Are There Documented Empirical Marketing Studies For Elio Motors?

[Aprilia]

Greeting from the Woodlands (30 miles north of Houston).

Paul Elio has stated the consumer demand for the Elio vehicle should support a yearly production target of 250K units.
.
Has Elio Motors ever commissioned an independent market study to validate his claim?

Without empirical data to backup a 250K annual demand scenario, the 250K figure would seem to be hugely speculative.

 

[Jeff Porter]

Hi Aprilia,

Welcome to the forum!

I hadn't heard or read Paul saying that demand will support 250k units / yr. I had heard / read him saying that he felt that producing 250k units is within reach. But, you may be right. Where did you hear or read that he said that?

 

[Aprilia]

Thanks Jeff!

The reason I find the 250K projection so pivotal, Paul has stated the $7,000 base price estimate (give or take) is based on spreading the unit costs of 250K units annually.

So if Elio Motors sells only 50K to 100K units a year (which would be a home-run in my books), that would likely necessitate raising the base price to $12,000 (give or take) to support the higher costs associated with selling less units.

At $12,000, the value proposition of the Elio changes dramatically .

I would hope Paul has hired an outside consumer consulting firm to validate his 250K run rate, it's the most important factor in his $7,000 price offering!

 

[Ekh]

The production capacity of the plant is being sized for 250,000 units per year, 2 shifts producing 250 cars per shift. This is a production number, not a demand estimate.

There are no formal marketing studies of which I'm aware. At some point there will have to be, certainly for Elio 2.0. Such studies get into trade-offs of how much does X feature mean to you, and what will you pay for it? Or, what would you give up to get X feature: mpg, cost, safety, etc. And even then, they're expensive and not completely accurate predictors of demand.

Paul's empirical data at this point is that 50,000 people have plunked down money to buy a car that doesn't exist yet. Thousands more have thought this risky stock is worth $600 minimum per investor. So far, that's evidence of demand.

What's less clear is how much the price of gas affects demand. The reality is that gas savings are only a small part of the reasons an Elio is a Really Good Deal, but they are the easiest to see and to sell. The real reasons that Elio is a Good Thing are 1. Lower carbon footprint 2. Cheaper to own and operate (much cheaper) -- lower maintenance cost, lower insurance costs, simple to repair 3. Lower taxes (in some states) and lower financing charges.

The Elio is so cheap to buy and operate that it will save buyers as much as $20,000 PER YEAR compared to buying and operating a standard $30,000 sedan

The savings are dramatic. So yes, gas price is the most obvious thing that can depress (or boost) demand, but the "VALUE PROPOSITION" is terrific even without $4.00 gas. And yes, virginia, we'll be seeing that within a year or so -- and higher.

 

[RUCRAYZE]

We continue to omit the incentives in these and other calculations.
My take, the first 50k+ will be sold @ the 6.8k - a price increase and the removal of the incentives will still push sales when they're on the road.
Like other businesses a "lost leader", get 'em in the door

 

[Aprilia]

I'm perplexed on why 50K advanced reservation's over 4 year's equates to the need to produce 250K units on a yearly basis, where's the empirical data to back up the consumer demand for 250K yearly units.

Does this mean production of 100K annual units (which is a huge number of vehicles) would not be considered a wonderful success story?

 

[Trusting]

Greeting from the Woodland's (30 miles north of Houston).

Paul Elio has stated the consumer demand for the Elio vehicle should support a yearly production target of 250K units.
.
Has Elio Motors ever commissioned an independent market study to validate his claim?

Without empirical data to backup a 250K annual demand scenario, the 250K figure would seem to be hugely speculative.

You might find it interesting if you searched this forum for "woodlands".

 

[RUCRAYZE]

I don't know if it can be equated, but 50k folks who hope/believe in the project are taking a Big gamble. When they are zipping down the road, I think there will be the same reaction when VW came to America, folks seeing them on the road and all the great ads they ran- they were VERY cleaver- Loved the one floating the VW.
i.e. they'll sell themselves. AND current low oil prices are a blip,

 

[slinches]

I think I remember a mention at some point that they did commission some market studies early on that led EM to pursue immediate high volume production. But I don't have a reference for that.

The most recent and concrete statement I can find on the subject is in the Reg A+ offering circular:

Our management believes that based on the public response received to date, selling 250,000 vehicles per year at the $6,800 retail price is achievable

 

[Jeff Porter]

Thanks Jeff!

The reason I find the 250K projection so pivotal, Paul has stated the $7,000 base price estimate (give or take) is based on spreading the unit costs of 250K units annually.

So if Elio Motors sells only 50K to 100K units a year (which would be a home-run in my books), that would likely necessitate raising the base price to $12,000 (give or take) to support the higher costs associated with selling less units.

At $12,000, the value proposition of the Elio changes dramatically .

I would hope Paul has hired an outside consumer consulting firm to validate his 250K run rate, it's the most important factor in his $7,000 price offering!

Yep, big thumbs up! The more they sell, the closer the price could get to $6800. This is a subject that can go in about 5 different directions, so just focusing on your original statement: EM "wants" to produce 250k vehicles during the first year of production. That much we know for sure. Other things we know for sure: the stated list price has been confirmed at about $7300, and there are more than 50k reservations right now.

We don't know what the list price will be if they have for example 70k reservations when production starts.

On why EM wants to produce 250k in the first year, when they have 50k reservations at this point... I'm with you, I have no idea. But I think if EM could wave a magic wand, they are saying that they can meet demand for 250k vehicles during the first year. That's the dream scenario.

For your success story question, I think EM is a success story if they produce 1000 vehicles in the first several weeks. Others will have multiple different opinions for sure. :-) I'm certain Paul wants to pay off the company's debt, that's a success story for him.