The Louisiana Motor Vehicle Commission has accused Elio Motors of breaking state law and fined the startup $545,000 for operating as a manufacturer/dealer of recreational products without a license.
KSLA-TV reports the commission handed down the fine during a hearing Monday in Metairie where Elio Motors was given the opportunity to explain and defend its practice of accepting paid reservations for the future purchase of its three-wheel vehicles.
The auto startup is supposed to manufacture the vehicles in the former General Motors plant in Shreveport but has yet to begin production due to a lack of capital. Elio’s lack of funding has resulted in numerous production delays since 2013.
When Commission Chair Raymond Brandt asked what happened to the $27.8 million the company accepted in reservations for its vehicles, attorneys for Elio Motors could not say.
But they argued the practice of accepting reservations ahead of production does not violate Louisiana law. The reservations, they said, are just spots in line and do not guarantee actual sales.
However, the commission’s attorney and its executive director, Lessie House, noted that the Elio Motors’ website and news releases use words like “buy,” “sale” and “own” as evidence of intent to sell.
Elio Motors’ now faces the more than $500,000 fine instead of the $7.5 million penalty originally proposed by the commission’s attorney.
In addition, the auto startup is required to obtain licenses to manufacture and deal in Louisiana, and to place all refundable Elio Motors reservations into a trust account within 60 days. Failure to do all of that will result in a fine of $5,000 for each day Elio Motors is not compliant.