysler, and BMW [12].

2010 Aston Martin V8 Vantage N420 High Resolution Exterior
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The Aston Martin N400 Vantage V8 has a fettled version of the Jaguar AJ-V8 [13], the key fob and radio from a Volvo, among other things [14]. Also, the new Vantage will be receiving a 4.0 liter, twin turbo Mercedes-AMG V8, as will the DB11. Furthermore, the DB11 shares much of its switchgear and its infotainment system with Mercedes products [15]. If parts bin rummaging is good enough for Mr. Bond, surely it’s good enough for a startup tricycle manufacturer. And while some components of the Elio are parts bin, such as the gauge cluster (at least in the pre-production prototypes) and the Aisin transmission [16], they are over-developing an engine that is already adequate for the job.

Furthermore $6,800 or even their jacked-up price of $7,450 isn’t an awful deal for this little “car,” though there are cheaper options on the used car market. While there are very few, if any, cars that meet Elio’s claimed 84 mpg, there are some cars that come close for less money. Look at the original Honda Insight, for instance. The Insight had a claimed 49 mpg city, 61 mpg highway, with some drivers reporting unofficial mpg figures as high as 90 mpg [17]. You can touch one for less than five grand on the used market, though mileage tends to exceed 100,000 miles with rare exceptions. The original Prius sells for around the same price, too. If fuel economy isn’t your primary concern, you can even have a Porsche Boxster for around the same price as the Elio. It’ll have a few miles, but it will put a huge smile on your face, right up until the moment the IMS bearing fails.

Creating a market is a challenging and costly thing to do

The two fundamental problems that can and probably will cause the demise of the Elio are that they are trying to create a non-existent market and they are developing their own engine and other components when it simply isn’t necessary. Creating a market is a challenging and costly thing to do. If Elio had just taken the Geo Metro engine and plopped it into the car, it would sell, and they would have saved loads of money that would’ve been spent on development and loans and investments to fund it. These days, the prospects of seeing an Elio on the road become smaller and smaller.

References

1. Elio Media Kit, Page 3: Elio Motors
2. Elio Media Kit, Page 3: Elio Motors
3. Elio Motors Support: Elio Motors
4. Jason Torchinsky, Boing Boing: Boing Boing
5. Paul Elio, “Elio Motors Locks In Its Price,” Elio Motors
6. United States Security and Exchange Commission form 1-U, Elio Motors INC, March 31, 2017: Sec.gov
7. Elio Motors, INC, Form 1-K (Page 6): Elio Motors
8. Greater Baton Rouge Business Report, Elio Motors fined $545k: Business Report
9. Elio Motors, The Elio Engine, Part 1: Elio Motors
10. FuelEconomy.gov, 1994 Geo Metro: Fuel Economy
11.
A. Elio Motors, Features: Elio Motors
B. Research.com, Geo Metro: Research.com
12. Allpar.com, ZF 845RE: Allpar
13. Car and Driver
14. Autoblog, Aston Martin Owner Finds Volvo Logo On Key: Autoblog
15. NewAtlas.com, DB11 becomes the first Aston Martin with a Mercedes-AMG heart: NewAtlas
16. Elio Motors, Aisin: Elio Motors
17. FuelEconomy.gov, Honda Insight: FuelEconomy

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