The Bottom Line

[Bert]

True, but pre orders can more than make it possible to profit from the start.
The question remains, will they take a loss (IF they have to), in order to fill the pre orders?

 

[goofyone]

I will have to find the exact numbers later, as I really should be working now , but Elio Motors actually broke it down for Caddo Parish. EM has roughly $1K in profit and another $1K in other business expenses and warranty insurance built into the retail base price. This means that the estimated cost would be under $5K to build the vehicle including materials, labor, and assembly plant overhead however this is at a full production rate.

During the first year EM will be running at reduced efficiency levels and giving incentives so they are likely breaking even or losing slightly on the base vehicle in getting this vehicle to reservation holders but of course they are doing this because tens of thousands of these vehicles rolling off the assembly line and down a street near you is great marketing for an all new vehicle company.

Take notice that I wrote break even or lose a little on the BASE vehicle. This does not necessarily mean that most vehicles will be sold at a loss as EM still cold turn a profit on the sale of options and accessories as well as getting a cut from any vehicle financing deals they make be it traditional financing or their credit card financing plan.

Having written that the reality is that even if they are profitable per vehicle in relationship to their targets EM as a company will very likely lose money in the first two years anyway. They will simply be spending a lot of extra money to get everything up and running as well as needing a big advertising campaign to expose buyers to the brand.

 

[Ekh]

Let's see if we lose money on every vehicle we can make it up in volume!
I love accounting!

(Z... this is a joke)

Except that I once heard a singularly stupid CEO say it and mean it. This particularly dumb bunny got onto the board of the local utility co and stayed there adding lots of value for another 12 years until they got bought out. The Peter Principle at work. One shudders.

 

[Kuda]

Snipped: Having written that the reality is that even if they are profitable per vehicle in relationship to their targets EM as a company will very likely lose money in the first two years anyway. They will simply be spending a lot of extra money to get everything up and running as well as needing a big advertising campaign to expose buyers to the brand.

There is more than one MBA out there to attest that most start-ups
don't break even until years three to five...............If the "Cafe Credit"
scenario plays out, Elio will be ahead of the curve...............

 

[Kuda]

Yeah, like getting motorcycles eligible for CAFE credits. That's a BIG loophole!

FYI: http://elioowners.com/search/845300/?q=cafe+credits&t=post&o=date

 

[Jeff Porter]

It seems evident that Paul Elio and his decision makers have had the plan in place for a few years: sell a high quantity of quality vehicles at a low price. Elio Motors on Facebook has said over and over, that there is profit margin in their base price of whatever it is when last we heard, $7100 - $7300.

Many of us wonder and question how EM will make money on a vehicle at such a low price. Then we convince ourselves that EM can't do it, and to make ends meet they will raise the base price with short or no notice.

There should be no fear in the idea that EM might lose money in the first two years. It's entirely possible that they might lose money, but years 3 and 4 should be very good for them. :-)

You heard it here first: just a SWAG, gas prices in 2019 will be more than $4.75 for a U.S. average. Today? It's $2.48. Six months ago it was $3.67.

All of THAT said, I would like to say how thankful I am that gas prices are down.

 

[goofyone]

There is more than one MBA out there to attest that most start-ups
don't break even until years three to five...............If the "Cafe Credit"
scenario plays out, Elio will be ahead of the curve...............

FYI: http://elioowners.com/search/845300/?q=cafe credits&t=post&o=date

Thanks for posting that as if the CAFE credit idea works out this would definitely make a huge difference in EM's bottom line. It would also give one or more of the major automakers a good reason to work with and not against EM.

 

[Kuda]

Thanks for posting that as if the CAFE credit idea works out this would definitely make a huge difference in EM's bottom line. It would also give one or more of the major automakers a good reason to work with and not against EM.

You bet. We have no definitive evidence to date but it looks
like Elio has the support of at least one if not all of the Big
three in getting approved for the Credits. It's certainly in their
interest to help, since with all the trucks & suv's they are
currently selling ( due to cheaper gas) the credits become
even more valuable.............$2,400 extra bucks to Elio for ea.
credit would come in handy.......

 

[Kuda]

Thanks for posting that as if the CAFE credit idea works out this would definitely make a huge difference in EM's bottom line. It would also give one or more of the major automakers a good reason to work with and not against EM.

Hypothetical: Simple math: 20K + 20K + 20K = 60K x $2,400 = $144,000,000...........first year
for credits alone..............

 

[Jay3wheel]

Hypothetical: Simple math: 20K + 20K + 20K = 60K x $2,400 = $144,000,000...........first year
for credits alone..............

One could make a fair dent in a $185M loan with that.