Cleantech Market Intelligence
Has the Elio’s Time Come?
This year’s Earth Day inspired Paul Elio, the founder of Elio Motors, to issue a press release outlining how his planned new vehicle would emit fewer pounds of greenhouse gases when driving 15,000 miles than a typical cow produces in a year of cud chewing. Putting the word “fart” in a press release had the desired effect of gaining attention, at least in the initial target market of the United States.
It was also a good way to get pictures of the latest prototype into the media. An earlier prototype got plenty of attention when it was shown to the press in the summer of 2013, and a trickle of stories has followed since the beginning of 2014. Production is now slated to begin in the first quarter of 2015 after the original date of summer 2014 proved to be impractical.
The vehicle itself is an interesting design concept that features a two-seat tandem passenger cockpit with two wheels at the front and a single wheel at the rear. This design has very stable handling, unlike the single front wheel trike design that the infamous (in the United Kingdom at least) Reliant Robin had. Top Gear did a feature on it a couple of years ago that I think is one of the funniest 6-minute videos in motoring journalism. It will put you off getting a Reliant, but not an Elio.
Customers Line Up
The Elio is a simple commuter vehicle that uses many off-the-shelf parts, and because it’s lightweight and has a small, efficient engine, it can offer decent performance and good fuel economy at a very low purchase price of $6,800. The company has even come up with an innovative purchase scheme that involves monthly payments that are twice what the owner spends on gasoline. The idea is that because the Elio offers about 3 times the gas mileage of a typical older car, owners will be spending about the same each month for a while, but eventually the running costs will drop by two-thirds.
Not only does this look like a good deal for consumers, but the vehicles will be built in Louisiana, thus providing hundreds of local jobs. About 15,000 potential customers are reported to have paid deposits ranging from $100 to $1000 to secure one of the first off the production line. Ambitious plans for six-figure production targets have been mentioned. So is this the next big thing for individual transportation? Will Elio Motors challenge the established automakers?
Tesla has proven that a startup company can compete effectively in the automotive market. Tesla’s approach was to attack the high end of the market by selling a small number of high-value vehicles packed with new technology. The Elio business model, by contrast, relies on selling large numbers of basic vehicles at the bottom end of the value market. One of the hurdles that both companies share is distribution. Tesla is already facing costly battles in some states to sell vehicles without establishing a network of certified dealers.
But certification will be the biggest hurdle. By choosing a three-wheel design, the Elio is classified as a motorcycle in the United States. This brings some advantages in terms of not having to meet strict safety and other standards, but in many states, it means that the driver must wear a helmet, even though the vehicle is designed to meet crash safety standards for front and side impact and features airbags. It also means that drivers must have a motorcycle license – even though the vehicle cannot be used to take the motorcycle test (which requires riders to show they can control a two-wheeler through a figure eight maneuver around cones).
The company is presently in negotiation with some state legislators to have its vehicle classified as an autocycle to get around this significant issue. If this effort is successful, the unique Elio could really be another game changer for the automotive industry.