10/3/2014 - Ktal Nbc 6 - Interview With Paul Inside The Factory

[JP]

It's not your everyday glue that they will be using. It's more than likely a 2 part structural adhesive much like that is used in the aviation industry. As long as the two surfaces are prepped correctly the glue will hold forever. Plus the body panels are a composite panel, so no welding will be going on there. Now they could have inserts in all these panels and they could be bolted to the frame and each other, but I'm guessing that would make the cost higher.

That calms my concern. Thanks

 

[tonyspumoni]

Paul Elio is a visionary. No doubt. But he needs funding to realize his/our dream.

From day one, I have followed the money. (I have been All In since July 2013.) From where I sit, money is the only remaining significant hurdle. Keep your fingers crossed regarding the government loan. Me... I'm keeping my expectations in check regarding a solid production date.

I wholeheartedly agree that all issues presently are monetary in nature and that, given the right infusion of capital, this would at least get to the stage of creating a production workflow. Here's where I have problems with the chaff around funding. DOE has very explicit guidance regarding who qualified for a ATVM loan and who doesn't. Here's what I got from their site:

http://energy.gov/sites/prod/files/2014/05/f16/ATVM-Program-Application-Overview.pdf

Advanced Technology Vehicles Manufacturing (ATVM) loans support the development of advanced technology vehicles (ATV) and associated components in the United States. They also meet higher efficiency standards. (learn more

The ATVM Loan Program is currently accepting applications. Click here to learn more about the application process.

ATVM ELIGIBILITY

1. ATVM loans may be made to applicants who are technically and financially eligible in order to finance the cost of:
   1. reequipping, expanding or establishing manufacturing facilities in the United States to produce ATVs or qualifying components or
   2. engineering integration performed in the United States of ATVs or qualifying components.
   In order to be technically eligible for an ATVM loan, an applicant must be either:
   1. an automotive manufacturer satisfying specified fuel economy requirements or
   2. a manufacturer of qualifying components.
   In order to be financially eligible for an ATVM loan, an applicant must be financially viable without the receipt of additional federal funding for the proposed project.

I interpret this as (1) you have to be financially viable BEFORE you can quality for the loan: (2) the vehicle or component in question must be a light duty vehicle, when in fact EPA has already said that the Elio is NOT a light duty vehicle, but rather a motorcycle, rendering it entirely plausible that however good the application, the Elio motorcycle would be excluded on grounds that it isn't the kind of vehicle for which the program is intended; (3) a significant feature of the post-submission application review will be the determination of exactly these facts in order to establish genuine eligibility; and (4) this will NOT happen soon unless Elio is deemed ineligible, e.g. even if Elio does qualify it'll take years for this to work itself into cold, hard cash.

It took Telsa more than a year, as detailed here (http://www.teslamotors.com/fr_CH/blog/early-repayment-tesla’s-atvm-loan):

Following more than a year of thorough due diligence by commercial auditors, automotive consultants and lawyers, on January 20, 2010, Tesla became the recipient of one of three initial DOE loans announced by Secretary Chu, along with Ford and Nissan – good company for a start-up automaker. Tesla’s loan of $465 million was to be paid back over ten years following the start of production of the Model S. Months later in a separate announcement, an ATVM loan was announced for Fisker.

 

[ks6c]

Paul Elio is a visionary. No doubt. But he needs funding to realize his/our dream.

From day one, I have followed the money. (I have been All In since July 2013.) From where I sit, money is the only remaining significant hurdle. Keep your fingers crossed regarding the government loan. Me... I'm keeping my expectations in check regarding a solid production date.

I don't have the concerns over money that are often expressed on the forum, because there are so many sources, with caveats for each one.

First choice might be government subsidies/loans - cheap(er) and few(er) strings attached.
Second might be bank funding, but certainly wouldn't be cheap - likely usurial rates for a start-up, if they'd loan at all.
Third, think private equity/venture capital, but they want control of your venture, and if you already have a venture capitalist on board, they might guide you to all other possible funding sources first so as not to dilute their control.
Fourth, with 34 world-class companies already invested in this venture, I wouldn't rule out a consortium of sorts if the project was teetering and that was what was necessary to rescue it.
Fifth, if all else fails, it's back to #3 - the original VC wouldn't let his stake evaporate for ego's sake, they'd be the ones sourcing another VC.

So no, I'm not worried about funding at all. This project will fly or fail on it's own merits, not funding - $185mio is chump change, after all. IMHO

 

[tonyspumoni]

...in other words, the loan doesn't have anything to do with whether Elio will be or won't be able to enter production in 2015. They will likely have to get their own funding, independent of the loan, in order to get production off the ground in that timeframe. The application for the loan may have a lot MORE to do in fact with assuring investors that they will get repaid (eventually), e.g. the fund initially and then Elio uses the DOE loan to settle those debts, goes IPO to get more bucks to really get this off the ground.

This is of course just speculation, but the idea that the DOE loan has anything to do with a Q3/2015 production start date is not supported by any data on how Federal loan programs work.

 

[tonyspumoni]

I don't have the concerns over money that are often expressed on the forum, because there are so many sources, with caveats for each one.

First choice might be government subsidies/loans - cheap(er) and few(er) strings attached.
Second might be bank funding, but certainly wouldn't be cheap - likely usurial rates for a start-up, if they'd loan at all.
Third, think private equity/venture capital, but they want control of your venture, and if you already have a venture capitalist on board, they might guide you to all other possible funding sources first so as not to dilute their control.
Fourth, with 34 world-class companies already invested in this venture, I wouldn't rule out a consortium of sorts if the project was teetering and that was what was necessary to rescue it.
Fifth, if all else fails, it's back to #3 - the original VC wouldn't let his stake evaporate for ego's sake, they'd be the ones sourcing another VC.

So no, I'm not worried about funding at all. This project will fly or fail on it's own merits, not funding - $185mio is chump change, after all. IMHO

Dan

I'm not terribly worried either. Just getting the info out that all the concern with the DOE loan is misplaced and that the project won't gate on that.

You make excellent and clear points with which I fully agree.

 

[wayne kemp]

If Paul would put 15 to 20 models on the road by Jan 1, 15 and let people sit and drive he would get the money.
Spur of the moment buying is what America does. Not all but a lot.
I live about 35 miles from the plant and haven't seen one yet.

 

[creekstone]

...in other words, the loan doesn't have anything to do with whether Elio will be or won't be able to enter production in 2015.

Really? Did you listen to the Paul Elio interview?o_O http://www.arklatexhomepage.com/sto...e-of-elio-motors/21673/kFX2yx11MEyFy7IUhyYPeg

Paul Elio, regarding the loan: "That is the majority of the money we need to get all the way to production."

Paul Elio, regarding the start of production: "It surrounds the date on funding. So, if there is a delay in the loan application, then that would delay production. If there is a delay in funding, that would delay production."

Look, I'm as optimistic as anyone. I've said repeatedly "I like their odds". I want this to happen (and think it will); but I'm realistic in my expectations as to when. If the loan gets delayed, production WILL get delayed. If the loan doesn't get approved, production WILL get delayed (and most likely, Paul Elio will source funding at the expense of some long-term control.) Either way, I still think the Elio will happen.

I find it ironic that my postings months ago were focused on providing facts to counter the Elio bashers; now I'm using facts to temper irrational exuberance.

 

[goofyone]

Really? Did you listen to the Paul Elio interview?o_O http://www.arklatexhomepage.com/sto...e-of-elio-motors/21673/kFX2yx11MEyFy7IUhyYPeg

Paul Elio, regarding the loan: "That is the majority of the money we need to get all the way to production."

Paul Elio, regarding the start of production: "It surrounds the date on funding. So, if there is a delay in the loan application, then that would delay production. If there is a delay in funding, that would delay production."

Look, I'm as optimistic as anyone. I've said repeatedly "I like their odds". I want this to happen (and think it will); but I'm realistic in my expectations as to when. If the loan gets delayed, production WILL get delayed. If the loan doesn't get approved, production WILL get delayed (and most likely, Paul Elio will source funding at the expense of some long-term control.) Either way, I still think the Elio will happen.

I find it ironic that my postings months ago were focused on providing facts to counter the Elio bashers; now I'm using facts to temper irrational exuberance.

I believe you are correct. We know Elio Motors has, or is, exploring alternatives however it does appear that for now they are waiting to hear the results of the loan application before moving forward along other paths. My guess is that this is likely what the EM board and EM investors have decided is most prudent as they likely do not wish to dilute their current investments via additional funding, or put further investment at risk until they hear what the results of the loan applications are.

My guess is that the only major funding work happening currently are the sale of equipment from the plant and also there will likely be some work on amending the CAFE regulations which may be ongoing however likely will not really get moving until after the new year as DC is in the middle of an election cycle right now.

Hopefully EM has the secured the funds to complete the vehicle development and testing program as this is really where they need to get things going. EM actually has a bit of time on their side as they have until about the middle of next year to get the funding and still make it into production by the end of the year however if the vehicle is not ready for production it really does not matter.

 

[tonyspumoni]

Look, not every word that comes out of Paul's mouth is a golden nugget of truth. He also said before that he didn't need the loan but was applying for it because, as CEO, it was the right thing to do - the same line of reasoning Judge Smales uses in Caddyshack when he says "I didn't want to send them to the gas chamber. I did it for their own good." Sure his funding situation is in flux and by all means we ought to lend more weight to recent utterances than more ancient ones, but if he genuinely believes that he has to have the loan to get into production, then odds for getting to production in 2015 are very long one indeed. His comments in the interview are all the more worrisome because instead of just wanting loan, now he says he actually needs it, which says that his private equity options are not so great. I sense in this a struggle for power - if Paul gets the loan, existing equity stakes and the power those stakes accrete remains undisturbd. If he doesn't and has to rely on private money heck, he might not even be CEO anymore, as those who invest typically get majority seats on Paul's board.

As for DOE, let's face some reality here. First, there is no evidence for and much evidence against the idea that DOE is going to fund this next month, or the month after that or even quite possibly before the END of 2015. They have zero track record of acting this decisively even with major political players with flush lobbying groups such as Ford let alone for some guy with a great idea and a bit of moxie. Harsh, reflexive, and often unwarranted criticism of "The Feds" has de-incentivized Government Adminstrative functions from doing anything that cannot be easily defended. They will take their sweet time with this regardless of whatever pixie dust Paul is sprinkling around. Second, DOE is much more likely to ask for clarification of certain items or kill this outright than funding in Q4/2014 or Q1-Q2/2015. Third if I were DOE and I were facing harsh (and standard) criticism from Congress I would look at this and say "it's not a light duty vehicle, doesn't qualify". Otherwise Yamaha could borrow at 4% and using that 25 year amortization and build a factory here. So they'll at least have to sort this out and no amount of wish-think is going to change that. I have paid scant attention to Paul's cultivation of power political allies, but absent that I see no natural allies to help put the squeeze on DOE to 'get this done'.

Bottom line in my book? Paul better have a better funding plan than this loan or there will be no Elio's in 2015 other than the P5's.

 

[Charlie G]

and also there will likely be some work on amending the CAFE regulations which may be ongoing however likely will not really get moving until after the new year as DC is in the middle of an election cycle right now.

The ATVM Loan states that to qualify a project must be viable without additional federal funds. Initially I assumed that meant without the loan itself, but I'm starting to think they may mean other loans or federal funding. E.G. We don't want to fund if you will also require an answer from agency X about <grant application>. I wonder how the CAFE credit portion of their business model would qualify under that