Published on August 19th, 2013 | by Jo Borrás335
Paul Elio Releases Elio Motors’ Financials: The Numbers Don’t Add Up
August 19th, 2013 by Jo Borrás
You’ve got to hand it to Elio Motors’ CEO, Paul Elio. He may or may not know much about the car business, but he knows how to motivate his fan base! The article originally appeared on Gas2, and has sparked a lively debate with more than 70 comments hitting the post over the weekend. Few, if any, really address the points made in the article, though. What do you think about my take on Elio’s numbers? Think Elio has a shot? Let us know!
Financials Show that Elio Motors is Really, Definitely, Not Gonna Happen
Elio Motors’ next payment of three-million USD to Racer Trust — the “old GM,” the property liquidation agent selling the old Shreveport GM plant to Elio — is due September 4th. According to reports coming out of the Caddo Parish in Louisiana, it looks like Elio is asking the residents of Caddo to “front the money.” It’s also worth noting that Elio appears to be “on the hook” for the initial $750,000 deposit, already, which seems to be acting as a kind of “hold” on the building.
The company has submitted a number of documents to the Caddo Commission that are related to the proposed manufacture of the “Elio” trike, and these included a full breakdown of the company’s financials … and they are hilarious! Or, at least, they would be hilarious if 1.) you knew anything at all about the car business, and 2) you weren’t one of the people pinning their hopes, dreams, and hard-earned cash on Elio’s success.
You can download the .PDF report, below, but before you go rushing off to defend your precious
vaporware con Elio 3-wheeler, let me talk to you about (what I found to be) the most obviously glaring issues in Elio Motors’ financials.
Elio Motors’ Retail Store Budget
There are a few major, major faults with this plan. Let’s start with the most obvious: Elio believes that he can go from ZERO sales (0, “goose egg”, nada, etc.) in 2013 to 68,333 units in 2014 (the second tab in the .XLS doc), on his way to a “steady” 250,000 units per year. I know you Elio supporters are bad at reality, so I’ll provide a little context:
68,333 units is 2210 more units than Mini sold in 2012, despite a strong, experienced dealer group, a compelling ad presence, and the Mini being a generally good-looking, practical car (as opposed to a ridiculous 3-wheeled virginity shield).
68,333 units is 12,658 more units than Jaguar and Land Rover sold — combined! — in 2012, despite having an experienced dealer group several times larger than Elio’s proposed 120-strong dealer network (also: ridiculous 3-wheeled virginity shield).
250,000 units is 181,883 more units than Volvo sold in all of 2012.
250,000 is a big number, in other words, and — if Elio hits that number — that would make the Elio trike the number 4 best-selling vehicle in the US using 2011 numbers. The Elio would out-sell the Honda Civic, Toyota Corolla, Ram pickup, etc., etc. And it would have to do it all with (get this) 120 dealers.
[pause for hilarious laughter]
Based on that “120 dealers” number (provided by Elio), each dealership would have to sell 2084 units per year. Divided by 12, that’s 174 units per month (before the mental midgets start questioning my math, you can’t sell “0.xxx” of a car). 174 units per month is a decent number, representing a fairly solid car dealership … but here’s where this gets really stupid: each of these dealerships has just 5 (five) employees making all those sales. Even assuming that 100% of your staff is in sales and you have no finance people, no administration, no service writers, no techs, no porters, no title clerks, no receptionists, etc., each employee would have to sell 35 units per month.
That ain’t gonna happen.
Figuring each of those 5 employees works 20 days/month, they’d have to sell an average of 1.75 units per day. With no support staff. Their job would be to convince 1.75 people, each, per day, every day, that they should buy a ridiculous 3-wheeled virginity shield instead of, you know, a decent used car … and that they should buy said ridiculous vehicle from a dealership with no service department. And these are the numbers Paul Elio is using TO ASK FOR MONEY!
It becomes clear, at this point, that Paul Elio has never worked in a dealership, has never sold a car, never written service, never turned a wrench, never paid attention, and is (to use the industry parlance) little more than a stupid green pea. That’s a compliment to Paul Elio, when you think about it, because the alternative is that he’s an accomplished con artist … he can’t be both, at this point.
Things get even hilarious-er when you look at Elio’s justification for his proposed “$5959” price point on the Elio trike.
Elio Motors’ Pricing is a Joke
You know all those finance people, administration staff, service writers, techs, porters, title clerks, receptionists, etc. that I mentioned above? Elio doesn’t budget for them anywhere that I can see, except for right there, in a piddling little $150 line-item dubiously titled “warranty.”
“But wait,” I can hear you saying. “He budgets $225 per car for retail operations. Surely, that covers it?” Sadly, you didn’t read everything above — that $225 covers only the 5 dealership employees expected to sell 1.75 cars per day, every day, out of a dealership with no support staff. Even if you take $150 and multiply it by 250,000 units sold, you’ve only got $37.5 million. Divide that by 120 dealers and you get $312,500 per dealer. Divided by the $67,500 that Elio cites as his cost per employee, and that’s just 4 full-time people … with $0 left over for loaner cars, replacement parts, etc.
Oops! I just noticed that the $150 line in Elio Motors’ spreadsheet reads “warranty and liability,” so it’s even less than 4 people with no access to parts and loaner cars under said “warranty.”
The short version: Elio is borked, whether you need to wear a helmet to drive its ridiculous 3-wheeled virginity shield or not. If you don’t see that, then I hope that 1.) you haven’t foolishly put your 401K into this mess, and that 2.) you have fun flaming me in the comments.