Securities And Exchange Commission Form 1-k - Filing Date: 2016-04-29

John Painter said:

EM has been saying their profit margin on the base model is approximately $1000, I'm not aware of any EM official saying anything close to $500. I was intrigued to see the BOM included in this recent SEC filing, since Paul Elio had made several references to having over 80% of the cost of parts nailed down, he evidently has more than that. What's not clear to me is even though it's possible to include assembly into BOM, whether EM does their accounting that way, I was curious if anyone here knew if that was possibly how the accounting and materials tracking partner they're using does things?

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I don't know why we always seem to be in the context that the business model is only the profit per Elio sale. You now how it is at the gas station, it's gas is almost sold at cost. They make money when you go in the store and buy something else. Same way at McDonalds and other places. It's the 'other' products where the profit is.
Same way with Elio, once you get hooked on your Elio, you just might chose to personalize it. And who else would you get those from? Well, of course from EM ! And getting it installed before delivery is best from a customer point of view. Just include it in and paid for by the financing.

.. and CAFE credits - we hope.

AriLea said:

I don't know why we always seem to be in the context that the business model is only the profit per Elio sale. You now how it is at the gas station, it's gas is almost sold at cost. They make money when you go in the store and buy something else. Same way at McDonalds and other places. It's the 'other' products where the profit is.
Same way with Elio, once you get hooked on your Elio, you just might chose to personalize it. And who else would you get those from? Well, of course from EM ! And getting it installed before delivery is best from a customer point of view. Just include it in and paid for by the financing.

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A long time ago I read that car companies don't make very much at all from their vehicle sales.
It was said that the real money lies in parts sales over the life of the vehicle.

Elio Amazed said:

A long time ago I read that car companies don't make very much at all from their vehicle sales.
It was said that the real money lies in parts sales over the life of the vehicle.

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There's some truth to that. I used to have a Porsche 911S. It ate two transmissions, at the rate of $2500 each -- in 1978! I was a university instructor making $9,500 a year, so the car had to go ... I once calculated I could buy 3 of the cars for the price of the parts in one.

The psychology of this is straightforward: you have a choice in what car to buy, so price competition is real. But once you have the car, you have very little choice about what parts go in it, so the car companies charge the earth for them -- because they can get away with it.

Sweet.

So, if the car you're buying is not a brand new model (has been out for a few years)...
Not only would it would be prudent to research reliablility but also repair and parts costs?
Kind of like checking the local taxes, utilities and cost of living before you make a home purchase.

Elio Amazed said:

A long time ago I read that car companies don't make very much at all from their vehicle sales.
It was said that the real money lies in parts sales over the life of the vehicle.

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Truth....word....whatever.

Ekh said:

Good thing that Takata airbags aren't on the list of "off the shelf parts and proven technologies"! But your basic point is good. Easier availability to parts, lower cost = greater financial safety and lower risk of recalls.

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Did Elio pull back from using Takata? For a while, they were listed as one of the parts suppliers. If Elio (along with every other manufacturer) is leaving Takata for other makers, perhaps that is part of why the cost to production just went up by such a large amount. With the bargain brand out, and demand for replacement high, what do you do except pay out the nose?

Sethodine said:

Did Elio pull back from using Takata? For a while, they were listed as one of the parts suppliers. If Elio (along with every other manufacturer) is leaving Takata for other makers, perhaps that is part of why the cost to production just went up by such a large amount. With the bargain brand out, and demand for replacement high, what do you do except pay out the nose?

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Yes, they left Takata.

P85D said:

Actually the margins are still very acceptable... and dealerships that meet sale quotes are rebated large quarterly bonus rewards in most cases.

And...and franchised dealership service departments are extremely profitable...

The actual question should be...how much markup do automobile manufactures have when selling vehicles wholesale to Franchised Dealership's...

Answer...It's substantial!

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That's one of the reasons EM will not have dealerships; it's all direct sales.

AriLea said:

I'm going to suggest the BOM is directly related to each vehicle out the door and the other costs are not directly related that way. For example, tooling or facilities you have used for the first year, can be used again on the second year and later, the direct cost to production depends on final sales, what you plan to produce and when, and just how you chose to write off investments using various accounting methods.

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Good post. The costs of machines and other fixed costs are amortized by either depreciation if owned or rented or leased if not.

Assembly is a hybrid with some employees being like fixed costs and are often loosely grouped as management where day labor is variable depending on production. If production stops, they go home while management and maintenance do not.

This is where the accountants and financial officers parse the numbers and often keep multiple sets of books to meet the different requirements of parties. The IRS calculates one way. Banks and Investors calculate other ways.

I actually ran across this while trying to find out who their financial officers are.