It was October 2010, and the Phoenix entrepreneur had emptied his personal bank account to
pay the bills for his startup car company, Elio Motors.
Elio's wife had left him. A year late on his mortgage payments, Elio faced the prospect of
losing his home too. He was getting ready to pawn the wristwatch -- his last possession of
any real value -- when salvation came from the
sky: A damaging hailstorm struck Phoenix,
and an old friend gave him a job with his roofing business, providing Elio enough income to
keep the startup afloat.
"There have been hard days, scary days, days when I didn't know how we would survive
another minute," Elio, 51, a former engineer at Johnson Controls and CEO of the automotive
consultancy ESG Engineering, told Automotive News as he recalled his brush with bankruptcy.
"But I've never thought of conceding defeat. Ever."
Indeed, seven years after he founded Elio Motors to design a cheap, efficient three-wheel
commuter vehicle, Elio is counting victories. Small ones, at least.
Last month at the Los Angeles Auto Show, the 15-person startup unveiled the latest
prototype of Elio's three-wheeler, now outfitted with a 0.9-liter engine built to
specifications by the German engineering company IAV.
The same week, the company got the green light from the U.S. Securities and Exchange
Commission to raise $25 million through online crowdfunding.
To date, 47,000 people have sent the company $100 to $1,000 over the Internet in exchange
for the privilege of buying Elio's three-wheeler, which has a promised starting price of
around $6,800 and a fuel economy rating of 84 mpg on the highway.
As much as a car, they're buying into a dream -- Elio's dream. And there's a lot of Paul
Elio in the vehicle that bears his name, down to the speedometer and rev counter, which are
mounted on rotating discs visible through holes in the gauges.
Elio modeled the design after his father's midcentury Lord Elgin wristwatch. If the Rolex
remins him of dark days, the Lord Elgin reminds him of bright ones.
"I can still see myself as a child," Elio said, "holding his hand and looking up at it."
'No new technology'
Elio calls his vehicle an "autocycle," because it blends elements of an automobile and a
motorcycle. It has one door, two seats arranged one behind the other, and a three-cylinder
engine cranking out 55 hp, about as much as a 1975 Honda Civic.
Classified as a motorcycle under U.S. law, the Elio would be exempt from many crash-safety
regulations, though it would have seat belts and airbags. And in many states, drivers would
be permitted to ride solo in the carpool lane, like motorcyclists.
The idea isn't revolutionary. From 1973 to 1981 and 1989 to 2001, England's Reliant Motor
Co. sold a fiberglass three-wheeler called the Reliant Robin as rising fuel prices created
demand for efficient city cars. And today, Toyota is developing a tandem two-seater called
the i-Road that steers with its lone rear wheel and leans into turns for stability.
Elio concedes well-funded automakers have the money and know-how to emulate his three-
wheeler. He has no unique powertrain, software wizardry or patents.
"No new technology is allowed on this vehicle," Elio said. "Every part on this vehicle is
used somewhere else. But we're putting them together in a unique way, so we can have a
disruptive effect without new technology."
In a business plan shared with investors and the SEC as part of the approval process for
crowdfunding, the company suggested it will keep prices low, cultivating loyal fans and
discouraging rivals from imitating the Elio. In other words, the Elio will be sold with
such thin margins that larger rivals would be crazy to imitate it.
Working-class wheels
Paul Elio follows a long line of entrepreneurs who have chased the dream of the perfect
people's car. Their track record is mixed.
Ford Model T
Detroit's mass-produced wonder started at $825 in 1909, but Ford pushed down the price to
$260, or just $3,500 in modern money, by 1925. Yet General Motors overtook Ford by
satisfying Americans' desire for style and status.
Volkswagen Beetle
The people's car once championed by Adolf Hitler arrived in the U.S. in 1949 at a base
price of $1,280, equal to about $12,500 today. Smaller and more efficient than Detroit's
space-age barges, it became a counterculture icon.
Yugo GV
Malcolm Bricklin pulled off the cheap-car formula by bringing the Subaru 360 to the U.S. in
the 1960s, but his imported Yugo, which started at $3,990 in 1985 (about $8,700 today)
became known as one of the worst cars of all time.
Tata Nano
The Indian automaker built the most affordable car in the world, only to see it spurned by
status-conscious consumers. Launched in 2008 for 100,000 rupees, or about $2,000, the
minicar now costs 199,000 rupees for the (slightly) more upscale Nano GenX.
Beetle or Yugo?
Elio's dream of cheap, efficient transportation is, of course, as old as the car itself.
Yet for every Ford Model T or Volkswagen Beetle, there is a Yugo GV and a Tata Nano, not to
mention the many three-wheelers pitched by dreamers.
Elio, who would begin production in late 2016 under the best of circumstances, faces many
challenges. The current prototype of the car is running about $500 over cost and is getting
about 81 mpg in highway driving, suggesting the Elio may miss its price and fuel-economy
targets.
And even with the cash infusion from crowdfunding, Elio Motors needs another $200 million
to start production at the Shreveport, La., factory where General Motors built the Hummer
H3 and Chevrolet Colorado/GMC Canyon pickups before shuttering it in 2012.
"You would think developing a $6,800, 84 mile-per-gallon vehicle with 90 percent North
American content would be the hard part," Elio told Automotive News last month. "No.
Finding the money to build it is the hard part."
Paul Elio, the entrepreneur behind Elio Motors, envisions his tiny 3-wheel “autocycle” as a
cheap and efficient commuter car. Here are the details.
Price target: Around $6,800
Fuel economy target: 84 mpg highway
U.S. vehicle classification: Motorcycle
Seats: 2 (1+1 configuration)
Powertrain: IAV-designed 3-cylinder, 0.9-liter gasoline engine
Performance target: 55 hp; 0 to 60 mph in 9.6 seconds
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