What Brooklyn Nets and Russia's Dream Car Have in Common
The emergence of the Brooklyn Nets, with the backing of Russian billionaire Mikhail Prokhorov, is looking like a dream come true for fans and investors alike. As they set their expectations, they might be interested in the fate of a different Prokhorov project: Russia's dream car.
“This is the most exciting poll of the year, a poll about a dream,” author and journalist Masha Gessen wrote back in May 2011, as she watched an online counter record the number of people who wanted to buy a seemingly magical product: the Yo-Mobile, an electric hybrid car that would feature a methane-fueled power generator and would be fully designed and built in Russia. Some 50,000 people signed up on day one. As of Sept. 11 of this year, the number of potential buyers had reached nearly 200,000.
The car was revolutionary in more ways than one. A specially built factory near St. Petersburg would supply dealers with assembly kits, and the cars would be put together at points of sale. Engineers promised a revolutionary design platform using half as many parts as in an ordinary modern car. The price would be between $10,000 and $16,000, depending on the configuration. Prokhorov, the project's primary investor, said with certainty that production would start in September 2012, and the factory would be able to turn out 45,000 Yo-mobiles a year.
“I imagine running into one of my American friends at the airport. I lead them to this fun plastic car which I open without a key," wrote Gessen on the website Snob.ru -- incidentally, also owned by Prokhorov. "Asked what kind of car this is, I answer: It's this cool Russian car. I push a button, I drive and I talk about how ingeniously it's designed. I'll sign up, too. I'll be number 55,000 or something."
The international hybrid car community watched in wonderment. French green car aficionado Laurent Masson, on his Motornature.com blog, wished Prokhorov success, "because right now I can't think of anything from Russia I would like to own." The car "should be more fuel efficient than a Prius, but less powerful, at half the price. It’s hard to believe.”
Sadly, reality has been cruel to the dream. A week ago, Alexander Biryukov, the chief executive of Yo-Auto, told Snob that the Yo-Mobile would not hit the market until late 2014 or early 2015, and that he would no longer be the company's CEO. Biryukov blamed the two-year delay on an unnamed U.S. company that had failed to design the car's body. He explained that Yo-Auto would now focus first on a bigger, more expensive car. “The price is important to our consumers, we understand that," he said. “Of course, all this is extremely unpleasant.”
The Yo-Mobile was an important project politically. In April 2011, Vladimir Putin, then serving as prime minister, test-drove a prototype (fitted with a German engine) as part of President Dmitri Medvedev's campaign to modernize Russia's economy. There was a lot of talk of reducing Russia's dependency on hydrocarbon exports and developing innovative, smart products. With his plans to quickly produce a cheap, clean, revolutionary car, Prokhorov was the poster boy for Russia's high-tech future. The project became an element of a presidential campaign that won Prokhorov third place in March's election, after he tried and failed to build a liberal political party.
The type of entrepreneurship that created Prokhorov's wealth was very different from the kind needed to build a breakthrough automobile. He made his fortune in the 1990s, when his then-business partner Vladimir Potanin devised a scheme known as loans for shares. Under the plan, a handful of oligarchs were allowed to take control of choice Soviet-era industrial assets in exchange for backing President Boris Yeltsin's second presidential bid. Potanin and Prokhorov got Norilsk Nickel, the world's biggest palladium producer and one of its biggest nickel producers, for about $170 million. The two later parted ways, and Prokhorov cashed out of some of his industrial possessions just before the 2008 crisis. He's now worth about $13.2 billion, according to Forbes Russia.
On his own, Prokhorov has yet to launch or endorse a successful high-profile business. He quit six months after taking the reins of Russian precious-metals company Polyus Gold and announcing plans to make it one of the world's top three producers. According to Forbes Russia, he's now in talks to sell his stake in the company to a partner. A media group called Zhivi has had a hard time getting off the ground, despite some $150 million in investment.
The failures -- including an estimated $120 million sunk into the car of the future -- have yet to make much of a dent in Prokhorov's vast wealth or bravado, a situation that serves as a sort of allegory for Russia as a whole. The country's natural-resource wealth is so great that it can compensate for a breathtaking amount of thievery, botched campaigns and white-elephant projects. How well or poorly it is run hardly matters. Dreams may be shattered, but the money is still there.
Hopes are high for the Brooklyn Nets, which are scheduled to begin their inaugural season at the newly built Barclays Center in November. National Basketball Association Commissioner said last week he thinks the team's revenues in the coming season could rival those of the league's leaders, and that the team looks like it's "going to compete." May the dreams of basketball fans in Brooklyn come true.
(Leonid Bershidsky, an editor and novelist, is Moscow and Kiev correspondent for World View. Opinions expressed are his own.)
To contact the writer of this column: firstname.lastname@example.org.
To contact the editor responsible for this column: Mark Whitehouse at email@example.com.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Leonid Bershidsky at firstname.lastname@example.org
To contact the editor responsible for this story:
Mark Whitehouse at email@example.com