Even Tesla, which is well on its way to becoming the most successful new car company since the late 1940s, has had to repeatedly return to the capital markets for more cash.
Hanlon says in some respects today's startups have it easier than 20 years ago when Excelsior-Henderson was rolling slowly toward production.
"With rapid prototyping and build to order, some parts of the business model have changed. But some things have never changed. You still have to design it. And you have to build it. And once you build it, you still have to test it. So, some of the steps are still there — and you can accelerate those — but you still have to go through many of them," Hanlon told me.
And this is one key reason I have so much trouble believing in the ability of startups to bring a world-class vehicle to market. It has taken the rest of the industry more than a century to figure out how to create competitive products with high quality that consumers want to buy.
And let's not forget that much of Tesla's success is based on a unique set of circumstances that would be difficult if not impossible to repeat. Toyota basically gifted Tesla an assembly plant in Fremont, Calif. Tesla's first product, the Roadster, was based on a car that Lotus designed, built and paid the freight for crash testing. And Tesla has been able to generate considerable funds by selling to other automakers the credits it earns from its zero-emission vehicles.
Still, Hanlon doesn't rule out the possibility that another startup could become successful.
"It's really important to have a compelling story and it needs to be told well, and by that, I mean honestly. What I have learned is that investors and the consuming public can deal with bad news as long as it is truthful. I do monitor them [automotive startups] and I wince because they often talk and say things that are exceedingly difficult to become true. When they don't hit a milestone or don't make it for the price they said they would, they instantly lose credibility."