Elio almost road ready with three wheels, 84 mpg

The Elio, a three-wheeled prototype vehicle, is shown in traffic in Royal Oak, Mich., Thursday, Aug. 14, 2014. Instead of spending $20,000 on a new car, Paul Elio is offering commuters a cheaper option to drive to work. His three-wheeled vehicle The Elio will sell for $6,800 car and can save on gas with fuel economy of 84 mpg. (AP Photo/Paul Sancya)
The Elio, a three-wheeled prototype vehicle, is shown in traffic in Royal Oak, Mich., Thursday, Aug. 14, 2014. Instead of spending $20,000 on a new car, Paul Elio is offering commuters a cheaper option to drive to work. His three-wheeled vehicle The Elio will sell for $6,800 car and can save on gas with fuel economy of 84 mpg. (AP Photo/Paul Sancya)

ROYAL OAK, Mich. -- Phoenix-based Elio Motors plans to start making two-seat, three-wheel cars that get 84 miles per gallon in the fall at a former General Motors plant in Shreveport.

With a starting price of $6,800, it's half the cost and half the size of the Honda Fit. Already, more than 27,000 people have reserved one.

Elio hopes to make 250,000 cars a year by 2016. That's close to the number Mazda sells in the U.S.

Because it has three wheels -- two in front and one in the rear -- the Elio is actually classified as a motorcycle by the U.S. government. But Elio Motors founder Paul Elio said the vehicle has all the safety features of a car such as anti-lock brakes, front and side air bags and a steel cage that surrounds the occupants. Drivers won't be required to wear helmets or have motorcycle licenses.

The Elio's two seats sit front and back instead of side by side, so the driver is positioned in the center with the passenger directly behind.

The Elio has a three-cylinder, 0.9-liter engine and a top speed of more than 100 mph. It gets an estimated 84 mpg on the highway and 49 mpg in city driving.

Elio plans to keep the price down in several ways. The car only has one door, on the left side, which shaves a few hundred dollars off the manufacturing costs. Having three wheels also makes it cheaper. It will be offered in just two configurations -- with a manual or automatic transmission -- and will have standard air conditioning, power windows and door locks and an AM/FM radio. More features, such as navigation or blind-spot detection, can be ordered through Elio's long list of suppliers.

Germany's Daimler promised to revolutionize American commutes with the Smart car, but that hasn't panned out, said Karl Brauer, a senior analyst with Kelley Blue Book. Smart sold just 9,264 cars in the U.S. last year.

The Smart has a starting price of $13,270 for a gas-powered car and gets 38 mpg on the highway -- not enough savings or fuel economy to justify sacrificing comfort in the tiny car. But, Brauer said, the equation might work in the Elio.

"If it really gets 84 mpg and doesn't drive terribly, it would justify the compromises you're making in size and comfort," he said.

Elio will also save money by selling the cars directly through its own stores and not through franchised dealers, similar to electric carmaker Tesla Motors. Elio plans stores in 60 major metropolitan areas. They'll be serviced by car repair chain Pep Boys.

Paul Elio, a former stockbroker and New York City cabdriver, dreamed as a kid that he would one day own a car company called Elio Motors.

"As I matured, I decided that was as likely as playing in the NFL," Elio said.

But he earned an engineering degree at General Motors Institute -- now Kettering University -- and started his own company engineering products such as children's car seats.

In 2008, tired of high gasoline prices and the country's dependence on foreign oil, he started working on a fuel-efficient car. Equally important to him was creating U.S. manufacturing jobs and making the car inexpensive enough to appeal to buyers who might otherwise be stuck in old, unreliable clunkers.

"Whatever matters to you, this can move the needle on it," he said.

The recession killed his engineering company, but it also provided the opportunity to buy the Shreveport plant when GM filed for bankruptcy protection. Elio Motors plans to employ 1,500 people at the plant.

The company has applied for a $185 million advanced vehicle development loan from the U.S. Energy Department.

Elio said so far, reservation holders are older, more affluent buyers who will use the Elio as a second or third car for commuting.

"It's an 'and' purchase for a lot of folks," he said. "So keep your SUV or your minivan or your large sedan, and when you're driving back and forth to work all by yourself, take the Elio. At this price point and this mileage, that works financially for folks."

Eventually, though, he believes the car will appeal to high school and college students as well as used-car drivers who want something newer and more reliable. He also hopes to export it to other countries.

Business on 08/16/2014

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