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Appreciating Depreciation: The Elio’s Value Proposition

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It can sometimes be difficult to know with absolute certainty that your new purchase is a good deal. For example, a cheap product can offer immediate savings, only to prove costly down the road. The total savings equation is more complex than the initial price: it includes the cost of operation, depreciation, resale value, etc. Today’s Momentum will look at the true proposition value of the Elio.

The Elio’s affordability starts with our ultra-low base price. At a targeted base price of only $7,450* for new reservation holders, our base price is a fraction of the average new car. We will be offering several different financing options to keep monthly payments low for Elio owners. Additionally, as gas prices continue to climb, our impressive gas mileage will accumulate significant savings for Elio Motors drivers at the gas pump.

Further bolstering the Elio’s value proposition is the cost to insure and operating costs. As we are a three-wheeled vehicle, the Elio will likely be insured as a motorcycle. It costs significantly less to insure a motorcycle than an automobile. Additionally, the Elio should be affordable to insure based on our safety package, cost to entirely replace, and the cost of replacement parts. In terms of operating costs versus a used vehicle, the Elio comes standard with a 3-year, 36,000-mile bumper-to-bumper warranty.

One of the often-overlooked aspects of the Elio value proposition is the matter of depreciation. It’s widely acknowledged that the moment a new vehicle leaves a dealer’s lot and hits the open road, the value of the vehicle drops significantly. By at least one estimate, as soon as the vehicle leaves the lot, the vehicle has lost 10% of its value. In its first year, that same vehicle will lose as much as 20% of its value.

According to Kelly Blue Book, the average price of a light vehicle reached $36,270 in January 2018. Based on Carfax’s depreciation rates (which posits that the average new vehicle loses 10% of value after leaving the lot, 20% in the first year, and 60% after five years), let’s look at the lost value of the average new vehicle and the Elio.

Elio Average New Vehicle
Before ownership $7,450 $36,270
After leaving dealer lot $6,705 $32,643
After one year $5,960 $29,016
After five years $2,980 $14,508

 

Here’s a look at the total depreciation by vehicle, by time:

Elio Average New Vehicle Elio Advantage
Before ownership 0 0 Even
After leaving dealer lot $745 $3,627 $2,882
After one year $1,490 $7,254 $5,764
After five years $4,470 $21,762 $17,292

 

As you can see, the average new vehicle loses approximately $7,200 in only one year. Essentially, the depreciation of an average vehicle can almost pay for a brand-new Elio in full.

Affordability is one of the main tenets of the Elio Motors project. To offer a vehicle with a true value proposition we keep the base price and operating costs low, gas mileage high, and a favorable depreciation rate.

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