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An electric vehicle for $14,900? Sounds great until you take a deeper look at the company

On The Money-Startup Investing
Posted at 4:29 AM, Sep 20, 2021
and last updated 2021-09-21 01:11:36-04

Automakers are adding more electric cars to their lineups but average prices are still about $19,000 higher than the average gas-powered vehicle.

So, what if you could get an electric vehicle for under $20,000?

That's what Phoenix-based Elio Motors is promising.

It may sound great until you take a deeper look at the company.

Elio wants to produce an electric car/motorcycle vehicle on three wheels. At just $14,900, it would be far below the price point of other electric vehicles available -- and it's the available part that you should question most.

This isn't an ad for the car. It's a warning about a company trying to put on a new face to cover years of old problems.

Four years ago, John Litman saw a similar Elio Motors ad for a gas version of the same vehicle.

On The Money-Startup Investing
FILE - In this Thursday, Aug. 14, 2014, file photo, the Elio, a three-wheeled prototype vehicle, is shown in Royal Oak, Mich. Usually only rich people and venture capitalists invest in startups. But now more regular folks are getting the chance because of two major changes to a federal law that have made it easier for small businesses to sell shares and raise cash from the public. Elio Motors has never delivered a car and has never made any revenue since it was founded in 2008. But the Phoenix company was able to raise nearly $17 million from investors through Regulation A. After delays, its first vehicles are expected to be ready for customers in 2017, says Elio Motors CEO Paul Elio. (AP Photo/Paul Sancya, File)

"I enjoyed the concept of something new and different instead of the common car," John said.

The vehicle touted 84 miles a gallon at just $7,300.

But to get the car, customers would have to put down a deposit and wait, so John handed over $1,000.

"They assigned me a position in line which was 22,533," he says.

But four years later, John wanted his money back: there is still no car and there's been no communication.

All John has are old promises and an Elio T-shirt.

Since 2009, Elio has taken in nearly 66,000 refundable and non-refundable deposits for a vehicle that has never been produced.

Dozens of customers who gave deposits and have been waiting now also want their money back.

Founder Paul Elio says refundable deposits are given back on request.

But during the 11 years of producing no car, he has said non-refundable still means just that. No refunds.

"These dollars aren't sitting around to give back to them because we're spending it creating a business," Elio told me in 2016.

But recently filed papers with the government show his company is $215 million in debt.

And in their filing with the Securities and Exchange Commission, there is a statement that may not be good news for customers who have given Elio deposits.

While the company says it has $26 million in non-refundable deposits, they also say they "now believe it is better to develop an electric-powered Elio first, and then potentially launch a gas Elio second based on demand."

None of this was passed on to customers like John.

"There hasn't been anything from them," he says.

It turns out, John's deposit was refundable. He did get his $1,000 back, but we contacted the company about many others who still can't get their refunds.

We also reached out to Elio Motors about this story. The company sent us this response:

"Thanks for the note, we appreciate every opportunity to talk about the Elio. There has been a lot of activity since our announcement last week. We are able to move to the electric platform quickly because of the shared architecture and learnings we have from the base gas model. This allows us to address the electric market and then, if appropriate, launch a gas model shortly thereafter. We will know more about our reservation holders wants through direct surveys and that will tell us a lot about what the plan will look like. Reservation holders may elect to move from the gas to electric but will not be required to."

Elio Motors said nothing about refunding all deposits if requested.

The Arizona Attorney General's office says they cannot talk about any case. Contact their office you have a similar issue.

And let me know.

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