10/15/2014 - Tech Talk - Engine Series: Part 1

[BlioKart]

Maybe a Geo Metro somewhere is running around with a prototype Elio engine in it.

 

[UCF'73]

G-

You are probably right, as are all those who hold the view that the engine is the critical rate-limiting step to further investment, but I'm not so sure. The Tesla team had to successfully design, build, integrate, and test a far larger array of new technologies - on their own no less - and they had no trouble convincing investors to flock aboard. Investment bucks flow towards the best (reward/risk) opportunities and with the market bouncing along at highs, it isn't hard to make money, reducing the incentives for VC guys to look hard for new ways to get good returns. Now with the market trending lower, I'm thinking Elio gets a lot more interest. I just don't see the engine as being so non-standard that it presents much of a challenge. Now if IAV wasn't involved and Elio Motors was doing this themselves from scratch, then I would totally buy into your views.

I've seen big investors jump on far more speculative projects than this, and in earlier stages. If American investors are balking, then foreign investors might like to get in on the ground floor. However, I was under the impression that Elio isn't seeking additional investors of any kind at this time, pending processing of the federal loan application. Unless I am mistaken, the loan dollars, plus investor money, plus non-refundable reservation fees are enough to cover start up production without the cash flow balance going negative. It would probably be cheaper to pay back the loan at favorable interest rates than to compensate additional private investors.

 

[Ty]

I've seen big investors jump on far more speculative projects than this, and in earlier stages. If American investors are balking, then foreign investors might like to get in on the ground floor. However, I was under the impression that Elio isn't seeking additional investors of any kind at this time, pending processing of the federal loan application. Unless I am mistaken, the loan dollars, plus investor money, plus non-refundable reservation fees are enough to cover start up production without the cash flow balance going negative. It would probably be cheaper to pay back the loan at favorable interest rates than to compensate additional private investors.

Or it could be that getting a loan ensures that Mr. Elio makes the big bucks down the road rather than a bunch of investors. Plus, with no investors, he gets to decide if/when Elio gets bought out. If he had investors to answer to, part of that power goes away.

Just conjecture here... move along.

 

[AriLea]

Not really saying what it seems to. "Over the next few weeks" refers to disseminating some information, not showing a completed engine. That detail is placed after the world "finally", which is sometime after "the next few weeks". I would be very surprised (pleasantly), if we see an assembled engine in a few weeks.

Well, just using my programmer skills at parsing meaning from a sentence, the first part specifies a period of two weeks, and the last part specifies ending that period with an event, the assembled engine. The sentence isn't a contractual agreement, and a couple of weeks typically is still accurate in casual conversation to allow about a week variance.

So yes, I say we are in a high probability of an assembled engine (one or more) inside of three weeks. The engine is not likely to have any testing by that point, that they will talk about.

I would expect they are now also working another, but waiting for any pending conclusions from the first engine evaluation. At minimum, you can expect this to include some cursory coolant system leakage test, cyl compression and oil pressure, all static testing. And sometime later, not too long, one of these assembled engines will go on display. Likely the first one, or a non-functional special one.

Anyway I'm guessing at least a month to 6weeks before I get to see some dyno or other testing results from one of these first assembled engines. Hopefully including enough to determine thermal efficiency at various outputs. If so, at the same time you can expect the 84mpg goal to get adjusted or at a higher level of confidence.

I'm hoping they don't wait for performance graphs to start building the new cars. Because were getting pretty late in the year as it is.

 

[Kuda]

snipped: I just don't see the engine as being so non-standard that it presents much of a challenge. Now if IAV wasn't involved and Elio Motors was doing this themselves from scratch, then I would totally buy into your views.

Engine & Crash Testing are milestones (think private placement) to be met
so that production monies held in abeyance pending successful completion
of same, will then be released. That's the rub folks. This is all moving along
according to a well orchestrated & thought out plan...............November should
be an interesting month......

 

[tonyspumoni]

Or it could be that getting a loan ensures that Mr. Elio makes the big bucks down the road rather than a bunch of investors. Plus, with no investors, he gets to decide if/when Elio gets bought out. If he had investors to answer to, part of that power goes away.

Just conjecture here... move along.

That's not conjecture friend - you are right on the money. One of the reasons the DOE looks so hard at these loans is that they appear to be unsecured, e.g. the DOE does not get an equity stake in return for their loan - it's 4% APR with a 25 year amortization. Basically a really big mortgage without the property lien bit.

 

[tonyspumoni]

Engine & Crash Testing are milestones (think private placement) to be met
so that production monies held in abeyance pending successful completion
of same, will then be released. That's the rub folks. This is all moving along
according to a well orchestrated & thought out plan...............November should
be an interesting month......

Yeah, Kuda, maybe. But that would mean that they already had a funding source that had set a tranche release to gate on that milestone and typically they would have announced that they had secured that funding, e.g. press release stating they had gotten a deal with X upfront and milestones of Y and Z plus total deal value. Maybe the automotive sector works differently.

I agree though - aside from the funding issues and their opacity - product development is moving along. And given the fragility of the circumstances and lack of material evidence, they wouldn't spring bad news on us regarding engine design and testing. We can only expect good news from this team regarding the engine in the next few weeks.

 

[Smitty901]

We shall see if they say anything Sunday morning on CBS

 

[Kuda]

Snipped: I agree though - aside from the funding issues and their opacity - product development is moving along. And given the fragility of the circumstances and lack of material evidence, they wouldn't spring bad news on us regarding engine design and testing. We can only expect good news from this team regarding the engine in the next few weeks.

My guess bad news regarding not meeting these bench marks will be
noticed by another delay. The longer the delay the more serious the
issues & vice versa. Regarding the P/PL. They are under nondisclosure,
which, in my experience, is typical........

 

[tonyspumoni]

Hmm. If we get bad news I'd be surprised if it was about the engine though. Unless they are inept at a level I have yet to see, they would already know what they were going to say in two weeks time and, if bad, they would not have given us this week's good engine news beforehand.

Business leaders often employ the strategy of covering failure by lauding success. I worry that Elio Motors might be kicking off three weeks of positive views on engine design and trial development to mask bad news regarding funding.