Rarely has a three-wheeled anything, much less a car, engendered as much goodwill — and second (and third, fourth …) chances financially – as the Elio.
The quirky three-wheeled car initially introduced nearly five years ago has secured $2.5 million in new funds through a private stock placement with Overstock.com. The shares are worth $2.75 each, but as a private stock, it cannot be traded or sold.
Elio Motors officials say the company intends to use the proceeds of the new investment to fund capital expenditures and repay certain outstanding debt and accounts payable. Since it’s a private placement, Elio will enter into a registration rights agreement with Overstock.
“I believe Elio’s vision and business model to build a $7,500 ultra-high mileage, ultra-fuel-efficient car-like vehicle is a win for America,” said Overstock CEO and founder, Patrick M. Byrne. “An Elio that was brought to Manhattan drew a crowd just parked against the curb.”
(Start-up automaker takes over GM plant in Shreveport, Louisiana. Click Here for the story.)
Byrne is a fan, but the company began as a vision, Paul Elio’s vision to be precise. A former engineer at Johnson Controls started his own firm, ESG Engineering, before striking out on the path that he thought may lead him to be the next Henry Ford.
However, as has been the case for many before him, the road to successful entrepreneurship has been a tough one with plenty of potholes and other problems. Initially touted as more reliable transportation for those looking for a used car and “having to say a hail Mary before turning the key each day hoping to get to work or school” or as a third car for commuters looking to save money on gas.
Initially advertised as getting 84 mpg and costing just $7,400, the company took deposits from early adopters who were rewarded with not only the promise of getting one of the first vehicles off the line, but also gas cards which would make driving free for a little.
However, once the moved past outbidding another upstart auto company, Next Auto, to purchase the former GM truck plant in Shreveport, Louisiana, the company began to have problems — almost all of them financial.
(Click Here for more about the evolution of Elio Motors.)
First and foremost, it takes a lot of money to start up an automaker, even when purchasing a plant for pennies on the dollar, and Elio Motors ran into cash crunches often. In fact, fast-forward to this January and it appeared the company was dead in the water, not even taking a spot at the North American International Auto Show in Detroit — outside the exhibition hall, where the rates are lower.
However, the company has seemingly tapped into its inner feline because the latest round of funding must be closing in the company’s ninth life. Not only did it secure $2.5 million in new cash, Elio board members Stu Lichter and Ken Way agreed to convert all of the $1.75 million in convertible debt they collectively hold into common stock of Elio at the conversion price of $2.75 per share.
However, it appears that the Elio has caught the eye of a new patron and Byrne sees more than just a car company in Elio Motors, he sees opportunity and is acting on it.
“I sat in it for five minutes and was in awe. It is really comfortable and feels like great fun,” he said. “I am confident that this will become my car for at least two-thirds of the days I drive. Given its breakthrough pricing and ultra-low delivery cost, I anticipate that Overstock Cars and even Overstock Retail will play a role in bringing this product to the public.”
(To see more about Elio Motors pushing the boundaries, Click Here.)
A new outlet for the Overstock brand is just one venue for profits, there is also the launch of the Elio Motors security token offering (STO) to, among other things, fund production of the Elio vehicle. Called ElioCoin, will be the first of its kind – a digital token that is associated with the production of a motor vehicle – as well as the first digital token sale led by a major investment bank. ElioCoin may trade on the blockchain-based securities trading platform that is in development at tZERO, which is a subsidiary of Overstock.
They are great salespeople. I was convinced two years ago that they would be selling these cars in a few months. Their biggest mistake was developing their own engine; they should have bought Ford’s 1L or an even smaller motorcycle engine.
I don’t know…