With a successful book and heavy publicity before his car came to market, John DeLorean himself had evolved into being more a celebrity than a credible businessman and engineer. In an era of economic and industrial stagnation, more than a few politicians and investors fell for his con.
Keep in mind that entrapment is a messy defense because it essentially admits to the crime -- for DeLorean it was cocaine trafficking -- but argues that the government created the opportunity and drew a vulnerable person into the trap. The defense succeeded but no one with money to invest would touch DeLorean after that because he was so obviously foolish, incompetent, and corruptible.
I am not sure why the composite approach never worked as I am not an engineer. I would guess it was never durable enough. The idea of having a rust-free care was appealing to anyone from the MidWest. Many of the cars from the late 60’s and 70’s were really rust buckets. I remember reading that many used too much recycled steel.