8/19/2014 - Arklatexhomepage.com - Elio Applies For Dept. Of Energy Loan....

[trock59]

My Dad gave me a round tuit when I was a kid, We need to send some to DC

 

[JEBar]

What happens to EM if they get turned down? Are we done?

I've been wondering about that

Jim

 

[Charlie G]

I'm reading through the loan requirements and I found this part particularly interesting:

Projects must be “financially viable without the receipt of additional Federal funding associated with the proposed project”

• ATVM is a loan program, not a grant program. It provides “expansion capital,” not working capital

I had been assuming that their plans to get the vehicle produced relied on the loan, but it looks like technically speaking that would preclude eligibility. My assumption now is that with a loan rate of 2-4%, the reason for application is that it allows investors to use their capital elsewhere.

What I mean by that is..
Say hypothetically there were 10 investors, production took 100M to get started, and first year profits would be 400M.
If each investor put in an equal share of 10M, they would each receive 40M, a 400% return on investment. If however they "committed" the capital on a non contingent basis, basically guaranteeing that production would happen but not actually turning over the money yet - they might qualify for the loan. So say they're granted a loan for 80M. Each investor then only needs to chip in 2M. If the loan rate was the MAX of what the ATVM site quotes (4%) they could pay back the entire loan the first year at 83.2M, reducing the total profit to 316.8M. Divided 10 ways, that's 31.68M per investor - but in this scenario they only put in 2M each so that's a 1584% return on investment, not to mention if they invested the other 8M elsewhere, they'd make even MORE.

That's a very simplified version of what I'm guessing is going on, anyone with more background in things like this that could give some additional insight and/or tell me why I'm wrong?

 

[CompTrex]

Ah! The best way to make money. Use OTHER people's money! Where's my photo of Danny De Vito when I need it?

 

[CompTrex]

Ah! The best way to make money. Use OTHER people's money! Where's my photo of Danny De Vito when I need it?

Wait... Those 'Other People', ie tax payers, is me! They're going to make money off of MY money? Hmm.... o_O

 

[Charlie G]

I

Wait... Those 'Other People', ie tax payers, is me! They're going to make money off of MY money? Hmm.... o_O

In all fairness, both sides make money in the arrangement - assuming the people making determinations on the loans are doing their job.
They're loaning taxpayer money to incentivize efficiency improvements, and then collecting interest on those loans.

Not to mention, they're pushing the angle of creating jobs with loan funds - which directly benefits the population.

 

[CompTrex]

I

In all fairness, both sides make money in the arrangement - assuming the people making determinations on the loans are doing their job.
They're loaning taxpayer money to incentivize efficiency improvements, and then collecting interest on those loans.

Not to mention, they're pushing the angle of creating jobs with loan funds - which directly benefits the population.

Yeah, I know. I'm just trying to stir things up!

 

[Dustoff]

Yeah, I know. I'm just trying to stir things up!

Good job.

 

[Jeff Porter]

And I guess the follow-up question, and one that no one knows the answer to or probably wants to ask, is:
What happens to EM if they get turned down? Are we done?

We will turn to our friend C.T. when the unaskable needs to be asked! :-)

It's a good question, one that I hesitate to state guesses and thoughts. Will like to hear what GoofyOne knows and thinks.

Ok, moment of hesitation has passed. LOL! Here's what I believe based on what I've read: it's a 90% chance the answer is no, we are not done if EM doesn't get the loan.

It's not my hope, it is my belief, that EM has what they need to produce the vehicles that have been reserved so far. Does EM need more money to go beyond producing say 40,000 vehicles (calm down everyone, just pulling a number out), setting up the marshalling stations and 60 stores, and umpteen things I don't even know about? I think so.

Has EM released any information about potential funds coming to them in the form of investments, loans, grants? No. Paul Elio has said he's confident, but what else would he say? He's said he's turned down big-time investments because the providers want to change Paul's plans.

 

[Charlie G]

Yeah, I know. I'm just trying to stir things up!

Can never be too sure with some of the folks on here