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AzCapitolTimes.com • Page 21
TECHNOLOGY
SUBMITTED PHOTO
November 20, 2009 • ARIZONA CAPITOL TIMES
Cutline
75 miles per gallon…
A Tempe company thinks it has a revolutionary car concept, but will the public buy it?
SALVADOR RODRIGUEZ
[email protected]
A
startup Tempe motor company is hoping to turn
their lime-green, “spunky little ride” into the 21st
century version of the Volkswagen Beetle.
Since August 2008, Elio Motors has been working on a
cockpit-shaped, three-wheeled vehicle that seats two
people and is the size of a small compact car. Chip Stempeck, vice president of sales and marketing for the company, hopes the car will succeed based on its low price,
focus on safety and economic benefits.
“With gas prices going up and all of our work overseas
or out of America, we want to put together a vehicle that’s
good for the everyday person, gets great gas mileage,
reduces our need for foreign oil — and make it here so we
that can contribute back to the country,” he says.
The vehicle, which runs on regular gasoline, is
capable of getting more than 75 miles per gallon and
has a top speed of 109 miles per hour, says Stempeck.
The “reverse-trike design,” featuring two wheels in the
front and one in the back, makes the vehicle very light
and highly aerodynamic.
At the target price of $7,500, Stempeck says the
vehicle would cost less than the original Volkswagen
Beetle, adjusted for inflation.
“We have found a way to build something in America
that is very high quality and can be competitively priced,”
he says. “We believe that we have a way to make it
happen, and we’re going to prove that.”
Tim James, an economics professor at Arizona State
University’s W. P. Carey School of Business, says the
biggest challenge facing the company’s concept is getting
the American public to buy into the idea of driving smaller
cars.
Continued on page 22
‘With gas prices going up and all of our work overseas or out
of America, we want to put together a vehicle that’s good for
the everyday person, gets great gas mileage, reduces our need
for foreign oil — and make it here so we that can contribute
back to the country.‘
— Chip Stempeck, vice president of sales and marketing for Elio Motors
Page 22 • AzCapitolTimes.com
TECHNOLOGY
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ARIZONA CAPITOL TIMES • November 20, 2009
75 miles per gallon
continued from page 21
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602-250-4520
“There are four-wheel cars in the U.S.
with high gas mileage — Ford sells them,
GM sells them, but they don’t sell many of
them,” he says. “People don’t want to buy
small, fuel-efficient cars. They just don’t see
them as attractive.”
Stempeck says he is confident of the
vehicle’s success, based on reactions he
receives from people who drive the car.
“I believe that Americans, in particular,
will be very, very open-armed to our vehicle
even though it is a three-wheeled twoseater,” he says. “I believe that the economics, the overall value and the eco-friendliness will overshadow anything else that
(the public) could see.”
Elio Motors gets its money from CEO
Paul Elio’s Arizona-based engineering company, ESG Engineering. The company is
focused on finding investors and finding a
place to build a manufacturing plant. A big
part of that equation is determining which
state will offer the most in incentives to the
company.
Stempeck says Elio has spoken to government officials in various states, including
Michigan, Delaware and Ohio, but would
prefer to remain in Arizona.
“That’s where we’re currently headquartered,” he says. “But we just can’t get the
traction with Arizona that we need.”
David Drennon, spokesman for the Arizona Department of Commerce, says the
agency has spoken with Elio Motors about
programs that could benefit the company,
including the Angel Investment Program,
which provides a tax credit for individuals
who invest in rural, bioscience and other
qualified companies.
James, the economics professor, disagrees with government subsidies for the private sector.
“A business should stand on its own two
feet, and all you’re really doing when you’re
giving them tax credits is you’re basically
funding what the public wouldn’t subsidize,”
he says.
The reason people should chose to locate
in Arizona is because they see it as a good
place to do business, James says.
“In terms of the work force and also in
terms of the potential market, and that’s the
only reason they should come here,” he says.
“Not because the government is offering
them some inducements. That’s not a good
reason to locate somewhere.”
Stempeck, however, says the economic
impact of locating the plant in Arizona
would be “huge.”
Elio Motors and its suppliers estimate the
company could sell 550,000 units per year,
Stempeck says. At that volume, the company
calculates it could operate a manufacturing
plant that would create as many as 4,000
jobs.
“We are obviously in this because we
think it’s a great idea, and frankly, we think it
can make some money,” he says, “But the
cool part about this is it’s great for our
economy right now.”
Drennon says the state would want to
retain the 4,000 jobs. But based on his experience with other similar businesses, questions remain whether that number is real or
contrived.
“Some of the largest manufacturing jobs
that we’ve brought into the state don’t have
that kind of work force,” he says.
Stempeck acknowledges it is a huge
number of jobs, but he expects his company
would require and support that many
employees.
“It sounds like a pipe dream, I realize, but
it’s not,” he says.
Safety is another focus area for Elio’s
small-statured vehicle. One way the company has addressed the concern is by
working closely with Takata Corporation,
which supplies the car’s passenger restraints
and three airbag systems.
“They’ve got an extensive database of
what crash data looks like, how it should
look, what the reaction is and all that type of
stuff,” says Stempeck. “They’ve run it
through their whole mix and they believe
that we can get (high safety ratings.)”
Stempeck also says the vehicle’s light
weight actually makes it safer, because it
doesn’t fight crash impacts. “Because of the
weight of the vehicle, it’ll actually slide
versus hold its ground and take the brunt of
the force,” he says.
CEO Paul Elio says his company plans
to start rolling vehicles off the line 15
months after they receive adequate
funding. He says he is shocked by how
well things have fallen into place.
“We set our initial targets and you hope
you can achieve something like this, and
we’ve been able to exceed every target we
set for ourselves,” he says. “So I’m very
happy with how it’s progressed.”
Though production is a long way off,
Stempeck remains excited about the project’s future.
“It’ll be a very fun, very functional. It’s
just a spunky little ride that gets great gas
mileage, is safe and affordable,” he says.
“That’s really what it’s all about.”
James, the economics professor, says he
is sure the concept is great, but success in
the marketplace ultimately requires more
than just a great idea. Customers must have
access to the product as well.
“I’m really in favor of people being
innovative and coming up with new products, but you have to have a business
strategy that underlies your innovation,” he
says. “Really, selling something is often
not about how good your product is. It’s
more about what access you have to consumers, whether a big chain will take your
product or not, and the same thing goes
with cars.”