Back to the Future: The Rise and Fall of the DeLorean Motor Company (2024)

Today, October 21, 2015 at precisely 4:29 p.m., is the time when Marty McFly and Doc Brown (and Marty’s girlfriend) end up in what was in the late 1980s considered “the future” in the movieBack to the Future Part II. The car that got them there? A specially outfitted, time-traveling DeLorean DMC-12. But for as compelling as time travel is—and the 1989 vision for what the year2015is like—the DeLorean’s real-life history is far more cinematic. Officially, DeLoreans were sold between 1981 and 1983, but the company’s talespans much longer and involves multiple criminal trials, the IRA terrorist group in Ireland, the British government, and even the founder of Lotus Cars, Colin Chapman.

In the Beginning, There Was Stainless

John Z. DeLorean was a former manager at General Motors who successfully ran Pontiac and Chevrolet, and just as his future appeared rosiest, he hung it all up in the early 1970s to start an all-new company. Named after himself and officially incorporated in 1974, it was to provide what amounted to consulting services, but then DeLorean added the Composite Technology Corporation subsidiary in 1975 to develop a new form of plastic-sandwiched foam panels that promised high strength but low weight, the patent for which DeLorean had acquired licensing rights for. This tech-focused arm of the DeLorean Corporation was also to do the R&D legwork on a new car.

The DeLorean car as we know it today first glinted into existence as a cooperative effort between DeLorean’s fledgling company and Allstate Auto Insurance, which provided half a million dollars toward the design of a so-called “safety car” intended to exemplify the ideal safe automobile per a contemporary government safety initiative. Allstate later backed out, but DeLorean had a solid investment it could use to continue developing a car. Design work was contracted to Ital Design in Turin, Italy, and ultimately was handled by Giorgetto Giugiaro himself, although John DeLorean and his budding crew dictated that the car have gullwing doors, deformable plastic nose and tail caps, room for six-foot-plus occupants, and stainless-steel bodywork. Giugiaro’sdesign was applied in 1976 to acompleteprototype assembled by Kar Kraft of Detroit and powered by a transversely mounted Citroën-sourced four-cylinder engine. The prototype (dubbed DMC-12) was introduced to the public at the 1977 National Automobile Dealers Association meeting in New Orleans with the intention of kicking fundraising for the project into high gear.

Ireland, the Promised Land

Money first really began flowing into the operation by late 1977 after 158dealers were signed on—with the stipulation that they cough up $25,000 for common stock in the company. After185 more dealers eventually came onboard, this generated nearly $10million, with individualinvestors making up another $1 million or so. Pay dirt was found in Northern Ireland, where a mixture of grants, loans, and direct equity investment totaling more than$100 million from the Northern Ireland Development Agency and the Department of Commerce enticed DeLorean to set up its manufacturing operations in Belfast. Ireland had beaten out Detroit, the state of Texas, Puerto Rico, and several European countriesfor the privilege. Flush with cash, DeLorean contracted Lotus—yes, that Lotus—to develop the DMC-12 sports car in 1978.

The car Lotus was given wasn’t exactly the car Lotus would have designed itself. The DMC-12 prototype had a plastic chassis to which front and rear subframes were bolted, and a late decision to abandon the Citroën four-cylinder for a Renault-sourced 130-hp 2.8-liter V-6 necessitated pushing the engine to a rear, not midship, position and turning it 90 degrees. Lotus ultimately scrapped the chassis design for a backbone-type unit, and it lent considerable fiberglass experience to the body construction. The Belfast facilitywas completed in just two years and was really an assemblage of buildings, not a single factory, to mitigate production fallout should it suffer aterrorist attack. Make all the jokes you want about early-’80s Detroit, butNorthern Ireland at that time was anything but stable: the Irish Republican Army, a radical group fueled by Irish nationalist sentiment, wanted Britain to withdraw control over Northern Irelandand made its position known usingterrorism. It was a mess, and right in the middle of this political storm sat a luxury-car company with financial backing from Northern Ireland’s government—i.e.Britain.

Enter the Accountants, and Cue the Cocaine

In 1981, the first cars rolled off of the assembly linesandwere sent stateside. Reviews were positive, but initial interest quickly tapered off as a recession hit the U.S., leaving a large inventory of unsold cars. Curiously, DeLorean reacted by building more cars. An alreadyuntenable situation turned impossible when interest payments on bridge financing for the unsold cars—essentially funding to pay for the cars’ costs between the factory and the showroom—mounted. DeLorean sought financial assistance from the British government, but the newly conservative governance led by Margaret Thatcher wasn’t as keen as its liberal predecessors to throw cash at DeLorean’s venture. Layoffs ensued at both the Belfast factory and among DeLorean’s U.S. staff and prompted the British government to look into DMC’s accounting. The bean counters didn’t like what they saw, and Britain put DMC into receivership. In 1982, DMC filed for bankruptcy in the U.S. and initiated Chapter 11 restructuring.A complicated series of deals intended to save the company resulted in some quick cash, but ultimately the Belfast factory’s operations were halted. And then came John Z. DeLorean’s arrest for drug traffickingon October 19, 1982.

Nearly as improbable as a fledgling automaker anchored in Belfast in the early 1980s actually succeeding, the arrest cameafter DeLorean waslinked to an attemptto smuggle millions of dollars’ worth of cocaine into L.A. The executive was alleged to have promised a man a $1.8 million commissionas a finder’s fee for a potential $15 million investment windfall—only the man was a confidential informant for the FBI and DEA, who ultimately set up John Z. to meet with a smuggler. Under surveillance of lawmen, DeLorean was arrested at the finalmeeting; his trial began April 18, 1984.

Around the same time, it was discovered that some of the company’s investment money, about $17 million assumed to have goneto Lotus, was missing. Suspicion centered around “GPD,” General ProductDevelopment, a Swiss company that was incorporated in Panama City. On paper, DeLorean paid GPD for the development and engineering of the DMC-12, and that company subcontracted Lotus. Only Lotus appears to have never received any notable sum fromGPD; sure, money flowed in directly from DeLorean Motor Company, but almost nothing from GPD. In late 1982, soon after the missing funds were called into question, Lotus’s founder and head man Colin Chapman—rumored to be one of the few peoplenext to DeLorean who truly knew what GPD’s game was—died.

Interest in GPD was likely spurred after DMC’s receivership and bankruptcy filings, and it really stemmed from the source of the absentmoney. Raised years earlier for a “research partnership” brokered by the financial firm Oppenheimer and Company, this money was dumped into a DeLorean subsidiary, the DeLorean Research Limited Partnership, and earmarked forresearch and development. Under contemporary tax laws, these investments could be written off; so when the money appeared to have vanished, the IRS and its British equivalent came knocking. These inquiries eventually led to John Z. DeLorean’s indictment in 1985 on 15 federal charges of fraud, racketeering, wire fraud, and more.

“Not Guilty”

Almost amazingly,DeLorean successfully used an entrapment defense in his drug trial and was found not guilty. In his tell-all 1985 book,DeLorean, John Z. claimed his involvement in a government drug sting came “by chance,” insisting thatthe informant he dealt with approached him and initiated dealings to save his company. By DeLorean’s hindsight account of the business, he describes over two months of chasing what he thought was alegitimateinvestment in his auto companybefore, abruptly,drugs came up as apossible source for investment. Having immediately refused further involvement, John insiststhe “FBI should have backed off” when it “was obvious [he] did not want to be involved in a criminal act,” as expressed in tape-recorded conversations. Those exculpatory recordings, he further claims, were destroyed or withheld by the FBI and DEA.Even so, DeLorean kept in contact with the informant and the deal, right up until the moment he was arrested in a hotel room with a smuggler holding some 60 pounds of cocaine. Cameras planted in the room caught DeLorean famously remarking “it’s better thangold” in a clear reference to the drugs, therebytoasting the future success of his company.

Perhaps more amazingly, he also beat the fraud rap, even though it wasn’t entirely clear where $17.75 million in investors’ money had gone.Prosecutors alleged that more than$8 million of GPD cash was used by DeLorean himself to pay off loans he took out to purchase a snow-machine manufacturer in Utah—one of his many side projects that irked other DMC executives—while another half a million was simply used for personal purposes. Almost nothing had made its way to Lotus or to any actual R&D. Even DeLorean’s lawyer said at the time that his client “was lucky to be acquitted in the fraud case in Detroit.” If DeLorean expressed an almost impossible level of naïveté before his apparent discovery of the illegal source of funds in his drug case—there were mentions of cash infusions from Columbian businessmen who, somewhat atypically, didn’t want anything to do with public-facing aspects of the DeLorean Motor Company like holding board positions—his grasp of irony also was lacking. In his book, John Z. writes that he was “convinced [the drug men] wanted DMC so they could use its resources to move money around the world.”

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When the criminal trials were over, DeLorean’s name was as (legally) clean as his stainless-steel DMC-12s’ body panels, but the DeLorean Motor Company had already almost completely dissolved.Over the years, DeLorean’s civil litigation battles left him steeped in debt, and eventually he was forced to declare bankruptcy in 1999 and sell his New Jersey estate to pay off creditorsa year later. He died from a stroke in 2005.Back to the Futureopened on July 3, 1985, smack between John Z. DeLorean’s two criminal trials. In the film, the DMC-12 was outfitted with a plutonium-fueled “flux capacitor,” what appeared to be a raft of cooling equipment where its engine was supposed to be, and a digital readout witha trio of dates and times:destination, present, and last time departed.

Chronologically trifurcating the roller-coaster tale of the DeLorean Motor Company is impossible, but fitting it within the 30-year time span linkingBack to the Future‘s past and present is. John Z. DeLorean began working for GM in 1956; after ascending to the position of vice president in 1972 and on track to become president of GM, he left in 1973only to see his professional credibility evaporate by 1985. Would the man have used a time machine, DeLorean-based or otherwise, to get back to1955 and change anything? In an interview withBloomberg Newsdays before his death in 2005, he was asked about GM’s then-decline. He replied: “There’s one or two ways they could make it, but they’re both long shots. If they want to know [how], they have to pay me.”