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. Elio is preparing to hold an initial public offering (IPO) of its common stock in a bid to raise the cash it desperately needs to make its futuristic machine a reality.
The company is listed on the NASDAQ Global Market under the symbol ELIO, according to the stock exchange’s official website. Elio hopes to raise about $100 million. At this point, the company’s future hinges on the IPO. A successful stock market entry will provide it with the cash it needs to build prototypes and finally start production of its three-wheeler. An unsuccessful entry will likely send the company to the great junkyard in the sky, next to the countless other startups that tripped, fell, and never got back up again.
“A significant portion of Elio’s accumulated deficit represents the amounts incurred for engineering, [and] 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. The IPO filing indicates it currently has $208,748 to work with, up from $120,000 at the end of last year. That’s not enough to buy a high-end supercar, let alone run a car company.
“The number of shares to be offered and the price range for the proposed offering have not yet been determined,” according to a statement published by Elio. The company told Digital Trends it’s excited for the next step, but it can’t comment further due to the nature of the announcement.
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, which is the predecessor of today’s Colorado, 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 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.
To add insult to injury, Elio wasn’t the only company interested in the facility. Jaguar — Land Rover wanted to base its North American operations in Shreveport, and air conditioning giant Daikin considered setting up shop in the former GM factory. Daikin ended up moving to Texas and creating jobs there, while Jaguar — Land Rover delayed its plans to build cars in the U.S.
Cedric Glover, the former mayor of Shreveport, wants to investigate the deal and question — under oath — some of the actors involved in luring Elio to Louisiana, according to a KTBS report. Notably, he points out that Stuart Lichter, an investor who played a key role in bringing Elio to the Bayou State, was one of the startup’s shareholders.
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. On paper, the three-wheeler is a brilliant idea.
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 65,000 refundable and nonrefundable reservations, according to its official website. The IPO filing states production has been pushed back to 2019 at the earliest.
In Glover’s opinion, the reservation holders have lost their money for good. Government officials’ frustration with Elio led the Louisiana Motor Vehicle Commission to file a lawsuit against the startup. The state of Louisiana argued Elio failed to apply for the necessary permits before accepting deposits from prospective customers, a penalty that carries a $545,000 fine. That’s more than twice the amount that the company has in the bank, so it plans to appeal the decision.
Updated: Added information about Elio’s IPO and about the lawsuit filed by Louisiana.