It was 2008 and Paul Elio found himself flicking through the news channels each night, watching the price of oil steadily increase. Wealth was pouring out of the country, and he became frustrated.
The automotive product development company that Elio founded in 1996, ESG Engineering in Arizona, became unsteady in the wake of the recession.
That’s when the idea for Elio Motors, an automotive startup that is aiming to create a fuel-efficient, affordable automobile, was born.
The automotive industry has gained speed again, and with that, many engineers and entrepreneurs such as Elio have founded startups to challenge the larger automotive companies.
Elio’s plan is to challenge those automakers right next door to the Motor City. The project’s main headquarters are in Michigan with prototypes being put together in Livonia and the design work happening in Troy.
“If you’re designing a new vehicle, Detroit is the place to do it,” Elio says. “Detroit is where the real action is and where the project is being engineered.”
The three-wheeled Elio is being promoted as getting 84 miles per gallon — with a price tag of around $6,800.
If all goes according to plan, the manufacturing will happen in Louisiana. Of the nearly 3,000 jobs estimated to be created over the span of the project, up to 400 of them would be white-collar jobs in Detroit.
Elio, who graduated from Kettering University in Flint before moving to Arizona, says the vehicle’s impact is three-fold: reducing the total amount of gas consumption, providing Americans with jobs, and providing folks with affordable transportation.
“The impact of the product on the folks who are struggling in this country is what matters as well,” he says. “Sixty percent who are chronically unemployed have turned down jobs because they couldn’t get to the jobs. Mobility helps people get out of poverty. People need to be able to afford to get to their jobs.”
But before the first Elio hits the road, the company is facing a few hurdles.
First off, since it’s a three-wheeler, it’s technically considered a motorcycle. That means some states would still require Elio drivers to wear a helmet. And some would also require a motorcycle license or endorsement to operate the vehicle.
Then there’s the high cost of starting up a new company. But more on that later.
The general design of the vehicle sits people front to back rather than side by side. The engine was designed by Elio Motors engineers specifically for their product.
“The basic premise was to have high mileage and low cost,” Elio says. “To get the mileage we sat people front to back. By only having one wheel in the back we created a natural fit. The design was driven by miles per gallon.”
Elio says once in the vehicle, drivers will not be able to tell that it’s missing the typical fourth wheel.
“It can out handle all of the little guys,” he says. “It’s safe and performs very well — it goes from zero to 60 miles per hour in under 10 seconds.”
The Elio Motors brand was founded in 2009, but the mass of progress didn’t take off until 2013 when the company started pre-selling the product through a crowdfunding campaign on the Elio website. Some $20 million has been raised through the campaign, which is still ongoing.
“We wanted to do a crowdfunding campaign because existing funding avenues didn’t take auto projects,” Elio says.
More than 47,000 people have reserved a spot to buy a vehicle when it goes into production.
While the advanced reservations exceeded Elio’s expectations, it wasn’t enough to fund the $300 million project. He has raised nearly $75 million through investors already and has near $46 million committed through nonbinding indications of interest.
In November, the automaker announced a $25 million stock sale to get even closer to production, including the building and testing of an additional 25 prototypes in Detroit. Production will begin once the design is finalized and the financing is in place. The goal is for a late 2016 launch.
Elio Motors recently revealed their P5 prototype at the Los Angeles Auto Show. While not exact, the P5 prototype will be close to what future buyers and those who made reservations would be able to drive off with.
The vehicle can be ordered standard with manual transmission or an automatic (for an additional $300-$500). While both models will come with air conditioning, power windows, power locks, and a stereo, any other custom requests — such as leather seats — would be added on post-manufacturing.
“The way the process works is that you walk into our showroom and say you want an orange automobile with leather seats,” Elio says. “Well, we close our supplier stores at 9 p.m. each night and build on to the models until midnight, so at 10 a.m. the next day you get your vehicle.”
The company plans to open retail centers in top U.S. markets — including several in metro Detroit. Service and warranty work will be handled through an agreement with the Pep Boys service and auto aftermarket chain.