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The Real Reason DeLorean Failed Spectacularly

The gullwing doors swept open, Marty jumped inside the sleek stainless steel sports car, and the engine roared to life. As the DeLorean accelerated down the street and vanished in a flash of light, an automotive icon was born — though short-lived. DeLorean Motor Company crafted an indelible image in popular culture, but spectacularly failed in the real world due to missteps by founder John DeLorean. Beyond just bad luck and timing, poor decisions doomed DeLorean to collapse after just a few years.

The Visionary Leader With No Business Plan

John DeLorean was a rising star at General Motors when he decided to launch his own car company in 1975. The sleek, angular DMC-12 reflected his taste for radical design. And its brushed stainless steel body stood out from anything else on the road. Under DeLorean’s leadership, the company invested heavily to manufacture the car in Northern Ireland and produced distinctive marketing to generate buzz.

However, critics point out DeLorean lacked the operational skills to translate his vision into reality. By focusing so much on his strengths around car design, he failed to make a viable business plan, secure enough investors, or accurately forecast market demand. Production delays and cost overruns quickly burned through cash, forcing DeLorean to take unfavorable financing terms that ceded control of the company. Even worse, he was the target of lawsuits and accusations of misusing investor money.

Founding 1975
Founder John DeLorean
Key Product DeLorean DMC-12
Units Sold ~9,000
Original MSRP $25,000

Figure 1. Key facts about DeLorean Motor Company. Poor sales volume compared to high initial costs contributed to the company‘s failure.

Colliding With the Perfect Economic Storm

The recession of the early 1980s couldn‘t have come at a worse time for DeLorean. Gas prices climbed along with unemployment rates. Major automakers like Chrysler had to be bailed out by the government, showing the industry was on shaky ground across the board. When the DeLorean DMC-12 debuted in 1981 for $25,000, its lackluster acceleration and impractical design dimmed interest from car buyers battered by hard economic times.

0-60 mph Time 10.5 seconds
Quarter-Mile Time 17.2 seconds
Fuel Economy 19 mpg highway
Base Price $25,000

Figure 2. Performance specs and pricing of the 1981 DeLorean DMC-12 paled in comparison to rivals like the Corvette.

Reviews praised the car‘s flashy appearance, but lamented its disappointing powertrain and lackluster consumer appeal. DeLorean had placed huge bets on manufacturing capacity to deliver sales volumes that ended up significantly lower than expected. By 1982, the company was hemorrhaging money and desperate for an influx of capital. Unfortunately, John DeLorean‘s choices for relief sank the company into an even darker place.

Drug Charges Dealt Final Blow

In late 1982, DeLorean got embroiled in a scandal when he attempted to raise money for his struggling company by facilitating a drug deal worth millions of dollars. Even though DeLorean was eventually acquitted after spending 10 months in jail, the damage to his company and credibility was irreversible. DMC went bankrupt in early 1983, having produced under 9,000 vehicles against DeLorean‘s rosy projections of selling 12,000 cars per month.

DeLorean Timeline 

1975 - DeLorean Motor Company founded
1976-80 - DMC-12 developed
1981 - Car goes into production in Northern Ireland
        - John DeLorean arrested in drug trafficking scheme
1982 - Company declares bankruptcy
1983 - Factory closes down

Figure 3. Rapid demise of DeLorean within a few years of its founding.

While the economic climate and car‘s flaws were contributing factors, John DeLorean carried the most blame through his mismanagement and criminal acts. For all its brash style and cinematic fame, the DeLorean failed because of the misplaced bravado of its creator. DeLorean‘s tale reminds us that vision requires realism, and ego without business sense is a recipe for disaster. The company died an early death, but the mystique of its signature car lives on.

Lasting Cultural Impact Despite Commercial Failure

The rise and fall of DeLorean made it an icon of 1980s ambition and excess. While the business ended up failing spectacularly, the car itself left an outsized imprint on popular culture. The Back to the Future movie franchise cemented the DeLorean DMC-12 as the archetypal time machine. Its unpainted stainless steel skin and gullwing doors gave the car an unmistakable look on screen and on the streets.

Over the years, other film and TV projects like Ready Player One continued featuring DeLoreans to tap into nostalgia for the 1980s era the car represents. Tour companies rent out DeLoreans for Back to the Future fans to drive. An active owners community keeps surviving cars running many decades past the company‘s demise through meetups and online forums.

This cultural mystique persists despite lackluster sales during DeLorean‘s brief lifetime. About 9,000 DeLorean DMC-12s were produced between 1981-83, but the fan fervor made the car seem more successful than it ever was as a commercial product. For consumers, the bold styling and movie magic mattered more than the business missteps behind it.

An Innovator Ahead of His Time?

The DeLorean story shares similarities with Tesla‘s journey decades later. Like John DeLorean, Elon Musk built a company around distinctive sports cars not everyone believed the mass market wanted. Production and quality control issues plagued both Tesla and DeLorean early on. Like the DMC-12, Tesla Roadsters cost over $100,000 when first introduced.

However, Tesla crucially avoided DeLorean‘s mistakes around mismanaged cash flow and lack of operational experience. The company took a more incremental R&D approach and benefited from learning the auto industry ropes through seasoned executives. Thanks to better planning and exposure from luxury early adopters, Tesla generated enough momentum to bring more affordable and higher-volume electric cars to mainstream buyers.

In some ways, John DeLorean was an innovator before his time whose daring vision collapsed under the weight of forces beyond his control. While his personal shortcomings sealed DeLorean Motor Company’s fate, perhaps today‘s economic and technological landscape would have been more forgiving. DeLorean’s legend reminds us that yesterday’s Folley can become tomorrow’s inspiration to build companies that stand the test of time. The DeLorean ethos deserved better execution, if not better ideas. Gambling on automotive passion over pragmatism is always a risky bet.

Wrapping Up DeLorean‘s Failure

Decades later, sorting through the wreckage, we can piece together the myriad factors that doomed DeLorean:

  • Unrealistic sales projections
  • Chronic cash flow issues
  • Lack of operations experience
  • Economic recession eroding demand
    -Design compromises hurting performance
  • leader‘s poor judgment and criminal scandals

The shocking collapse of such an audacious company reminds entrepreneurs to ground passion with practicality. John DeLorean surely constructed an automotive icon but fatally shortchanged basics like engineering and financials. We should admire his daring vision while learning object lessons about the business prerequisites visionaries often ignore when charging blindly ahead.

DeLorean aimed impossibly high without a safety net below and paid the ultimate business price. But the unique car he created remains frozen in time as a symbol of 1925 possibility and 1980s dreams gone wrong. Against formidable odds, the DeLorean legend endures even as its creator and company long ago ran out of road.