This story is the latest in NPR's Cities Project.

A few years ago, engineers at the Massachusetts Institute of Technology debuted a design, a decade in the making, for a car that would transform urban transportation.

They called it the CityCar. It's a small, electric two-seat pod, with "robot wheels." It looks like a futuristic Volkswagen Beetle.

With zero tailpipe emissions, the idea was that it would not pollute. With four wheels that maneuver 120 degrees individually, it could turn on a dime. The door is on the front. So, when parked front-end-in, drivers and passengers could avoid stepping into traffic. And the whole car would fold up — such that seven vehicles could fit into two normal-sized parking spaces.

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The cars would be shared, not owned — parked at train stations where people could pick them up, as people do with a bike share. The goal was to give people more options to avoid owning a car.

Kent Larson, director of MIT's City Science Initiative, told NPR the CityCar was a complete rethink of the automobile, aimed at making cities more livable.

"I have seen estimates that in New York City up to 40 percent of the energy consumed by automobiles is by people circling the block looking for a parking space, so you eliminate all of that wasted energy, all of that wasted time and you remove vehicles off of the street," Larson said.

There was a tremendous amount of excitement about the design, and in Europe some leaders saw the CityCar as the solution to many urban ills.

The rise and fall of the CityCar illustrates the challenges of inventing the transportation of the future.

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The Production Phase And Public Money

In 2008, a consortium of small companies in Spain got together to transform the CityCar into a commercial reality.

The Hiriko project promised to create green jobs at a time when Spain's manufacturing sector was hemorrhaging. It had the power to transform economically depressed fishing villages in the Basque Country into hubs of high-tech creativity, its backers said.

They renamed the car "Hiriko," which means "urban" in the Basque language, Euskera. Entrepreneurs created a nonprofit parent company, Afypaida, to manage public money pouring into the project.

At the height of Spain's economic crisis, the Spanish government pledged some $16 million, and the Basque local authorities gave about $2.2 million. The European Union also devoted millions from a European social fund, for a total Hiriko budget exceeding $80 million.

The then-president of the European Commission, Jose Manuel Barroso (left), and Jesus Echave, the Spanish chairman of a consortium of seven small Basque companies, sit together in a prototype of the Hiriko car, during a 2012 event in Brussels.

The then-president of the European Commission, Jose Manuel Barroso (left), and Jesus Echave, the Spanish chairman of a consortium of seven small Basque companies, sit together in a prototype of the Hiriko car, during a 2012 event in Brussels.

John Thys/AFP/Getty Images

"This is a small, folding and smart electric car, but it is also much more than that. It is European social innovation at its best," said the then-president of the European Commission, Jose Manuel Barroso, at a 2012 event debuting the car in Brussels. He heralded it as a trans-Atlantic "exchange between the world of science and the world of business."

Barroso climbed into the car and got a demonstration from Jesus Echave, the Spanish chairman of the Hiriko consortium. Cameras clicked and both men beamed.

That was 2012.

How The Project Fell Apart

Now three years later, Echave and six associates have been placed under formal investigation for alleged misuse of public funds and falsifying documents. Afypaida ceased operations in April 2013, and laid off all of its employees, some of whom are now suing for severance pay. The company is currently in receivership, with its assets frozen.

Ex-employees of Hiriko have since come forward to say that pieces of the prototype debuted in Brussels were held together with Velcro and superglue.

NPR reached out to all seven officials under indictment, either directly or through their companies or lawyers. All either refused to comment, or did not respond to multiple requests.

"They're politically well-connected businessmen with no prior experience building electric cars. They used this public money to line their own pockets," says Igor Lopez de Munain, a member of the Basque parliament who has been investigating the Hiriko case. "I believe they never had plans to bring these cars to market. It was all theater!"

But one of the project's chief engineers, Carlos Fernandez Isoird, told NPR that all of the money did indeed go to the project, and was not embezzled for personal use.

"It's expensive to bring a car from design to commercial viability. Ask GM or any of the big companies, and they'll tell you it takes more than 10 times the budget we had!" he says.

Fernandez Isoird described a web of seven small engineering firms, including his firm, Denokinn, each tasked with producing a different aspect of the Hiriko car — the exterior body, the robot wheels, etc.

"There were problems with a lack of unity in vision, and communication, among all those companies — too many moving parts," he says. "This wasn't a normal car. It was a mobility project. But a lot of the conventional engineers didn't understand that."

What Happened To The Hiriko

People involved with the project tell NPR that several prototypes were built in Spain. We tried to track down the original, which was based on the MIT design.

Several sources said they had last seen it at a warehouse in an industrial park on the outskirts of the Basque city of Vitoria-Gasteiz.

Today, the building seems abandoned, a flock of geese nesting at its entrance. Knocks at the door turned up no answer. The whereabouts of the Hiriko car remain a mystery.

Outside of the abandoned headquarters of Epsilon Euskadi, one of the companies tasked with building the Hiriko car in Spain. The consortium's parent company, Afypaida, went out of business in 2013. Several sources told NPR that the Hiriko prototype was kept here, in an industrial park outside the Basque city of Vitoria-Gasteiz. But the building is empty now.

Outside of the abandoned headquarters of Epsilon Euskadi, one of the companies tasked with building the Hiriko car in Spain. The consortium's parent company, Afypaida, went out of business in 2013. Several sources told NPR that the Hiriko prototype was kept here, in an industrial park outside the Basque city of Vitoria-Gasteiz. But the building is empty now.

Lauren Frayer for NPR

MIT Moves On

Creators of the original CityCar didn't know where to find the Hiriko either and they emphasize that a firewall limits their involvement with the commercial production of their inventions. MIT is a nonprofit institution.

But the inventors are not in mourning. In fact, it's probably for the best, says team leader Kent Larson, because in the time it took to try to manufacture Hiriko, its technology has already become "obsolete."

He says autonomous vehicles will make the folding feature of the CityCar unnecessary.

"It was actually a great thing, because at that point we had all kinds of new ideas we wanted to explore," he says. "[We've] moved on from a vehicle that folds to save space, to one that doesn't ever need to be parked."

Larson is currently developing a new self-driving electric vehicle that would be almost constantly in motion, for people who don't own a car. It would drive itself — or you — around the city.

"We realized that perhaps the ideal urban vehicle is an ultralightweight one-person, three-wheel vehicle that's bikelike, not carlike. It operates on bike lanes, not roads ... and uses very inexpensive sensing and processing, rather than very expensive systems on highway-speed autonomous vehicles," he explained. "If you have a shared fleet of vehicles ... that serves a population appropriately at rush hour, then you have excess vehicles off-peak. So we transform the vehicle to move goods autonomously — packages."

So it could, say, pick you up from work — or pick up your groceries, without you.

They call it the PEV — the Persuasive Electric Vehicle. It would be low cost and lightweight, with three bicyclelike wheels. It looks a bit like a 21st century rickshaw.

Larson says this idea — like the CityCar — meets three key criteria for a Media Lab project.

"They need to have the potential of having impact. They need to be unique — can't duplicate what others have done or what you've done in the past. And they need to have some qualities of magic. They need to excite people and capture the imagination."

Larson says MIT will probably test a prototype of the PEV — a potentially city-changing new vehicle — in Europe.

"Our goal right now is to do a test next year ... and if it proves to be as successful as we think it will be, we'll work with a company to commercialize it or we'll spin off a startup to commercialize it," he says.

NPR's Elise Hu contributed to this story.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

Here's the story of a remarkable car. It's remarkable because it's electric, remarkable because it folds up so you park in less space and also remarkable because we no longer know where it is. It's a tale that says a lot about the challenge of inventing the transportation of the future. And it comes our way thanks to the NPR's Cities Project.

UNIDENTIFIED WOMAN: Becoming a world class city.

UNIDENTIFIED MAN #1: Keep the transit running.

UNIDENTIFIED MAN #2: We have to move people a lot efficiently.

UNIDENTIFIED MAN #3: Come take a ride of the future.

INSKEEP: We'd love to take a ride in the future, but first we're going to have to find that missing car. Our story begins at the Massachusetts Institute of Technology. MIT has a program that's focused on future cities, and researchers there have been rethinking the automobile. They'd like a car that pollutes less and takes up less space and costs less, all of which would transform the cities in which we all live, since our cities have almost entirely been engineered around the automobile. So the MIT engineers invented the CityCar, a small electric two-seater - looks like a futuristic VW Bug. Couple years ago, MIT's Kent Larson showed one off to our colleague Elise Hu.

(SOUNDBITE OF ARCHIVED BROADCAST)

ELISE HU, BYLINE: First, where are we?

KENT LARSON: We are in the atrium of the media lab.

INSKEEP: Which is where you find MIT's City Science Initiative.

(SOUNDBITE OF ARCHIVED BROADCAST)

LARSON: Down below us, you will see a full-scale mechanical prototype of what we call the CityCar.

INSKEEP: Visitors could check it out like any new car. You know, kick the tires.

(SOUNDBITE OF ARCHIVED BROADCAST)

LARSON: Each wheel - what we call a robot wheel - has the drive motor, the steering motor, the braking and it folds.

HU: Wait a second.

LARSON: (Laughter) Yes, it folds up to occupy very little space. You would be astounded how much prime land in the center of the city is devoted to cars not in use. You can get three and a half of these cars to one conventional car.

HU: Will anyone actually get to drive this?

LARSON: Well, we have a full-scale working prototype now in Spain, so we worked with one of our sponsors to commercialize it. There are plans for the Spanish company to have them out by next year.

INSKEEP: Or so Kent Larson of MIT told Elise Hu back in 2013. A lot was happening back then or seemed to be happening. Some European leaders saw the CityCar as a solution to urban problems. They wanted fleets of city cars, shareable cars parked at train stations where people could pick them up like a bike-share. The European Union invested millions of euros to help this happen. And the CityCar had a grand debut in Brussels. The then president of the European Commission, Jose Manuel Barroso, hailed the car as a trans-Atlantic exchange between the world of science and the world of business.

(SOUNDBITE OF ARCHIVED RECORDING)

JOSE MANUEL BARROSO: ...Opens to new thinking and these changes.

INSKEEP: The CityCar was renamed the Hiriko in the Basque region of Spain, where it was to be produced. That word means urban. This was all so exciting that we naturally wanted one of our reporters to get a ride in the CityCar. And so we called up reporter Lauren Frayer who is in Spain. Hi, Lauren.

LAUREN FRAYER, BYLINE: Hi, Steve.

INSKEEP: Did you get a ride?

FRAYER: I did not, unfortunately, because the project has screeched to a halt here in Spain. Two years ago, the Spanish government was so excited to be a part of this that it devoted $18 million of taxpayers' money - this is at the height of the economic recession here - to help produce this folding car. It was supposed to create lots of green jobs here. But that money has since disappeared.

INSKEEP: What?

FRAYER: Yeah, seven Spanish businessmen are under formal investigation for misuse of public money and falsifying documents. Igor Lopez de Munain is a Basque lawmaker who's been investigating.

IGOR LOPEZ DE MUNAIN: (Speaking Spanish).

FRAYER: "The money went straight into their pockets," he says. The Basque government and local business leaders touted this. But this lawmaker alleges that they never actually planned to even build the cars. Ex-employees have said the prototype they debuted in Brussels was held together with Velcro and superglue.

INSKEEP: (Laughter).

FRAYER: I did speak with the head engineer who described a lack of unified vision among entrepreneurs here. He thinks the money was spent on the project, though. He says it's pretty expensive to turn a design into a commercial vehicle.

INSKEEP: But, Lauren, there was that original working prototype. Did you get a chance to look at that?

FRAYER: Well, several sources told me that they'd last seen that car in an industrial warehouse outside the Basque city of Vitoria-Gasteiz. So I hopped in a taxi, and I went there.

UNIDENTIFIED MAN: (Speaking Spanish).

FRAYER: (Speaking Spanish).

The taxi driver was a little bit confused. He dropped me off at this abandoned warehouse. I knocked on metal shutters. I peered through windows. I didn't see anybody. I did see a flock of geese nesting on the doorstep. The car may or may not be behind those locked doors, but this is as close as I'm going to get to it.

INSKEEP: In any case, it's not on European roads, as many people had hoped. And that raises a question for me, Lauren Frayer. Some people might be remembering, in a moment like this, this old documentary, "Who Killed The Electric Car?" which was about car companies essentially destroying a technology they didn't want. I'm wondering if that could have happened here.

FRAYER: No one suspects sabotage. But they do think that in hindsight, they took this MIT futuristic idea and gave it to conventional car engineers to produce. And that just didn't work. But what's funny is that since the project's demise here, electric cars have become all the rage. Some of the Hiriko project managers have started new companies, some of them using technology very similar to that robo-wheel from the folding Hiriko car. Former employees have raised questions about whether that infringes on the patents for that technology.

INSKEEP: Well, Lauren, I hope you have a safe drive home in whatever vehicle you may be in.

FRAYER: Thanks, Steve.

INSKEEP: That's reporter Lauren Frayer. She is in Vitoria-Gasteiz, Spain.

So this car was original and fascinating and ill-fated, a disappointment in the annals of invention, or maybe not. We check back in with Kent Larson, that leader of the team that created the folding car at MIT. And he told us he is not sad.

LARSON: No, actually it was a great thing because at that point, we had all kinds of new ideas we wanted to explore.

INSKEEP: Kent Larson says it's fine that the CityCar hasn't been produced because technology is changing so rapidly that this new idea is already obsolete. MIT has moved on.

LARSON: Moved on from a vehicle that folds to save space to one that doesn't ever need to be parked.

INSKEEP: Yeah, they're working on a new electric vehicle that would help more people live without owning their own cars. The car doesn't need to fold because it will be constantly in motion, driving itself around a city.

LARSON: This would be something like a autonomous, driverless Uber system.

INSKEEP: It would pick you up, take you where you need to go. They call it the PEV, the Persuasive Electric Vehicle - looks almost like a rickshaw - lightweight, with three bicycle wheels. Larson is hoping that this vehicle will be the one. The technology needs to work and also have a sort of magic to become the transportation of the future. You're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.

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