Harold and Ben Rosen, founders of Rosen Motors, failed to
redefine the automobile with their hybrid electric car when major
manufacturers rejected their new engine technology. A business obit.
The Business: Rosen Motors
Cause of Death: Major car manufacturers' rejection of new,
flywheel-based engine technology
In August 1996, brothers Benjamin and Harold Rosen summoned a throng of
journalists and auto executives to the remote Mojave Desert, in California.
The founders of Rosen Motors had spent three years developing a hybrid
electric vehicle. Now they were ready to debut their version of the car of the
future. As the road test began, the spectators craned their necks in
The car refused to budge.
The moment was humbling for the Rosens, who had resolved to do nothing less
than end the internal combustion engine's century-long reign under the hood.
Yet the problems that would make Rosen Motors a nonstarter ultimately weren't
technical but commercial.
If reinventing the automobile is an undeniable long shot, the Rosens
nonetheless seemed a better bet than most to pull it off. Harold, 72, is a
former Hughes Electronics engineer who pioneered the geostationary
communications satellite. Ben, 65, is the chairman of Compaq Computer Corp.
and a legend in the personal-computer industry. His venture-capital firm's
early investments in Compaq and Lotus Development Corp. hiked the worth of his
stock holdings to more than $100 million.
The brothers fueled their new venture with nearly $24 million of that
money, soliciting no outside investment. ("I didn't want to take money without
confidence there would be a customer," says Ben.) Their aim: to create a means
of propulsion that would be cleaner and more fuel-efficient than the internal
combustion engine yet more practicable than the batteries in
electricity-powered cars, which require recharging after relatively short
Their exotic design combined a small, gasoline-fed turbine with an
energy-storing flywheel. The turbine provided electricity for propulsion. The
flywheel, spinning as fast as 55,000 rotations per minute in the car's trunk,
could store energy that's normally dissipated during braking and release it
for sudden bursts of acceleration--acceleration that a turbine alone couldn't
By all accounts, the company, based in Woodland Hills, Calif., solved some
terrifically thorny engineering problems. And several months after its
embarrassing failure, the test car redeemed itself with a successful
The Rosens' business model, by contrast, never got on track. Rather than
build an entire car, they had planned to produce its vital innards, the
drivetrain, much the way Intel Corp. creates chips for computer makers. But
tradition-bound Detroit is not disposed to contract out the guts of its cars
to another manufacturer, and the Rosens say they never considered licensing
out the technology. "The drivetrain is just so critical for the big
manufacturers," says John Paul MacDuffie, a professor of management at the
University of Pennsylvania's Wharton School. "It was a gamble to try to break
into the industry that way."
The stumbling block, ironically, wasn't resistance to innovation but too
much enthusiasm for it. The major automakers snubbed Rosen Motors' visionary
drivetrain because they were already hard at work on their own environmentally
friendly alternatives, and flywheel technology didn't figure into their plans.
Glenn Mercer, director of automotive services at McKinsey & Co., explains,
"The Rosens just got squeezed out."
With their company entering a costly crash-testing phase, and with
automakers in Detroit and overseas unwilling to bankroll it, the Rosens
decided to call it quits, putting their 70 employees out of work. Reinventing
the automobile turns out to be as difficult as it sounds--even for Ben Rosen.