A few years ago, during my guest appearance on a Minneapolis talk radio show, a caller asked about the Elio three-wheeled automobile. It was being touted as an 84-mpg $6,800 car, with amenities that made it sound more like an upscale Honda Accord EX. Such hype meant I had my doubts, and I said I sincerely doubted it would ever come to market. Within a day I had numerous e-mails from the good people of the North, slamming me for not being a true believer. It was as if an ecumenical council had ruled me an automotive heretic and thrown me out of the Church.
Within a year or so of that event — May 28, 2014, to be exact — Jim Motavalli wrote a review of the about to be late-to-market Elio. His first thought for his review, posted at NPR’s Car Talk website, concerned how this unique vehicle instantly drew a crowd of New Yorkers — all claiming they couldn’t believe this car cost only $6,800. Motavalli did mention that neither the climate-control system nor the Siemens radio worked; and he said the brakes needed a “fair amount of pedal effort” to stop the car and noted that its engine was not the final production model, either. And yet, he pointed out, Elio claimed to have 17,000 orders already.
Small, basic three-wheeled vehicles are nothing new in automotive history. Companies like Messerschmitt built them in the early 1950s as commuter vehicles that could hold two passengers, tandem fashion. And, priced at DM 2,500, they were within reach for some Europeans still recovering from the Second World War’s economic devastation. Isetta in Italy also came up with a three-wheeled vehicle, which BMW would later license to sell as its 600.
By 1964 the Messerschmitt had gone out of production, just 40,000 copies of the last-generation KR200 having sold in nine years. For people who had no money during a rebuilding of their economies, maybe those little people-movers had a market. But, at the exact same time in America, George Romney wrote his famed essay, “The Dinosaur in the Driveway;” in it he lamented that buying big 5,000-pound cars to run trivial errands — his example was a 100-pound woman driving that behemoth to the drugstore to buy hairpins — was sinfully wasteful.
As Europe recovered and incomes rose, its citizens turned to more traditional means of transportation. But, because gas cost so much there, they rarely bought the huge automobiles we enjoyed. And, since Americans had never purchased small three-wheeled vehicles for transportation, even during our own Great Depression, I had a hard time believing Elio was going to change that automotive dynamic. Its touted 84mpg fuel efficiency was also highly suspect, particularly when I knew that the Yamaha TMax, sold as the “ultimate long-distance scooter,” could get only around 50 miles per gallon. How in the world a much heavier three-wheeled car with an engine nearly twice as big could possibly better that mileage was beyond me.
Still, the years went by and the number of individuals putting down their $1,000 deposit for a car that still hasn’t quite made it to market allegedly increased to 56,000 plus. Then came a recent caller to my radio show, saying he was one of those who had put his money down and he wanted my opinion on when that vehicle would go into production. At that point the car was at least two years overdue, maybe three — with little sign of being anywhere near ready for production.
Turns out Elio allowed another test of the vehicle last summer in New York, this one involving both Road and Track and Car & Driver. No one said whether this vehicle was the same one Motavalli had tested two years earlier, but Bob Sorokanich of Road and Track wrote about it on July 29, 2016. Immediately, it seemed, he started making excuses for why this was such a poor example of a potentially new vehicle: “One of the little secrets of automotive journalism is that cars break all the time.”
Oh, really? Having tested and written about nearly 1,000 new cars over the past 20 years, I find that statement to be unequivocally false.
Sorokanich did mention that this vehicle looked and felt like a prototype; its interior was unfinished, its shift linkage felt subtly off, the exhaust system rattled and he could smell gas fumes the entire drive. Oh, and it rattled during that low-speed drive in Manhattan. Then, doing just 14 mph, one of its fenders fell off. He said he thought it looked better that way.
But next up was Car & Driver, whose writer reminded readers that the Elio had lost a fender during the previous demonstration drive. Only this reviewer added that Elio claims this $6,800 car will have stereo, cruise, air conditioning, traction control, stability control, ABS and three airbags for the money. No word on whether they planned to use bolts that would keep the fenders mounted.
But Car & Driver did call the fit and finish extremely poor. It added that Paul Elio, the brains behind this vehicle, claimed he envisioned customers walking in, buying their Elio with no cash out of pocket, and leaving with their car and gasoline credit card. Then every time they filled up with gasoline, the card would charge three times that amount and the difference would become your car payment. As of that article, Elio had yet to find a bank willing to underwrite that startlingly different finance plan.
Car & Driver also pointed out that this test vehicle weighed 800 pounds more than the production model’s proposed weight. That’s a serious problem. Remember, this car was supposed to go into production back in 2014 at a shuttered GM factory in Shreveport. One would never think that, two years after the originally planned production kickoff, Elio would be showing off an overweight vehicle with a Camaro steering wheel in it, unfinished, and not even close to the actual production model he wants to produce.
It was time to find out how Louisiana’s Caddo Parrish felt; it leased part of that GM plant to Elio years ago and no production has yet been scheduled. As it turned out, KSLA News 12 had done that story on October 11, 2016, just two months after the unfinished, overweight prototype with a fender missing was shown in New York. KSLA’s feature pointed out that GM had closed its Shreveport assembly plant four years earlier; a year after that, the Parish purchased the property, promising to bring it back to life and thereby create new jobs for its citizens. The price was $7.5 million. And now everyone, including Parish Commission President Matthew Linn, wants to know where the 1,500 new jobs are that Elio promised them when Linn leased the company 100,000 square feet of that plant.
Surprisingly, the clever and thorough KSLA reporter pulled the last SEC filing for Elio, which states flatly that the company has “zero revenue.” So how has it been paying its bills? By stripping equipment out of that GM factory and selling it — plus stock, loans and “vehicle reservations to fund the company.” Obviously, little of that money went to make things work on the car they were handing out for review. The SEC filing also showed that Elio’s cost of doing business had jumped 341 percent in just the first six months of last year. Additionally, it showed two board members being paid over six figures per year and Paul Elio paying himself a salary of $250,000.
One last little point: “The company claims it needs $312 million more to fund the completion of prototypes, testing, tooling and facility fit-up to move into production.” That’s easy enough; 312,000 more people need to pony up a $1,000 deposit on their new Elio. After all, that’s less than Tesla claimed it received in deposits for its upcoming Model 3.
Three-wheeled vehicles already exist. Can-Am builds the Spyder, albeit without an automotive chassis enclosing its seating, and it starts at just $19,499. But it is in production and its engineering is definitively proven; further, I have not read about one losing any fenders.
And, to be fair, Elio has now raised the price of its vehicle from the original $6,800 to $7,300 — although there was a push to get more deposits in by promising a lower price for a few thousand if they were ordered by a certain date. This news came just two weeks after the horrendous reviews from that New York test drive. One can only assume that demand for this unbuilt and not-ready-for-prime-time vehicle skyrocketed.
Oh, well. For Mr. Elio, I’ll offer some solid advice to help move your Dream Car along. First, you need to go public and say that you’re going to shut down your plant with 1,500 as-yet-unhired workers and move those jobs to Mexico. Immediately, the powers that be will do whatever is necessary to keep those as-yet-unpaid, imaginary jobs in America. Who knows? Maybe they’ll even come up with that $312 million to make this a reality.
Other than that, 2017 is a critical year. All these companies must get their promised cars into production, profitably, before they run out of business journalists who don’t understand how the automobile industry works.
© 2017 Ed Wallace
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, conferred by the Anderson School of Business at UCLA. He reviews new cars every Friday morning at 7:20 on Fox Four’s Good Day and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: email@example.com