Probability Of Success Of Investment Concerning Timing Of Various Down Payment Options.

[Chris F]

I see several people with with $100 all-Ins planning to upgrade to $1000 later. I personally see this as the worst of both worlds:

1. I could get the same result with none of the initial risk. I.e. You decide to go $1000 all-in in 6 months. that same day I decide to do the same. I get my car the same time as you, but I didn't take the initial risk you did.

2. Because you 'have skin in the game." it could make you more likely to upgrade if you shouldn't. I.e. the company is still questionable in 6 months, but clearly looking like it will produce. It might be temping to go ahead and upgrade hoping to get a car. (Not everyone thinks this way but many do. I.e. the idea of something going to waste is a very strong psychological effect. The instinct of most people is to try and recover a "sunk cost".

- Everyone has their right to do as they please though. I realize many of these are sorta like a 'donation'. I.e. Hoping to help the companies chance of success.

*I disagree with the concept that all-in to show the company or banks that you are serious in following through with the purchase. a $1000 refundable deposit is over 14% of the final price. refundable or not I can't imagine someone putting that up without the intent of following through. (I.e. the major things I see causing someone to back out are: dissatisfied with final product, lack of patience, and personal financial reasons) Amount is extremely important in these decisions. For example I'd have a lot more faith in a $1000 refundable deposit than I would a $1 all in deposit. But it is true The "skin in the game" / "sunk cost" does have the tendency to feel more committed. In the end the bank will choose how to weigh each of these.
By the way, every deposit does cause 'skin in the game' so to speak. If the time frame was 2 years the $1000 deposit would forgo $100 in lost interest at simple interest rate of 5%. (This makes a good argument for the $100 all-in option, over a $1000 refundable).

Just curious anyone do a $250 or $500 all-in? I'd love to hear the reasoning. I really have trouble wrapping my mind around the decision behind either of those.

Seems to me that the purposes of the non-refundable deposit are to provide a little working capital to Elio, but also to generate interest in other buyers and financiers. I doubt Elio is talking to banks in the traditional sense. What they need is equity investment, which is probably all private for the near term. Don't hold your breath for an IPO before vehicles start being delivered.

 

[Chris F]

I seem to think that was the plan, get enough people to go all in for a $1k and have the first year of production(68K) sold out. The creative way to finance the car, I don't see it happening for many customers. Money attracts money. Just wonder how much they are burning through. How much it cost to secure lease for plant( I have to believe Racer Trust wanted a deposit). Is Mr. Elio getting a salary now (I would guess not), how many people work for EM?

Looks like he raised $250,000 in investments that are required to be reported. Not all offerings are required to be reported, so we don't know exactly how much he has raised.

 

[3 Card]

Agreed. Putting down a down payment doesn't make you an investor. Elio will probably go through a couple more rounds of financing before it sells a vehicle. I think the purpose of much of the promotion now is NOT to get deposits but to get the financing types to take notice. The deposits are to prove to the VC's that there is a market for the product and to finance the PR, mainly.
Chris from DE

I used the word bank as an example only.. A business uses capitol funding for inventory etc..It's called floor planning with a credit limit..And by no means do I think nor did I say my 2000 bucks is an investment in Elio.. I said thousands of people putting up 1000 dollars as a DOWN PAYMENT is a bettter indication about interest in the product than having a business plan with only 100 bucks from potential buyers..Now Elio did not do a credit check on anyone before accepting their reservation so there are going to be many who will not qualify for finance who have put money down, others will drop out and some will die before the Elio goes in to production.. I've already noticed one or two in here for personal reasons wanting to sell their production spot..Using the gas credit card option to pay for your unit will still require a person to qualify.. This was a red flag for me putting money down , Elio did not qualify anyone before accepting money, no doubt there will be law suits if and when this comes to delivery time..Seems they made it sound too good for everyone and anyone to purchase a new car..I don't have to remind you about the old saying "if something sounds to good to be true"...Fortunately I do not have to worry about securing credit or paying for mine but they should have disclosed that credit worthyness will be required before asking for money..

 

[3 Card]

Seems to me that the purposes of the non-refundable deposit are to provide a little working capital to Elio, but also to generate interest in other buyers and financiers. I doubt Elio is talking to banks in the traditional sense. What they need is equity investment, which is probably all private for the near term. Don't hold your breath for an IPO before vehicles start being delivered.

Oh geez.. It will take years before Elio can go public.. Chrysler couldn't even today with Fiat merge they are still a private LLC..GM went public again , How I don't know , their stock ipo-ed about 70 bucks a share, now look where it is at..

 

[Jim H]

Obviously, there is an increasing interest in Elio based on the growing number on the forums and the number of reservations. I'm still waiting for my number and guess it will be in the high 3400's or low 3500's and that just represents those of us who are all in for $1K. Now there are more than 13,500 people who have made deposits in one form or another. Many like me made incremental increases in their amounts until they reach that magical $1K. That should send a solid message to investors that the public wants this vehicle.

 

[creekstone]

Funding is first and foremost the fundamental issue here which EM has not discussed let alone a hint of investors.

From a December 2013 article:

"He (Paul Elio) says he has raised $47 million...

All he needs is $200 million.

That's what he says he'll need to start production late next year. He says continued interest in the car will draw investors. "Money will come in when we need it."

http://www.stevenspointjournal.com/usatoday/article/3880337