A History of the Auto Industry

A History of the Auto Industry

Why does America have a love affair with cars?

It is a familiar image in our movies, TV shows and advertising: a driver behind the wheel and vast expanses of open road waiting ahead. Why do we keep seeing this image? Because Americans love their cars and the lure of the open road.

U.S. inventors did not come up with the internal combustion engine and the first automobile. In many ways, American car manufacturers did refine the industry. Henry Ford automated production and sold 15 million Model Ts in 20 years. The Big Three -- Ford, General Motors and Chrysler -- built massive auto manufacturing factories and provided families with a solid middle-class income.

Within a half a century, our roads improved to take advantage of new cars and the freedom they provided. Our Interstate Highway System gave fast, safer and accessible routes for travelers to go from city to city and state to state. Paved highways and the cars on them allowed the suburbs to expand. People could live away from where they worked.

What started the automotive industry? How did humanity go from walking across continents to driving across the street?

It starts with horses and ends with horsepower.


Horses and Chariots

When did humans tame horses?

Current digs prove that 6000 years ago (4000 BC), riders were on horseback in the western part of the Eurasian Steppe -- modern-day Ukraine and West Kazakhstan.

Not too long after, the wheel came along -- about 3500 B.C. Wheeled carts were mounted on an axle and harnessed to a horse or team of horses. Chariots allowed one passenger to ride behind a horse -- convenient for battles. Races ensued.

Horses remained the dominant means to cross long overland distances for the better part of 6000 years before cars were invented.

Where did the horse come from? Did all cultures invent the wheel?

Paleontologists believe wild horses originated in the Americas. However, by the time European explorers arrived, the horse was long gone. The wild mustangs we know today came from escaped European stock.

Native American cultures never built a wheel. South American people used llamas and alpacas as pack animals to haul goods. North America native populations used boats or traveled on foot until horses were reintroduced.

In the Middle East and desert lands, camels had a similar job to horses and were easier to feed. So although they knew of the wheel, desert inhabitants didn't use it much.


Da Vinci's Cart

When were cars invented?

That answer depends on whether a drawing counts as the first automobile ever.

Leonardo Da Vinci designed a self-propelled vehicle, considered the first car ever designed. Springs moved the three-wheeled cart. Once the spring uncoiled, it would have to be coiled again for the next leg of any trip.

Found in DaVinci's journals in the early 1900s, a university team built the cart in 2004. It worked.


Steam Engines

What were the first car ideas?

Inventors and tinkerers modeled and built steam engines as far back as 100 B.C. These works did not have jobs but did show the capabilities of human innovation.

The Age of Steam started in the late 1700s and ran well into the 1800s. Steam-powered trains, ships and factories ushered in the industrial revolution.

Steam machines didn't just make life easier in factories. Steam threshers, used to separate grain from straw, operated well into the 1930s in the rural midwest.

There is debate about when the first steam-powered automobile was made and who created it. Ferdinand Verbiest, a Flemish missionary in China, claimed he designed a steam-powered toy cart for the Chinese Emperor in 1679.

Nicolas-Joseph Cugnot designed two versions of his steam-powered Dampfwagen, one in 1769 and one in 1771. The French Military wanted an automated cart to transport cannons but abandoned the design. The three-wheeled cart tended to tip.

Inventors introduced versions of a steam-powered auto to various degrees of success. In England, there were a few different versions of steam-powered cars. But across the U.S. and Europe carmakers worked on other engine ideas for more reliable autos.


Internal Combustion Engine

When were cars invented?

Starting shortly after the turn of the century, inventors introduced successive versions of internal combustion engines using different fuels. Some were more successful (and operable) than others. These engines lead to the first automobiles as we think of them today.


Francois Isaac de Rivaz, a Swiss inventor born in France, designed what is often considered the first internal combustion engine. His design used a hydrogen and oxygen gas mixture, ignited to create an explosion within the cylinder and drive the piston out.

At about the same time, French brothers Nicéphore and Claude Niépce built an engine running on Lycopodium powder, coal dust and resin. They used it to power a boat.

Over the next six decades, various changes and other fuels improved on those initial designs.


French engineer Jean-Joseph-Etienne Lenoir invents the "horseless carriage" using the first commercially-successful internal combustion engine.


German designer Nikolaus August Otto improves internal combustion engines, building the first to burn fuel directly in a piston chamber efficiently. In 1877, he made a four-cycle internal combustion engine. It is the prototype for our modern car engines.


George B. Selden's Patent

Who was the inventor of cars?

While one man had his name on the American patent, he wasn't the first person to build a working car.

George B. Selden filed the first U.S. patent for both an engine and four-wheeled car. But with a series of amendments to the application, it was delayed by 16 years.

His patent was granted in November 1895. Selden was also a patent attorney. He built one car during this time but never started full production.

Selden's shiny new patent caused problems for early carmakers already manufacturing and selling cars while his pended.

A few years after finally getting the patent, Selden sold it to John Whitney and his Electric Vehicle Company in 1899. Together they collected a 0.75% royalty on all cars sold.

Later, the Association of Licensed Automobile Manufacturers held the rights and licensed it to new automobile makers. The association decided who could and could not build cars in the U.S. The ALAM negotiated for 1.25% of all vehicles sold.

When Henry Ford attempted to get a license in 1903, ALAM turned him down. It cited past associations, including early work with the company that became Cadillac. (The existing members may have found exceptions in his plans to create a low-cost automobile.)

Ford sued. The first judge, in 1909, found Selden's patent covered any engine powered by gasoline vapor. Ford appealed, noting that Ford engines were not based on Selden's redesign of George Brayton's 1872 "Ready Motor" but Otto's. Ford won on appeal.

With one year remaining on the original patent, ALAM did not appeal the ruling.

Who made the first car?

While Selden dragged his feet in getting the patent for his car, other U.S. car manufacturers and German carmakers were already rolling out automobiles.

1885 – Carl Benz built the first true automobile powered by a gasoline engine. It was the first Mercedes Benz before the company even opened.

1886 – Henry Ford makes his first automobile in Michigan. He later introduced the moving assembly line.

1886 – Gottlieb Wilhelm Daimler and Wilhelm Maybach introduce the  “Cannstatt-Daimler," a four-stroke, four-wheeled car.

1893 – Brothers Frank and Charles Edgar Duryea invented the first successful gas-powered car in the United States.


Carl Benz Model


Who built the first car ever made?

In both Europe and the U.S., the wheels of invention were spinning. Improvements on the basics -- internal combustion engines, fuels to run them, and new auto body designs -- were coming to a head on many fronts. What most historians accept is who filed for patents and when.

On January 29, 1886, in different German cities, both Carl Friedrich Benz and Gottlieb Daimler filed for automobile patents. Benz typically gets credit as the first automaker. He had a working version of his Motorwagen in 1885. German automakers, Italian car designers, and French engineers (among others) were all designing cars around that time.


Duryea Motor Wagon Company

Where was the first U.S. car sold? What was the first car company, and who started it?

Bicycle mechanics J. Frank and Charles Duryea designed the first successful American gasoline automobile in Springfield, Massachusetts. On Thanksgiving Day 1895 in Chicago, the duo won the first American car race that any car actually finished. The Duryea Motor Wagon Company was established and made the first-ever sale of an American-made gasoline car the following year. Their original ten production cars were the first sold in the U.S.


First Car Dealerships

Who had the very first car dealership, and where was it?

Sources debate which dealership was "first" to open in the U.S. Claims are made for:

  • Independent William E. Metzge's automobile retail showroom opened on June 7, 1897, selling Waverley electric cars.

  • The Reading Automobile Co., first at 126 N. Fifth St. and later at 1411 N. Fifth, in Reading, Pennsylvania, sold Winton automobiles made in Cleveland.

One of the first Ford dealerships was in St. Cloud, Minnesota. Tenvoorde Ford opened in 1903 and is still in operation.

What started the auto dealership industry as we know it now?

In its infancy around 1900, the U.S. automotive industry was the Wild West. There were hundreds of independent companies making American cars.

During those very early years, makers built cars on demand. There were no inventories to choose from. You could order them from the factory, through a traveling salesperson, or via the Sears catalog.

From 1908 until 1912, the Lincoln Motor Car Works produced the Sears Motor Buggy in Chicago, Illinois. The 10-horsepower, 2-cylinder automobile had a top speed of 25 mph.

Once Ford, GM and Daimler Chrysler -- the Big Three -- started mass-producing cars, they needed someone to sell them. But their expertise was designing and manufacturing cars -- not selling them. The franchise system instead sold cars to dealers spread across the country. The dealers knew their local communities and were responsible for advertising in their local newspapers (then radio and TV) to bring in customers.

Starting in the 1930s and into the World War 2 years, states passed laws that encoded the dealership system. Manufacturers could not sell directly to consumers and undercut their franchisees.


Henry Ford and the Model T

Did Henry Ford invent automobiles?

He did not. Henry Ford is credited with creating our modern manufacturing and marketing plans.

The Ford Motor Company refined auto manufacturing by installing conveyor belt assembly lines. This and other innovations made cars affordable for many Americans. Henry Ford and the Model T brought prices down for the average American to buy a car. Ford Motors didn't advertise, but the dealerships did.

Road trips -- across the country or day trips -- meant people could explore further. Ford instituted $5/day pay for his factory workers and a five-day work week. His employees could afford the cars they were making and time off to vacation in them.

How much would a Model T cost today? Based on inflation rates since then: $25,223.10.


The Big Three Auto Manufacturers

When did the Big Three dominate?

The Big Three Automakers started in Detroit, Michigan, building cars across the spectrum of tastes and finances. There were not a lot of changes in those first three decades, but Detroit car manufacturing was its hub.


General Motors

Founded in 1908 as a holding company, William C. Durant formed General Motors with partner Charles Stewart Mott. They borrowed the name from General Electric.

G.M. introduced new model years and expanded its selection of autos -- entry-level, mid-entry and luxury vehicles -- with differing brand names.

G.M. was the largest worldwide automaker for 77 years, from 1931 to 2008.


Ford Motor Company

The first Model T rolled off the line in 1908 and continued production until 1927. Henry Ford said that you could get a Model T in any color as long as it was black.

Why black? Because the paint dried faster. That meant producing more cars per day.

After the Model T came the Model A. Ford sold 2 million by July of that year.

In 1932, Ford launched its first V8 engine in a low-cost car.

It was 1939 before Ford really began to expand its brands to capture a fuller range of potential buyers.


Chrysler Corporation

Chrysler Corporation was the latecomer. Walter Chrysler founded the company on June 6, 1925.

The first Chrysler cars were introduced nearly 1-1/2 years before he formed the Chrysler Corporation. Maxell Motors displayed the Chrysler at the January 1924 New York Automobile Show.

From 1936 through 1949, Chrysler held second place for U.S. sales. The company is credited with introducing new features never seen before in a medium-priced car.


Car Radios

When did cars get radios?

When the car radio is introduced, AM was the only available spectrum for 1920s cars. Makers added FM frequencies in 1952.

At first, lawmakers disfavored the idea, concerned that songs on the radio would lull drivers to sleep. Changing the dial would cause distractions.

There is no data on when thieves pried the first car stereo from the dashboard. The frequency of stereo thefts has dropped in recent years. Most manufacturers include better stereos today. New vehicles connect directly to our smartphones and personal playlists.


World War 2 GM Plant

World War II changed U.S. auto manufacturing.

On February 1, 1942, Detroit automakers stopped making cars and trucks for civilians and switched to military production.

GM was the biggest military contractor when full production began for the war effort. The company made:

  • 119,562,000 shells,

  • 206,000 aircraft engines,

  • 97,000 bombers,

  • 301,000 aircraft propellers,

  • 198,000 diesel engines,

  • 1,900,000 machine guns,

  • 854,000 military trucks.

In addition to not allowing cars for the civilian market, the government rationed gas, parts and tires for consumers. The used car market exploded at the time as people needed to keep their vehicles running.


Car Ignition Keys

When did cars get ignition keys?

The first cars started with a crank, and most cabins were open to the skies. Locks did not keep thieves out of cars. But cranks could cause a car to leap forward and be hard to turn.

Electric ignitions were first introduced in 1911 and installed in Cadillac cars in 1912. Cars started with a push button. Keys unlocked doors as hardtops and enclosed cabins became standard.

Chrysler invented the car key in 1949 with one key for the locks and a second for the ignition.

In 2021, new smartphone apps replaced keys for some cars. Drivers can use the apps to unlock, lock and start the vehicle. Biometrics could soon mean your fingerprint will open and start most new autos.


U.S. Interstate Construction

The interstate system and the ongoing love affair with cars.

After 20-odd years of congressional debate, President Dwight Eisenhower signed the Federal-Aid Highway Act of 1956. The legislation authorized $25 billion to construct 41,000 miles of Interstate Highways in 10 years.

The U.S.Interstate system is now 46,876 miles long.

That wasn't the first highway funding legislation in the U.S. That designation goes to The Federal Aid Road Act of 1916. The act provided 50-50 matching funds to states -- up to $75 million -- to build 6% of statewide roads over five years.

Eisenhower was a proponent of the Interstate system for a few reasons. As a 28-year-old lieutenant colonel in 1919, he volunteered for a cross-country convoy of 81 military vehicles. The 2-mile-long caravan traveled 3,242 miles through 11 states in 62 days. They averaged 52 miles per day.

The military man also saw the need for a system that would run past U.S. bases. The interstate highways would allow for full deployment if the country were attacked.

Ask anyone who drives the U.S. Interstate system: those roads have been under construction every summer since.


Monroney Label

What is a Monroney Label?

Sponsored by Oklahoma Senator Almer Stillwell "Mike" Monroney, The Automobile Information Disclosure Act of 1958 required dealerships to provide information on every car sold.

The sticker must include:

  • The manufacturer's suggested retail price (MSRP)

  • Engine and transmission specifications

  • Standard equipment and warranty details

  • Optional equipment and pricing

Later, the sticker added EPA-determined city and highway fuel economy ratings.

It is still known as a "Monroney Label" at dealerships everywhere.


The Ford Edsel

Why did the Edsel fail?

The Edsel brand line-up, produced from 1957 to 1960, had its rollout marred by poor reliability and bad design. Introduced via a hyped-up marketing campaign (E-Day), the Edsel did not deliver on the promises or account for changing consumer tastes.

The failed program cost Ford between $250 million to $350 million in 1950s dollars.


Ford v Ferrari

The 1966 24 Hours of Le Mans.

After Edsel's failure, Ford Motors realized American car tastes had changed. Baby boomers wanted fast, stylish cars -- not something for which the iconic car manufacturer was known. One way to speed up the design was to buy Ferrari, a buyout later rebuffed by the Italian automaker.

How would Ford get revenge for that slight? By building a car to win the 24 Hours of Le Mans race.

After losing the race to Ferrari in 1964 and 1965, Ford brought in legendary car designer and driver Carroll Shelby. Working with Ford's design team and studio, they retooled the Ford GT40.

Ford Motors won four consecutive Le Mans races from 1966 to 1969.


Seat Belts Federally Mandated

Seat belts become nationally mandated for all cars.

Nash was the first automaker to put lap belts in cars in 1949. Drivers didn't like them and refused to use them.

In 1959, Volvo engineer Nils Bohlin received a patent for the three-point seat belt. Seeing this system's superior protection, Volvo opened the patent to all automakers for free.

Nationally, the U.S. required all cars to include seat belts in 1968.

It took a bit longer for states to make seat belt use mandatory. Still, there is a holdout. New Hampshire does not require adult front seat occupants to wear a seat belt. All the other states, and the District of Columbia, do.


1970s OPEC Embargo

The OPEC embargo begins to change U.S. cars.

For the first 70 years of automobiles, gas in the U.S. was cheap. Then came wars and political challenges in the Middle East.

The Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo on countries that supported Israel in the Yom Kippur War. That included the U.S.

In May 1973, Americans paid 38.5 cents per gallon. By July, it was 55 cents per gallon.

At the time, American cars averaged just under 12 mpg.

When the embargo ended six months later, oil went from $3 per barrel to $12 -- a 300% increase.

In response, the U.S. began to increase domestic oil production, decrease highway speed limits, and work towards increased fuel efficiency.

American car manufacturers were not ready for motorists to change their habits. Japan was.

Japanese carmakers and their imports offered four-cylinder engines, uni-body construction and front-wheel drive. European car manufacturers also entered the U.S. market in larger numbers. The new competition forced the Big Three to provide smaller, more fuel-efficient cars to compete.

Toyota, founded in 1937, is now one of the biggest automakers in the world.

Gas prices never returned to pre-embargo levels.


The DeLorean Car Co

The DeLorean Motor Company.

Founded in 1975, the DeLorean Motor Company in Detroit, Michigan, is known for just one car -- the stainless steel, gull-wing DeLorean.

John DeLorean was the youngest executive at GM when he went out on his own. He brought in Hollywood stars for funding and worked with the British government to site a manufacturing plant in Northern Ireland.

The car did not do well in sales or performance. With an SMRP of $25,000 ($70,000 today), only 6,000 sold. The car was not as "sporty" as its competition.


Aerodynamics for fuel economy

Aerodynamic design for fuel economy.

In 1975, the U.S. introduced the Corporate Average Fuel Economy (CAFE) program. By the 1978 model year, the rule said automakers must improve fuel efficiency to 18 mpg. By 1985, the standard was 27.5 mpg.

One way to improve fuel economy was by improving aerodynamics. Soon, Detroit replaced its boxy cars with curved lines.

In his book Auto Opium: A Social History of American Automobile Design, historian David Gartman said, "One Ford designer claimed that while it would cost $200 to $300 million to achieve a one-tenth-mile-per-gallon increase by engineering 'under the hood,' aero design achieved a three- to four-tenths mpg increase for almost nothing."

The 2021 U.S. vehicle fleet average is now 36 mpg. The goal now? To reach 40 mpg by 2026.


Car Cup Holders Became Standard

When did cup holders and airbags become common?

If you drove a car built before 1990, you may remember your cup holder. It was a plastic basket you bought at a gas station. A hook slid between your car door and window to hold your soda or coffee cup.

The first vehicle to come with cup holders as a standard feature was the 1984 Plymouth Voyager minivan. According to historians, the advance came from an increased number of working mothers and drive-through restaurants.

Chrysler was the first U.S. automaker to offer -- in six different models -- driver-side airbags as standard equipment.

GM and Ford experimented with airbags in the early 1970s. GM offered them in one fleet car. Both companies later lobbied against airbag requirements.

Dual front airbags for new passenger cars became a U.S. requirement on September 1, 1998.


Mechanics Use OBD Reader for Diagnosis

Technology under the hood and in your hands.

Instead of describing the weird noise coming from under the hood, onboard diagnostics meant mechanics could plug in a reader to see what was wrong.

While onboard computers came in a few models in previous years, California pushed the technology forward.

In 1994, California Air Resources Board mandated OBD capabilities for all cars sold in the state by model year 1996. That specification extended to all automobiles sold in the U.S. by 1996.

In 1996, GM launched the OnStar system, using mobile phones to call 911 if involved in an accident.

The 1990s also saw SUV sales boom. SUVs fall into the light trucks category, not passenger cars, so they do not have the same CAFE standards. By 1999, SUVs and light trucks surpassed the sale of passenger cars.


Auto Maker Bailout

Recession and auto bailout.

The Great Recession may have started in the housing market, but it also brought financial problems for the Big Three U.S. automakers.

As SUVs were a leading moneymaker for the companies, they continued to make them instead of smaller passenger cars. But when the recession hit, some buyers realized they needed a more fuel-efficient vehicle or could not afford their current payments. At the same time, credit markets froze.

U.S. auto sales dropped by about 6 million units per year between 2005 and 2008. GM and Chrysler both were looking at bankruptcy and needed help. Ford had gotten a line of credit in 2007 to help bridge the gap.

The U.S. and Canadian governments provided an $85 billion bailout. The deal allowed the auto companies to restructure via Chapter 11.

The U.S. Treasury emerged as GM's largest shareholder. Now owned by employees and Fiat, Chrysler repaid its loan on May 24, 2011.


Electric Cars Charging

Electric cars reintroduced after 100 years.

There were electric cars and gas/electric hybrids in the early days of auto manufacturing. But gas was cheap, and gasoline engines went farther on a tank than an electric car did on a charge.

Once Ford introduced the Model T, the electric car craze mostly died out. At least until GM's EV1. GM made and leased this electric vehicle from 1996 to 1999. By 2002 the company crushed nearly all of the cars and ended the program.

At least one EV1 still exists. It is in the Smithsonian National Museum of American History.

Toyota and Honda introduced their hybrid models at about the same time.

The Toyota Prius was presented worldwide in 2000, after its 1997 release in Japan.

Honda's Insight came out the year before.

In 2010, Tesla Motors received a $465 million loan from the Department of Energy's Loan Programs Office. The company wanted to build a manufacturing facility in California. Tesla repaid the loan nine years early. Since its inception, Tesla has won wide acclaim for its cars and has become California's largest auto industry employer.

In October 2021, Tesla reported it had sold 2 million EVs worldwide.

Other carmakers, including the former Big Three, are joining the electric revolution.

GM promised an electric Corvette in 2023 and said it would have an all-electric lineup across its brands by 2035. That is the year California's CARB regulations want all-electric cars on its roads.

The Ford F-150 Lightning began rolling off the line in Dearborn, Michigan, on April 26, 2022. Ford says it had 200,000 preorders for the electric pickup truck.


Tesla Challenges the Dealerships

Elon Musk and challenges to the dealership system.

If you want a Tesla, you can go online and order one or go to one of its showrooms. Every state is not OK with that.

Tesla owns all of its retail fronts -- something that 48 states previously said 'No' to.

According to Tesla's Elon Musk, traditional car dealerships sell gas-powered cars. How can they sell buyers on an EV when they are also trying to sell them a gas-powered car?

State legislatures crafted Dealership laws to protect franchised dealerships from the automakers. The idea was to prevent automakers from opening showrooms and undercutting the franchisees.

However, Tesla doesn't have franchises.

Neither does the car need oil changes, tuneups, or emissions checks. Lifting a foot from the accelerator slows the car down, so brake pads last longer. Electric vehicles do not have the same maintenance demands. Maintenance is a big moneymaker for dealerships.

As of 2022, 16 states banned Tesla sales centers. Some of those states do have Tesla galleries. You can learn about the cars, but not buy one or even talk about buying one there.

Nine other states now allow direct sales.

Musk found a way around New Mexico's restriction. The company opened a showroom on native tribal land in 2021.


Cars of the Future

What will be the cars of the future?

Remember when you kept a road atlas in your car or printed out directions from MapQuest before heading to your destination? It seemed like a far-off future in the late 1990s when public officials suggested emergency vehicles would one day find homes in blinding snowstorms with an in-car mapping system.

Now, our phones or connected cars tell us exactly when to turn and when we will reach our destinations. Our vehicles can text whoever you are meeting to tell them when you will arrive.

That technology's next advances are already happening. Tesla (and others) are testing self-driving cars. A "driver" is behind the wheel, but the car is doing the maneuvering.

While failures make the news, their successes will keep coming as more technology becomes available. Some developers, carmakers and cities want intelligent infrastructure with instant analytics. Data would go directly to the car and help make autonomous vehicles a reality.

What else is next for automobiles and drivers?

The next significant innovation may be solid-state batteries. Several makers are working on batteries that do not heat up the way lithium batteries do, charge faster, and offer more miles per charge at faster speeds. These new batteries would also have longer life cycles than the current iterations.

We are waiting for flying cars. They've been promised to us by the Jetson's cartoons of the 1960s and modern sci-fi thrillers. Soaring above the road means summer highway construction delays would be a long-ago memory.

Fiat Chrysler is working on a flying car, as are other automotive start-up companies. Some makers promise they will be on the market by 2024.  


With less than 150 years of automobile manufacturing behind us, more innovations are just down the road. The internal combustion engine may go the way of the horse and buggy. Our cars may run on fuel cells and never need an oil change again.

Whatever comes, humans will always have an open road in front of them and want to see where it goes next.


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