Back in July, the state of Louisiana fined Elio Motors $545,000, saying it’s operating as a “manufacturer” and therefore should have a state-issued license to accept non-refundable deposits for its proposed three-wheeled ride. Elio vowed to appeal the decision, and on Tuesday it delivered, challenging the fine in court that it claims was “deliberately” made to “put Elio out of business.”
Jalopnik investigated Elio Motors controversial presence in Louisiana in a story published last month. In Elio’s 43-page filing, obtained by KSLA-12 in Louisiana, Elio portrays the Louisiana Motor Vehicle Commission’s fine as a vindictive ploy to force the company to close up shop.
The dispute stems from the commission’s interpretation of state law. In a July ruling, the commission alleged that Elio Motors violated a statute that requires any manufacturer to possess a license to sell products, like cars, in the state. The commission says that because Elio accepts nonrefundable deposits, that should be construed as actually producing cars.
Elio, correctly, notes that it hasn’t made cars in Louisiana just yet, and says that fact alone justifies having the fine overturned.
“Considering the evidence and arguments presented ... the Commissioners during the hearing and deliberations, it is apparent that the Commission simply dislikes Elio’s Reservation Program and believes that it is improper for Elio to accept reservations in light of the uncertainty as to whether and when Elio will be able to begin producing its vehicles,” the filing says.
KSLA, which first reported the news, said Elio filed the complaint on August 24, just shy of the 60-day deadline Elio had to appeal the Commission’s fine. Elio’s also asking a judge to pause the commission’s ruling until a final decision is made on the company’s lawsuit.
Elio presents a number of quotes from the commission’s investigators that, the company alleges, “demonstrates the Commission’s animus against Elio and intent to penalize Elio for conduct outside of the actual charges against Elio and outside the state of Louisiana.”
In one instance cited in the complaint, which you can view entirely here, Elio cites comments from an investigator named Thom Hoeflinger, who in 2016 visited a former General Motors plant where Elio hopes to launch production of its three-wheeled vehicle. Hoeflinger sent an email to the commission’s executive director, and said:
...the day after his first visit to the GM plant ... he stated, “My instincts tell me that Elio is a fraud.” He [further] stated, based on pure speculation with respect to Elio’s Reservation Program, that “it appears Paul Elio may surpass Bermie Madoff’s ponsy scheme. Look out American Greed you may have a new story.” These statements clearly demonstrate that Mr. Hoeflinger’s investigation of Elio was far from objective or impartial, but rather was tainted with bias and prejudice.
Elio’s filing is aimed at overturning a fine it doesn’t believe is legally just. But the document comes across as a damning illustration of the financially precarious situation the startup is currently in.
For one thing, the company suggests the three-wheeled Elio, its flagship vehicle, is far from being completed—nearly ten years after Elio Motors first launched.
Elio’s evidence further demonstrated that even the prototype Elio vehicles were not fabricated, manufactured, or assembled by Elio, but rather were assembled by a third party outside of Louisiana. Moreover, these prototypes are far from what the final Elio vehicles will be like, and, in fact, the bodies of the prototypes are not even made from the same materials as the final Elio vehicle will be.
And, last month, when the company said it was looking to raise $100 million to help move it toward launching production, Elio Motors revealed it only has about $4,000 left in the bank. The filing makes clear that a half-million dollar fine isn’t something Elio Motors could stomach right now.
“By imposing a penalty of $545,000, the Commission was deliberately attempting to put Elio out of business,” the company wrote in the complaint, “knowing that Elio would not be able to pay such a steep fine.”