Paul Elio Promises Reg A+ Investors 25 E-series Test Vehicles...

[RSchneider]

If it takes $500 million to get to production, what good will $2.5 million from Overstock do? Why would they invest such a small amount, seems like just throwing money away. Or am I missing somehing?

Pay off debt that's been accumulating since they have little if any revenue for at least over a year.

 

[Rob Croson]

Thanks for your explanation Ty.

I imagine the check written to Rousch was substantial in itself.

Rousch was involved in the design switch to stamped - right?

That was never actually stated by EM, AFAIK. Roush was contracted to help with "NVH": Noise, Vibration, and Harshness. They may have told EM that their welded-tube frame would produce undesirable results, and convinced them to switch to the stamped frame. That would all be assumption, though.

 

[Rob Croson]

I suspect the IPO was to pay for that unibody and hopefully to make the 25 cars because up to that point and even for a short time afterwards, they were still talking all about a tube frame and plastic body.

By "IPO", are you talking about the Reg A+? If so, that wouldn't make sense. If they wanted to use Reg A+ funds to switch to unibody, then first they would have said so. And second, they wouldn't have built several E series using the welded tube frame. Those tube frame prototypes are wasted money. I can't honestly believe they would do that.

The more likely theory is that they used the RegA+ funding to hire some consultants (Roush, most likely?) to help them finalize things. And those consultants were all "LOL WTF? This is tube frame shit is way too epxensive to manufacture, will produce inadequate quality and consistency, and will make for a loud and sloppy ride." Unfortunately, in an attempt to save time and money, they had already started fabricating the tube frame chassis for the E series. So you end up with several incomplete, wasted prototypes. And the unplanned expense of the re-engineering effort to stamped frame left them short on funds to continune. Way more likely than some conspiracy theory cover up.

If you look at the R&D costs, they spent $7.4M over two years (2014-2015) yet spent $20M in 2016. Maybe if they actually raised the $25M which they were hoping to do, then this would be a moot point. They needed $12M for the 25 cars which would have left them with $13M to finish the design on the chassis and body.

They didn't need $25m. They needed ~$12.5m. Reg A+ rules state that if you don't get at least half your max asking amount, then you give all the money back and get squat. So if you think that you absolutely have to have $12m, and nothing less than that will do you any good, you have to ask for double that amount.

 

[RSchneider]

So they started in 2009 with the design parameters of a tube frame and plastic body. Then 7 years later it took a consultant to tell them that it's not the way to go. If that's the decision making process within the Elio motors corporate structure, then they are doomed. Elio Motors was going against an industry standard and literally bought lots of stamping equipment in 2013. I just can't see how that would make any sense at all. Remember, Elio was all about "off the shelf" and using less parts (i.e. one hood latch instead of two) yet they were going to go with a manufacturing process that nobody uses on the planet when it comes to volume and price.

As for the money, it was underwritten for $12M, thus they raised that minimum amount. I still find it hard to believe that they were clueless about a unibody and steel body until mid February 2016 and somehow they cranked out a unibody design, tooling and prototype parts for the car in 3 months. I can't get a motor mount done in that period of time but Elio accomplished a brand new chassis design from scratch in that same period of time? If they have that ability, then the car would have been done in 2012 and we'd have Elio 3.0 today. Rapid prototyping is a great thing but it does have it's limitations.

Again , I'm not buying it because if Elio or ESG engineering can pull off those kind of designs in that period of time, they would be dominating the automotive engineering landscape today. Roush would literally be out of business because they can't work that fast by a long shot.

 

[Rob Croson]

So they started in 2009 with the design parameters of a tube frame and plastic body. Then 7 years later it took a consultant to tell them that it's not the way to go. If that's the decision making process within the Elio motors corporate structure, then they are doomed. Elio Motors was going against an industry standard and literally bought lots of stamping equipment in 2013. I just can't see how that would make any sense at all. Remember, Elio was all about "off the shelf" and using less parts (i.e. one hood latch instead of two) yet they were going to go with a manufacturing process that nobody uses on the planet when it comes to volume and price.

That is hard to argue against. Some silo/blinders issues going there, definitely. Inertia and blinders can cause a lot of problems, where you continue with what you have, because you think it can be good enough to get the job done. Sometimes it takes someone outside the organization, and someone for whom you have a lot of respect, to slap some sense into you.

 

[Ace]

So they started in 2009 with the design parameters of a tube frame and plastic body. Then 7 years later it took a consultant to tell them that it's not the way to go. If that's the decision making process within the Elio motors corporate structure, then they are doomed. Elio Motors was going against an industry standard and literally bought lots of stamping equipment in 2013. I just can't see how that would make any sense at all. Remember, Elio was all about "off the shelf" and using less parts (i.e. one hood latch instead of two) yet they were going to go with a manufacturing process that nobody uses on the planet when it comes to volume and price.

As for the money, it was underwritten for $12M, thus they raised that minimum amount. I still find it hard to believe that they were clueless about a unibody and steel body until mid February 2016 and somehow they cranked out a unibody design, tooling and prototype parts for the car in 3 months. I can't get a motor mount done in that period of time but Elio accomplished a brand new chassis design from scratch in that same period of time? If they have that ability, then the car would have been done in 2012 and we'd have Elio 3.0 today. Rapid prototyping is a great thing but it does have it's limitations.

Again , I'm not buying it because if Elio or ESG engineering can pull off those kind of designs in that period of time, they would be dominating the automotive engineering landscape today. Roush would literally be out of business because they can't work that fast by a long shot.

Intention to build the e-series was announced Jan 12th, 2016:
https://www.eliomotors.com/elio-motors-gains-momentum-starts-e-series-prototype-build-engineering-testing-vehicles-key-step-prior-to-production/

Roush was announced as a partner on March 18, 2016:
https://www.eliomotors.com/press-release-elio-motors-adds-world-renowned-roush-as-lead-engineering-partner-on-blue-chip-auto-supplier-team/
On April 29th, 2016, there was a blog post about finalizing the chassis design with the help of Roush:
https://www.eliomotors.com/e-series-engineering-completed-2/
Supposedly this was done BEFORE the start of assembly of the e-series, but clearly Roush was not brought on until two months in. This seems imply the had made the chassis design changes only after partnering with Roush but before starting on the e-series builds. You are right though, that does seem like a short amount of time to make sweeping changes from tube to stamped design. It's possible Elio had already been working on it and Roush helped finish it out. They decided to build in Livonia, MI where none of the stamping equipment was available for some reason. There's also a blog post in December of 2016 that says the E1C was built with 80% soft tooled parts, which I think means they were all molded steel parts using silicone molds. The parts they used to assemble the e-series could pretty much look the same as what they intend to stamp. That December post also says; "The E1c also features many improvements from the P5, such as the unibody frame..."
https://www.eliomotors.com/milestone-1-e-series/


The announced change to steel body outer panels came in August of 2016:
https://www.eliomotors.com/refinements-to-the-body-of-the-elio-elio-momentum-v67/

I originally thought they started the e-series with tube frame and mid-way decided that was not going to work, therefore stopped making them. But after digging into it some more, I see I was wrong about that, which makes it even more of a mystery to me why completing all 25 of the promised e-series cars ground to a halt so quickly.