Olds Motor Works

Olds Motor Works was the Detroit company founded by Ransom E. Olds in 1899, when the American automobile industry had yet to settle on what a car should be. Olds’s experiments with varied designs culminated in the affordable curved-dash Olds, an early mass-produced car that reached buyers at a time when automobiles remained rare. The company’s rise and eventual acquisition by General Motors exemplify the book’s account of how markets select among many competing technologies and firms, leaving only a few survivors.

Founding and Competing Visions

Olds had been building automobiles since the mid-1880s, beginning with a three-wheeled steam-powered vehicle. After moving to gasoline cars, he founded a company in the early 1890s, but it struggled and left him nearly destitute. He was able to open Olds Motor Works in 1899 only after financier Samuel Smith supplied nearly all the money. Olds gained a company, but also a boss to whom he had to answer.

Smith and Olds disagreed about the market the company should serve. Smith favored large, expensive cars with elaborate fittings; Olds was drawn to the possibility of building a car for the middle class. The wager was on whether a still-minuscule automobile market—fewer than 15,000 cars were on American roads in 1900—could grow into a mass market if cars could be made cheaply enough.

The Curved-Dash Olds

Olds did not initially commit to one design. In the company’s first year he built eleven prototypes, including electric cars as well as steam- and internal-combustion-powered vehicles. In March 1901, a fire destroyed the factory and all but one prototype. The survivor stood near the door and was light enough for the only man present to push to safety. It was the inexpensive model Olds had imagined could reach a much larger public.

Olds rushed the surviving design into production. The curved-dash Olds took its name from a floor that curved upward to form the dashboard. It was an ungainly horseless carriage, started with a crank beside the seat and steered by a tiller; it had two forward gears, one reverse, and a small single-cylinder engine. Its appeal was not style but price: at $600, it was within reach of many Americans.

Olds also worked to persuade a skeptical public that cars were practical rather than a passing gimmick. He sent a young driver 800 miles across the country in an Olds to the Manhattan Auto Show, a publicity stunt that drew attention from the press and dealers. He drove a souped-up Olds in the first race at Daytona Beach. The company sold 4,000 vehicles in 1903, more than any other American manufacturer, and 6,500 two years later. Olds had designed the first mass-produced automobile in American history.

A Market of Alternatives

The company’s early achievement unfolded amid fierce competition. Hundreds of firms were trying to build cars, and there was no settled definition of the automobile’s shape or power source. Electric vehicles had a substantial foothold: at one point, a third of the cars on American roads were electric. Steam cars also seemed promising; more than a hundred makers produced them early in the century, and the Stanley Steamer became renowned for speed and comfort. The eventual dominance of gasoline was not predetermined.

The alternatives had practical limits. Electric cars could not travel far without recharging, while steam cars took a long time to heat up. Gasoline-car makers also moved earlier toward mass production and the mass market. Olds was the first automaker to buy different parts from different manufacturers rather than make everything itself. Cadillac later used standardized components successfully to reduce manufacturing time and cost, and Henry Ford transformed production with the moving assembly line and a relentless focus on making one kind of car as cheaply as possible.

Acquisition and Industry Significance

Olds did not remain to guide the company through the industry’s later consolidation. After only a few years, he left following a fight with Smith’s sons and eventually started another car company, REO. Olds Motor Works was among the firms acquired or driven out of business as the field narrowed; it was bought by General Motors. By the time of World War I, more than 400 American car companies had gone out of business or been acquired, even though more than 100 automakers remained.

The story of Olds Motor Works captures both sides of the market’s selection process. A multitude of different designs allowed the industry to explore possibilities before electric and steam vehicles receded and gasoline-powered mass production prevailed. Yet pioneering an affordable mass-produced car did not guarantee the survival of the company that made it. In the book’s broader pattern, markets winnow early alternatives, and a handful of firms ultimately control much of the industry.