Beware geeks bearing grifts – is the new DeLorean more than just vaporware?

Petrolheads and movie fans of a particular vintage could get a reason to celebrate as a Texas-based company confirms it wants to bring back the legendary DeLorean brand.

The brand’s original iteration had a tumultuous existence in the 1970s and 1980s – the iconic stainless steel DMC12 starred in the Back to the Future film trilogy; but poor demand, poor build quality, financing issues and the founder’s arrest on drug charges forced the original company out of business in 1982. Since then, the rights to the DeLorean name have passed to Stephen Wynne, who owns the Texas DeLorean Motor Company, which supplies spare parts for the few thousand DMC-12s still on the road.

Now, however, the brand is being revived under the leadership of new CEO Joost de Vries, who previously held positions at Tesla and Karma. Spearhead in his new campaign is the DeLorean Alpha5 – a powerful battery-electric 2+2 coupe that will compete with the Porsche Taycan, Tesla Model S Plaid and Mercedes-AMG GT. The Alpha5 claims to return over 300 miles on the US EPA test cycle, with impressive acceleration to match. While sharing little or no visual cues with the original DMC-12, the Alpha5 will utilize some of the largest gull-wing doors ever fitted to a production car, giving the car a strong parked presence while allowing access to the rear seats.

While the Alpha5 is standout and the announcement includes some details of DeLorean’s planned strategy to bring it to market, we believe there are some notable omissions in the announcement that should give potential investors reason to wonder if DeLorean is actually capable of achieving its stated goals. objectives.

The Warning Signs

  • Mismatch between the potential price of Alpha5 and the probable production volumes

In conversations with the media, CEO de Vries pointed to rivals such as Porsche Taycan, Tesla Model S Plaid and Mercedes-AMG GT. As a result, one could extrapolate that the Alpha5 will be priced in a similar margin to those mentioned competitors – ie. somewhere between $100,000 and $200,000. While that price seems plausible for an EV claiming 300 miles of range and 3.5 seconds from 0-100 km/h, we would expect a much higher price to match the low volume Rimac Nevera (>$ 2,000,000) if DeLorean intended to provide significantly better performance than stated.

However, DeLorean has said that the production of Alpha5 will be outsourced to Italy – a likely partner is Italdesign Automobili Speciali, the production division of the design studio Italdesign that wrote the new car. Italdesign Automobili Speciali is a coachbuilding company specializing in ultra-small, rarefied vehicles that typically cost much higher (more than $1,000,000) than DeLorean’s stated rivals, meaning it probably wouldn’t be cost-effective to have a range low six-figure supercars out there.

While DeLorean hasn’t confirmed the price of the Alpha5 or who will build it, the company has yet to clarify whether this is a million-dollar exotic car or a six-figure luxury production car. The fact that the first run is for just 88 units implies the former, but its stated rivals would suggest the latter.

  • The first production batch is not legal on the road

DeLorean has said the first production run will be 88 cars, referring to the Back to the Future series. However, those 88 vehicles will not be homologated for road use, they are only available for track driving. This isn’t necessarily unusual when we’re talking about small, stripped-down race cars from Ferrari and Lamborghini, but it’s almost unheard of for a luxury 2+2 coupe intended more for road use. That the first 88 cars are not allowed on the road seems a bizarre business choice and will severely limit the number of potential buyers.

Homologation for small-volume cars can be expensive, but rivals from Pagani, Bugatti and Koenigsegg all accept it as a cost of selling cars to customers, so it’s strange that DeLorean seems to avoid it.

  • No Powertrain Details, But Blockchain Buzzwords Are Already Being Tossed Around

Another eyebrow-raising facet of the Alpha5 announcement was the fact that the first 88 vehicles will be “physical avatars” of associated NFTs (non-fungible tokens). While linking a product to an NFT is not inherently problematic, investors should be aware of the exaggerated risks associated with embracing this mercurial blockchain technology.

The hype surrounding these digital tokens peaked in 2021 and companies across industries lined up to highlight their efforts in the space. However, in light of collapsing NFT sales, cruel and widespread consumer pushback on social media, and growing concerns about the extremely high prevalence of scams and bad actors in the NFT space; many companies have started to abandon the technology because it poses too great a risk of reputational or financial damage if the NFT market bottom falls.

However, DeLorean’s announcement remains littered with NFT-related buzzwords rather than concrete details about the vehicle’s powertrain or performance.

  • Limited production or business strategy, but the company is already planning an IPO

DeLorean says it has completed its first seed funding round. CEO de Vries has stated that DeLorean plans to become “a publicly traded company”, citing the fact that “building cars isn’t cheap, and you need a lot of money to make it happen”. He has hinted that the company could be looking to launch its next round of funding alongside an IPO, possibly as early as August.

While this strategy is typical of new automakers looking to break into the market, it seems a bit premature for DeLorean to court investors without having anything approaching a working prototype to show it’s actually capable of producing production-ready cars. build.

  • Future plans are vague at best

DeLorean’s revived plans start with the Alpha5, but currently include three other models. Next on the agenda is an ICE V8-powered sports coupe, which will be followed by a battery-electric sedan and then an electric SUV, possibly powered by a hydrogen fuel cell.

What stands out here is the lack of consistency between vehicle strategies. You might expect DeLorean to develop a battery EV powertrain for the Alpha5 and then adapt that powertrain for the rest of its lineup. However, the fact that DeLorean’s strategy oscillates between BEV, ICE and FCEV powertrains suggests it lacks a concrete vision of its future powertrain strategy.

  • This isn’t the first time a revived DeLorean has said it’s going to build an EV

Back in 2012, when DeLorean Motor Company was still headed by Stephen Wynne, the company came up with the idea of ​​building an electric version of the original DMC-12 sports car. This would use the iconic wedge-shaped stainless steel housing, but fit a battery and motors instead of the

original V6 petrol engine. The car was supposed to hit the market in 2013, but after failing to land a production network or get enough orders to start building vehicles, plans stalled. Of course, the new DeLorean seems to be much more than a little retro car with an EV powertrain, so the fate of the 2013 model won’t necessarily translate to the Alpha5.

  • Now is a good time to take advantage of a frothy EV investment landscape

The astronomical rise of Tesla over the past decade has completely changed the investment landscape in the auto industry. Before Tesla, battery EVs were minor quirks meant for specific use cases, but after its emergence, each OEM in the market is scrambling for their own EV strategies. This has led to a bubbling investment market with no shortage of ready capital for EV startups, and no end to the line of players queuing up to convince investors that they will be the next trillion dollar EV company.

In this context, extreme caution should be exercised when evaluating the potential of EV investments – does the company have a clear go-to-market strategy? Does it actually have access to the facilities and specialist knowledge needed to ramp up EV production? Is the product itself a plausible competitor to the ever-growing list of proven EVs that are already taking the market by storm?

The answers to those questions will determine how likely an EV startup is to put its plans into action.

Sure, the DeLorean Alpha5 is a cool concept and a fun, nostalgic nod to a brand and car that came to define an era for car enthusiasts. However, investors should be careful to look beyond the hype and vigorously question whether a company is actually capable of achieving its stated objectives.

This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center

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