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Atvm News - 2018 Fed Budget Proposal

Coss

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There's an old (2012?) Excel workbook (that seemed to be an internal Elio document) floating around that indicated they were shooting for a 25.8% gross profit margin.
I heard that the profit in each vehicle was supposed to be $1,000 , so out of that $7,300 the true cost would have to have been $6,300.
That's a pretty thin slice to get out of it.
 

Johnny Acree

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In 1990 Toyota launched the Lexus brand with the LS400 with a base price of $35,000.00. By 1994 the base price was over $50,000.00.
Back then, my mother was thinking about buying one. I told her, if she wanted a Lexus, she better go a head and buy one now, because they won't ever be any cheaper.
Lexus was even sued for selling them under cost!
People will pay for quality, but you have to prove quality first, even Toyota.
So, if you want an Elio for $7,300.00,,,,,
 

RSchneider

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I can't imagine that anyone would do a $1K profit on a car (used car dealers make more than that). All it takes is a recall or assembly line rework to turn that into a negative. The issue with Elio is they have one product for one market. This is not like where VW can get hammered by the US market because of the TDI and people thought they were going to go out of business. VW sells all over the world and lots of different products. For Elio, it's a huge risk because one thing going wrong can turn into a real dilemma. If the car is not under the NHTSA umbrella, it'll be under the CPSC, so there's no avoiding that whole mess if it happens.

Elio is also thinking that they will be selling 250K/year. They will have a real problem if the sales are only 50K. You can't turn the plant and supplier network like it's a light switch. You might be able to get the best suppliers on the planet to make parts for you but that doesn't mean that they don't play hard ball. For a startup and existing car companies, they price product on how much you buy. Buy less, you pay more. I haven't even got into the whole issue with real estate for their showrooms and whatever crops up with Pep Boys and other factory authorized service centers.

This business plan can work and make Elio millions as long as everything goes perfect. As I've seen, there's not one product that has ever been launched without a problem (maybe except for the pet rock but someone somewhere probably complained that it bit them).
 

Samalross

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I can't imagine that anyone would do a $1K profit on a car (used car dealers make more than that). All it takes is a recall or assembly line rework to turn that into a negative. The issue with Elio is they have one product for one market. This is not like where VW can get hammered by the US market because of the TDI and people thought they were going to go out of business. VW sells all over the world and lots of different products. For Elio, it's a huge risk because one thing going wrong can turn into a real dilemma. If the car is not under the NHTSA umbrella, it'll be under the CPSC, so there's no avoiding that whole mess if it happens.

Elio is also thinking that they will be selling 250K/year. They will have a real problem if the sales are only 50K. You can't turn the plant and supplier network like it's a light switch. You might be able to get the best suppliers on the planet to make parts for you but that doesn't mean that they don't play hard ball. For a startup and existing car companies, they price product on how much you buy. Buy less, you pay more. I haven't even got into the whole issue with real estate for their showrooms and whatever crops up with Pep Boys and other factory authorized service centers.

This business plan can work and make Elio millions as long as everything goes perfect. As I've seen, there's not one product that has ever been launched without a problem (maybe except for the pet rock but someone somewhere probably complained that it bit them).
When they estimated profit they were probably talking about second year production. Unlikely any profit with first year teething problems.
 

Rickb

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I can't imagine that anyone would do a $1K profit on a car (used car dealers make more than that). All it takes is a recall or assembly line rework to turn that into a negative. The issue with Elio is they have one product for one market. This is not like where VW can get hammered by the US market because of the TDI and people thought they were going to go out of business. VW sells all over the world and lots of different products. For Elio, it's a huge risk because one thing going wrong can turn into a real dilemma. If the car is not under the NHTSA umbrella, it'll be under the CPSC, so there's no avoiding that whole mess if it happens.

Elio is also thinking that they will be selling 250K/year. They will have a real problem if the sales are only 50K. You can't turn the plant and supplier network like it's a light switch. You might be able to get the best suppliers on the planet to make parts for you but that doesn't mean that they don't play hard ball. For a startup and existing car companies, they price product on how much you buy. Buy less, you pay more. I haven't even got into the whole issue with real estate for their showrooms and whatever crops up with Pep Boys and other factory authorized service centers.

This business plan can work and make Elio millions as long as everything goes perfect. As I've seen, there's not one product that has ever been launched without a problem (maybe except for the pet rock but someone somewhere probably complained that it bit them).
The biggest issue facing all the new three wheeler vehicle startups, beyond the lack of the engineering vehicle 'validation' that roadblocks public or private venture capital production funding, is 'no proven market acceptance' of an enclosed three wheeler commuter vehicle with an internal combustion or pure electric drive train. High risk for all the new startups, the big money venture capitalists, the small investors, and the all-in reservationists alike.
 

skygazer6033

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Something to keep in mind also, out of that $7300 EM has already collected $1000 from 22000 or so reservationists plus $500 to $850 in bonuses plus $300 for purchace commitment. Seems to me the first 22000 will be sold at $500 to $850 below cost. How does that work?
 

RSchneider

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Something to keep in mind also, out of that $7300 EM has already collected $1000 from 22000 or so reservationists plus $500 to $850 in bonuses plus $300 for purchace commitment. Seems to me the first 22000 will be sold at $500 to $850 below cost. How does that work?
The key is cash flow. You can still lose money but as long as you are bringing in a good amount of money, you can survive. I think that's the major problem with Elio right now.

Without anything coming in, you do get to the point where even the IRS starts to take a look at what you are doing. This happens with many startups that the owner is taking their passion and turning it into a business. They can get away with it for about 3-4 years but then there some a point where the IRS will look at it as a hobby as opposed to a business. Thus, writeoffs, depreciation and other things will not be accepted. I know Elio is a bit more complex than that but there is a time where you need to see some sort of income where is reasonably close to what your expenses are. So far, the Elio expenses are way in excess as compared to what is coming in for real sales.

If Elio could start delivering cars and still lose X amount of dollars per car, at least money is coming in. You don't want it to cost you $20K for every $7K car you sell but even if it's $10K for every $7K car you sell, you can get away with it for a while as long as you are getting that delta smaller over time. Just look at Tesla, if it wasn't for the cash flow, I could never see that they would have made it further than 2015. Since they got the ball rolling, that delta gets smaller and smaller. Elio just needs to get the ball rolling.
 

'lio

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RSchneider

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That would be actually very good. Auto makers usually have an under 6% profit margin. See this for examples of profit margins across industries: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html
Remember. Existing automotive manufacturers are diversified among various segments in many markets and have a multitude of products. As for Elio, one product for one market and pinning the hopes that it works. A manufacturer might lose money on certain products but make a boatload on others. There's a reason why the automotive industry makes "halo" cars. They get the brand great press even though that particular product loses money. Elio doesn't have that luxury. In the end, 6% sounds great but you have to look further beyond that.
 

Marshall

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The biggest issue facing all the new three wheeler vehicle startups, beyond the lack of the engineering vehicle 'validation' that roadblocks public or private venture capital production funding, is 'no proven market acceptance' of an enclosed three wheeler commuter vehicle with an internal combustion or pure electric drive train. High risk for all the new startups, the big money venture capitalists, the small investors, and the all-in reservationists alike.
The innovator has always had to prove it. There's no surprise there.
 
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