Elio Motors, which has been struggling since 2009 to build its own ultra-cheap, small, fuel-efficient, three-wheeled car, announced Thursday that it will source an engine from a major automaker.
Previously, the company planned to build its own 3-cylinder engine with up to 55 horsepower for its projected 84-mpg three-wheeler.
The company did not specify what automaker will supply the new engine or the engine's specs, but said it had "entered into a memorandum of understanding with a Fortune 500 OEM to provide the engine foundation as part of a new powertrain for the Elio vehicle," referring to an original equipment (vehicle) manufacturer.
Likely candidates to supply the engine include Mitsubishi and possibly Ford or BMW, which have certified 3-cylinder engines for sale in U.S. models, though Ford has abandoned using its 3-cylinder in any models sold here.
Developing an engine and getting it to meet emissions and fuel economy requirements is an expensive endeavor. Elio estimates its agreement to buy the engine from an existing automaker will save the company about $120 million.
The company also said the new engine will double the estimated horsepower from Elio's own design and still meet the targeted 84 mpg fuel-economy rating.
Elio has struggled to raise money to construct an assembly line for the car at the Shreveport, Louisiana, factory that it took over following GM's bankruptcy in 2009.
The company has launched several unusual financing schemes, including asking buyers to prepay for gas at inflated prices and launching its own cryptocurrency.
Elio has hired Roush Engineering to integrate the new engine into one of its prototypes to begin testing. The company has built five prototypes and reportedly has three running test cars. The company has said it will put its car into production next year, with funding it received from Overstock.com earlier this year.
In the 10 years since founder Paul Elio announced the project to build an affordable two-seater, gas prices have dropped from over $4 a gallon, when fuel economy was a major purchase consideration, and electric cars have become more affordable and popular.