Atvm News - 2018 Fed Budget Proposal

[RSchneider]

Elio has been a great PR firm up until the last few months. If they were not a great PR firm, then they would have never got all of those reservations. You can get a few people behind you if you have a great idea, but to get tens of thousands to do that, it takes a good PR machine.

 

[Ekh]

Great addition to the discussion airforceguy6 .

I would add it is only a proposed " Budget Blueprint to Make America Great Again "
I would also wonder if this means this administration will not give a fair review of Elio's ATVM application.

" Eliminates the Advanced Research Projects Agency-Energy, the Title 17 Innovative Technology Loan Guarantee Program, and the Advanced Technology Vehicle Manufacturing Program because the private sector is better positioned to finance disruptive energy research and development and to commercialize innovative technologies."

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/2018_blueprint.pdf

More statements that are more ideological than factual from those wonderful people who think C02 is NOT the primary cause of climate change. This statement of doctrine may hold up for small-scale operations, but not for areas where the entry barriers (start up costs) are so high, and where the impact is so great.

While it is possible that EM may succeed without gov't assistance, and am in fact aware of some very real possibilities in that direction, the job is quicker, easier, and more certain by far if the ATVM loan is approved. Note -- the ATVM program is still extant. It has at least a year to run, so .... don't bail out too soon.

 

[Ekh]

The funds for the loan are not paid out in a lump sum on loan approval. They are drawn out in smaller payments over the life of the loan. Just because you get approved for $186M doesn't necessarily mean you get all $186M in day 1. I don't know what would happen if you got loan approval and then the program was canceled before you got all (or even any) of the money. Would it stay allocated and available because it was already committed? Or would it just be taken back, and too bad for you?

Additionally, Elio doesn't directly see a dime of that money. It goes entirely to suppliers and contractors who set the plant up and get it running. Some part may go towards start up labor costs as well (I'm not sure on that last point). So EM sends the bills to whatever firm is administering loan disbursements for the Feds, and THEY pay the bills. So it's impossible for EM to take the money and run. It does get allocated as expenses accrue, but never touches the EM bank account.

The real power of the ATVM loan is that it makes investing in EM a far safer proposition -- and given the 425 million book of business (65000 reservations, ignoring options), paying it back inside of a year is easily done... so other lenders and investors will be quick to jump on board. Also, the share price will go right up to $25 to $50.

The ATVM loan is critical. But it truly is not the only route to success.

 

[Elio Amazed]

I for one would rather hear one positive comment from Elio, than most the speculation on this forum. I said Most!

It seems rather obvious that they are trying the best they can to be positive in the momentums...
When they don't have anything positive and of any substance to work with. Gotta give them that.

 

[Elio Amazed]

Really tired of the old cloak and dagger "alluding to things known that can't be talked about because of the the SEC" thing.
Either say it or not. One man's "restrained" tease could easily be construed as another man's non-disclosure violation.
It's gone on for a very long time. Others have sung the same song as well.. And always with the same results.

It's getting to feel more like manipulation from the top and a bad urban legend than anything else.
Or maybe a little like the X-files. I feel like I should be asking Mulder for a link.

But what would be the point. Just sayin'.

 

[Samalross]

Additionally, Elio doesn't directly see a dime of that money. It goes entirely to suppliers and contractors who set the plant up and get it running. Some part may go towards start up labor costs as well (I'm not sure on that last point). So EM sends the bills to whatever firm is administering loan disbursements for the Feds, and THEY pay the bills. So it's impossible for EM to take the money and run. It does get allocated as expenses accrue, but never touches the EM bank account.

The real power of the ATVM loan is that it makes investing in EM a far safer proposition -- and given the 425 million book of business (65000 reservations, ignoring options), paying it back inside of a year is easily done... so other lenders and investors will be quick to jump on board. Also, the share price will go right up to $25 to $50.

The ATVM loan is critical. But it truly is not the only route to success.

You are counting $425 million income but are not counting expenses. They will likely lose money from each All IN ,due to the fact that they spent all the deposit and still owe the bonus. If they can make $500 on each car they sell it would be amazing. Of the $425 million sales they would be lucky to break even.

 

[Bookly]

You are counting $425 million income but are not counting expenses. They will likely lose money from each All IN ,due to the fact that they spent all the deposit and still owe the bonus. If they can make $500 on each car they sell it would be amazing. Of the $425 million sales they would be lucky to break even.

This, in a nutshell, explains the improbability that Elio can attract its needed $300+ million to start production. How does it get paid back? How could an investor imagine a gain?

Elio has 65,000 reservations, based on delivering a car for about 7k. That sounds like a benefit, but it is also an overwhelming anchor. Making money at that price mandates selling over 200,000 cars a year, a number that isn't even 25% matched by small cars made by companies like Ford & Chevy. To be kind, it just isn't very probable. Selling Elios at a higher price is a simple answer, but all those reservations guarantee a price.

It is a deep hole to dig out of.

 

[Jeff Bowlsby]

Maybe EM needs to rethink their business model and emulate Tesla and others. Offer the stripped model...maybe not right away but eventually. Come to market first with a vehicle that utilizes most of their R&D - the three-wheel aero chassis - but is positioned as more of a top end vehicle. More power (less mpg), more luxurious - perhaps solely electric power - all for a higher price which has a higher profit margin that they can reinvest back into the company. I am imagining this to be in the $12-18K range, still a killer deal in the marketplace. That additional capital can eventually fund the basic model that we know and love today.

 

[Frim]

Elio has been a great PR firm up until the last few months. If they were not a great PR firm, then they would have never got all of those reservations. You can get a few people behind you if you have a great idea, but to get tens of thousands to do that, it takes a good PR machine.

If the proof of your product is not science or fact, but the number of people that you can convince that you are right, you do not have a science or product. You have a religion.!!

 

[Rob Croson]

You are counting $425 million income but are not counting expenses. They will likely lose money from each All IN ,due to the fact that they spent all the deposit and still owe the bonus.

You've got some wonky assuptions here. Some quick spreadsheet action will show that in a near-worst-case projection, EM will pull in at least* $450M if they sell 65k vehicles.
Base assumptions:
1) All 65k reservations make a commitment to purchase, locking in a price of $7,000. (There is no way this is true. Could "want-ins" even lock in?)
2) 80% of reservationists are non-refundable (I believe EM has alluded to it being higher), and their deposits are deducted from the sale price.
3) All "All-in" deposits of less than $1,000 are at the $500 level (No way this is true...)
4) All "All-in" deposits are given a 50% bonus match (We know that many reserved at 25%.) All deposits are deducted fro the sales price.
5) For want-ins, EM gets full credit for deposits, as they will be released from escrow to EM on delivery of the vehicle
6) 90% of reservationists opt for the automatic transmission (National average is 93%?)
7) No one buys any other options. (Yeah, right...)

Given these hopefully pessimistic assumptions, EM will bring in about $454M in sales.

If "Want-ins" couldn't lock in the $7,000, then that sales value goes up to $457.5M.

If the average option price is $1,000 per vehice (not including the transmission), that's an additional $60M in sales.

If they can make $500 on each car they sell it would be amazing. Of the $425 million sales they would be lucky to break even.

Keep in mind that they set these prices knowing their approximate sales volumes. Just because you can't figure out how they are going to do it (I can't either), doesn't mean they can't. I don't know how to design an engine, but people do it all the same.