After spending nearly 5 years and $24 million to develop an engine technology that it promised would revolutionize the auto industry, Rosen Motors will close its doors on Friday because it couldn't persuade any major car manufacturers to buy into its vision.
Launched in 1993 by Harold Rosen, a renowned aerospace engineer, and his brother Ben, a legendary venture capitalist and chairman of Compaq Computer Corp., Rosen Motors aimed to develop a turbine-flywheel powertrain for passenger cars.
The brothers envisioned virtually pollution-free cars with double the range of today's automobiles and the performance of a sports car.
The company successfully demonstrated its experimental hybrid-electric powertrain in a modified Saturn coupe during a Mojave Desert road test in January. But auto makers in Detroit and Europe, who are pursuing a range of low-emissions technologies ranging from fuel cells to hybrid electric-gasoline vehicles, chose not to bet on the Rosens' flywheel technology.
"It was a longshot from the beginning," said Ben Rosen, who is the company's chairman. "We knew we had a huge technical challenge and a huge marketing challenge. We were 50% successful."
Harold Rosen, president and chief executive of Rosen Motors, said the auto manufacturers gave his company "a fair hearing, but they're spending a lot more than we could have on technology of their own. They all have pet projects for advancing their capabilities in emissions and fuel economy, and they had no room on their plates for ours."
Michael Gage, president and CEO of Calstart, the Burbank-based consortium that is developing advanced transportation technologies, credited the Rosens with developing useful technology that could still find a home among utilities and the military.
"The problem is there are always several paths to the future, and it looks like advances in fuel cells and simpler hybrid systems have captured the imagination of the automobile companies at the moment," he said.
The Rosens broke the news to the start-up's 70 employees Monday in a newly leased Woodland Hills building that was to have housed a raft of additional employees. Most of the staff, which is dominated by engineers and technicians, were shocked by the news, Vice President Deborah Castleman said.
"The people who work here believe in the dream, so to speak," she said. Although they understood the risks of working for a start-up company, "I don't think they expected this."
Employees had long known of the Rosens' end-of-1997 target for landing an industrial partner that could help them perform crash tests, cost-reduction analysis and other development work, Ben Rosen said. In the last few weeks the brothers were still in "advanced negotiations with several potential customers," but last Friday "we realized we were not going to get a suitable agreement,' he said.
Selling a core technology to the auto industry is always an uphill battle, Gage said: "It's real tough to convince auto makers who like to think they do it all themselves that they ought to buy into technology developed from the outside."
It was Harold Rosen, a 71-year-old engineer who holds 50 patents and pioneered the development of geostationary satellites at Hughes Electronics, who proposed combining a gas-powered turbogenerator with an energy-storing flywheel to replace traditional internal-combustion engines.
The turbogenerator is like a miniature jet engine and produces the power that the car needs to drive. The flywheel, a cylinder made of carbon composites, stores energy by spinning rapidly between a car's rear tires.
When the car needs an extra boost of energy for acceleration, the added power is drawn from the flywheel, which then spins more slowly. When the driver steps on the brake, the flywheel spins faster to capture the excess energy.
The Rosens hope that their sister company, Capstone Turbine Corp. in Tarzana, will find a use for much of Rosen Motors' technology and employees. Capstone is creating small turbogenerators for stationary power generation and may develop an application that can be used to power a bus. Sevin Rosen Funds, Ben Rosen's venture capital firm, is among Capstone's investors; the brothers helped revitalize the company before founding Rosen Motors.
In addition to Capstone, "a couple of companies have indicated they might be interested in our intellectual property," said Ben Rosen, who is expecting to get more inquiries as news of Rosen Motors' demise spreads. "Fortunately the labor market is good now, so all of the people will find other employment."
Despite the outcome, Ben Rosen said he is proud of his company's efforts and that he would gladly do it all again.
"There are not many chances you have in a major industry to change it and do something that's good for society and clean up the air and reduce the use of petroleum," he said. "It was a chance to change the world."