Elio is using crowd-sourced funding and will be selling directly to consumers. Here are some things you can learn from their business model.
The landing page of Elio Motors poses the question, “How is a $6,800 vehicle that gets up to 84 mpg possible?”
Well, technically, it isn’t possible yet, as Elio’s futuristic three-wheeled vehicle won’t be on the market until 2016. The $6,800 price tag excludes options (but even so works out to considerably less than any new eco-car on the market today,) and that 84 mpg is from highway driving (though 49 mpg city is still pretty impressive.) If the decline in retail gas prices continues, Elio may find its fuel economy a tougher sale for a vehicle that is definitely not mainstream in appearance and utility. But technicalities and speculation aside, founder Paul Elio’s approach to making this vehicle may provide a tenable model for American manufacturing in the 21st century.
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Made in America, highly affordable and highest-quality used to be this country’s claim to fame. Here’s how Elio intends to achieve it:
- Re-engineer existing, proven technology.
- Partner with an existing manufacturer with the necessary capabilities.
- “Less stuff” design approach that minimizes parts without compromising functionality. For example: three wheels costs less than four, two seats less than five, and one door less than two or four, and these facts drive the unusual appearance of the car.
- No detail is too small to save costs. For example, the car’s hood was redesigned to eliminate the need for a second latch, saving $17. And instead of a windshield wiper bottle, which only costs $8, there’s a depression in the engine compartment where you attach the 1-gallon windshield wiper fluid bottle you bought off the retail shelf.
- Crowdfund products before they actually exist. Elio takes reservations for vehicles that have yet to see a production line.
- Partner with suppliers committed to innovation.
- Customize. Henry Ford famously said consumers can get a Model T in any color they want, as long as it is black. Because Elio vehicles are built-to-order, they allow for more customization. In fact, the company states that customers should, “tell us what you want…Our job will be to make sure it is available.
- Leverage pre-existing infrastructure. Instead of building its own dealership service network, Elio has partnered with Pep Boys to provide customer service.
Will it work in the long run? That remains to be seen and is open to considerable debate. But it’s promising that a start-up already has 35,000 purchase reservations without expensive advertising for cars that are yet to be made. In addition, Elio is focused on a potential niche market that is largely unaddressed. Moreover, focus on efficiency is the only way American manufacturers can keep costs down to compete with off shore sources and maintain the highest quality for built-to-order products.