Startups often promise to change the way we drive, but building a car from scratch is more challenging than it seems.
Elio Motors, the Arizona-based startup that promised to change the way Americans commute, is in dire financial straits. The company has delayed production of its three-wheeler several times, and is reportedly burning cash at an alarming rate.
A United States Securities and Exchange Commission (SEC) filing reveals Elio Motors had just $101,317 in cash on September 30, 2016. That’s a rounding error at best for a car company. Worse yet, the same document declares recurring net losses caused an accumulated deficit of over $123 million. The company explained it’s uncertain about what the future holds.
“If we are unable to continue to obtain financing to meet our working capital requirements, we may have to curtail our business sharply or cease operations altogether,” wrote Elio Motors in the SEC filing. More recent information about the company’s finances hasn’t been released to the public.
Elio Motors made headlines when it leased a former General Motors factory in Shreveport, Louisiana. The plant manufactured trucks for decades — including the Chevrolet S10, the GMC Sonoma, and the Hummer H3 — but it closed down in 2012. Elio promised to give the local economy a significant boost and create about 1,500 jobs by producing the three-wheeler in the Shreveport facility. However, the factory remains idle, and news channel KTBS points out the company has yet to bring a single job back to the community.
“A significant portion of Elio’s accumulated deficit represents the amounts incurred for engineering, research and development work. These amounts are expensed as incurred and contribute to Elio’s operating losses, which in turn are reflected in the accumulated deficit,” a company spokesman told Digital Trends. The brand added that its debt amounted to $38.8 million in September of last year.
Displayed at auto shows around the nation, Elio Motors’ first car (pictured) is supposed to be a fuel-sipping, three-wheeled two-seater named P5. It has a narrow, highly aerodynamic body, and two front wheels that are completely enclosed to reduce drag. A 0.9-liter, three-cylinder engine developed specifically for the P5 returns up to 84 mpg.
Ahead of last year’s Los Angeles Auto Show, Elio announced plans to launch the P5 by the end of this year with a base price of approximately $6,800. To date, the company has taken 64,000 refundable and nonrefundable reservations, according to its official website. In the opinion of Cedric Glover, the former mayor of Shreveport, the reservation holders have lost their money for good.
Updated 1/20/2017 by Ronan Glon: Added statement from Elio.
Updated 1/19/2017 by Ronan Glon: Added that Elio leases the Shreveport plant.