Is Tesla The Next DeLorean?

Updated: July 29, 2010

Ever since Tesla Motors was founded in 2003, skeptics have questioned the long-term viability of the cars they sought to create. Electric cars in general have a long history of impracticality, so Tesla's visions of an electric sports car were easy enough to mock. Yet in spite of all criticism (and after years of unprofitability), Tesla became profitable in July 2009. According to SEC paperwork, the company sold over 900 Tesla Roadsters to customers in 18 countries, generating $126.8 million in revenue by December 31, 2009.

Now, the question is: how long will it last? Will Tesla become an enduring force in the automotive world, or just a DeLorean-esque fad?

The Fate of The DeLorean

One way to gauge the Tesla Roadster's long-term prospects is by comparing it with another futuristic and once-promising sports car: the DeLorean DMC-12. Manufactured in 1981-82 by the Irish DeLorean Motor Company, the DeLorean was in its heyday a markedly different car from anything else on the road. With its gull-wing doors (pictured above), a fiberglass underbody and brushed stainless steel panels, the space age 2-door coupe raised the eyebrows of just about every auto enthusiast around.

The DeLorean is perhaps best known as being Dr. Emmit Brown's time machine in the Back To The Future trilogy, and its appearance on the big screen only served to fuel the cult status surrounding the quirky car. Unfortunately, mystery and intrigue alone were not enough to keep the DeLorean in production.

In total, only 9,000 of them were ever produced, and quality problems (among other difficulties) drove DeLorean Motor Company to bankruptcy in 1982. Today, the DeLorean is little more than a collector's item among a small but insignificant number of enthusiasts.

Similar Circumstances

There are many similarities between the Roadster and DeLorean beyond the fact that both contain innovative technology and styling. Like the Roadster, the DeLorean was designed at a time when fuel prices were a pressing concern of every consumer (due to the worldwide fuel shortages of the late 1970's and early 1980's.)

While Tesla aims to sidestep fuel costs with lithium-ion batteries, the DeLorean tackled the problem by striving to make the car extremely light and by using a fuel-injected V6 engine - a major innovation over the older, fuel-hogging rotary engines of that time.

Reputable Leadership & Management

Despite appearing in retrospect to be a strange "gimmick" car, DeLorean Motor Company was not run by amateurs or hobbyists. The company was founded by John DeLorean, described by the New York Times as a "flamboyant automobile industrialist" who worked for General Motors and was once thought of as a candidate for GM President. DeLorean became chief engineer of the Pontiac division in 1961, contributing such patented innovations as wide-track wheels, torque-box perimeter frames, lane-changed turn signals and the overhead-cam six-cylinder engine.

DeLorean, like some of today's automotive innovators, felt that GM fell out of touch with what the public wanted out of its cars. Ultimately, he left GM in 1973 and founded DeLorean Motor Company in 1975. "If we were super, super lucky and did everything right", DeLorean said in 1977, "we might some day have another BMW."

Tesla Motors, too, is run by well-qualified management. While founders Martin Eberhard and Marc Tarpenning made their names in Silicon Valley rather than Detroit, the company has since taken on board members including Daimler AG Vice President of E-Drive and Future Mobility Professor Herbert Kohler. Tesla also accepted seed funding from such established businesspeople as Google co-founders Larry Page and Sergey Brin.

Similar Pricing Relative to Other Cars

The two cars also employed similar upscale pricing strategies. Today, the base model of a Tesla Roadster sells in the U.S. for about $109,000. The DeLorean, too, retailed for substantially more money than others cars of its time. As the New York Times explains, the car retailed at a price of about $25,000 (roughly $59,802 in today's inflation-adjusted dollars) "at a time when the average vehicle cost about $10,000."

Much like the Tesla's exorbitant selling price currently repels all but the wealthiest buyers, few Americans living through the recessionary late 1970's-early 1980's were willing or able to pony up for a DeLorean.

Government Funding

Both Tesla and DeLorean Motor Company received substantial government funding for their projects. Besides taking some early seed capital from Hollywood stars Sammy Davis Jr. and Johnny Carson, DeLorean Motor Company relied on the British government for about $120 million of its $200 million startup costs according to the Times.

The same roughly holds true for Tesla Motors which, in addition to taking several rounds of hefty private investment, was awarded $465 million in low-interest loans from the federal government's Advanced Technology Vehicles Manufacturing Loan Program. The Pacific Business News reported in 2009 that these funds will "help the San Carlos, Calif.-based company build a factory to produce for Tesla's next-generation sedan, the Model S and manufacture drive train technology."

The Environmentalist Movement

Given all of these similarities, is Tesla Motors doomed to become just another amusing footnote in automotive history? Not necessarily. One enormously important variable that DeLorean Motor Company lacked is firmly in Tesla's corner: the environmentalist movement. In the 1980's, the majority of public outcry about high fuel prices was purely practical. That is, the common consumer was just tired of paying through the nose at the pump. Once Ronald Reagan took office and ended President Carter's fuel rationing system, fuel prices fell virtually overnight and the problem went away.

Today, there is a full-fledged cultural movement toward using less fuel not only out of practicality, but also on principle. Additionally, automotive technology in general has improved by leaps and bounds since the DeLorean's 1982 demise. Tesla has also inked lucrative deals with other automakers, including a July 2010 pact with Toyota to produce an electric-powered RAV4. Autoblog.com reports that the car should hit the market by 2012.

Together, the environmentalist movement and superior technology could help Tesla Motors remain in business for much longer - at seven years old, it has already matched DeLorean Motor Company.

Featured Research
  • The Business Case for Updating an Aging Phone System

    You may think your business phone system is functional, but is it fully modern? In recent years, telecommunications technology has made major strides. A system that was perfectly serviceable ten years ago—or even five years ago—is now very out-of-date. more

  • 2017 ERP Buyer's Guide

    Among all of the business software applications necessary for business operations, ERP is undoubtedly one of the most important. Making the wrong selection can have a disastrous impact on your accounting, manufacturing, and supply chain. With so much at stake, it is crucial to make a well-informed decision. more

  • 2017 Contact Center Software Trends

    Did you know that, according to Forbes, 86 percent of customers will pay more for a better customer experience? Customer satisfaction is always a worthy business pursuit, but to identify customer preferences and exceed expectations, you must keep pace with innovations in the technology your customers are using. more

  • How to Select Contact Center Software in 9 Steps

    Your choice of contact center software will affect the future success of your business. Don’t leave this important decision to chance. This guide provides nine actionable steps for the selection process. more

  • [Infographic] 15 Questions to Ask When Selecting a VoIP Provider

    Deciding which phone system is right for your business can be difficult. With our VoIP technology blueprint, discover the top 15 questions you should ask VoIP vendors before you make a buying decision. more