Back in 1910, people cited these exact same three concerns over electric cars, and they’re part of the reason gas cars won the day. Gas cars had had their own major problems, but Ford had figured out how to make them viable—something no one has yet done for the electric car.I asked Musk about his opinion on Henry Ford. He said, “Ford was the kind of guy that when something was in the way, he found a way around it, he just got it done. He was really focused on what the customer needed, even when the customer didn’t know what they needed.”
When he decided in 2003 to stop thinking about electric cars and start making them, the odds weren’t in Musk’s favor. There were the high barriers to entry that had prevented any startup car company from succeeding in almost a century; there was the unaccounted for cost of carbon emissions, which made starting an EV company like trying to stand out on a basketball court as a rookie when all the players except you can foul with no penalty; there was the gargantuan oil industry, which would do everything in its power to stomp on any effort to make it obsolete; and on top of that, the EV was a new kind of car whose development had essentially been on pause ever since EV makers threw in the towel a century earlier, and a daunting and costly catch-up process would lay ahead—the three concerns listed above would all need to somehow be addressed for this to have a chance.The overarching question was, had electric cars never had their day because of irreconcilable issues? Or had the right person—the Henry Ford of EVs—just not come along yet?
While reading I Invented The Modern Age I came across a section I wanted to tell you about.
It is about control and ownership.
The Dodges were no longer supplying any parts to the Ford Motor Company. Three years earlier, in 1913, they had been shopping in a downtown department store when they ran into Howard Bloomer, their friend and lawyer. Bloomer surprised them by asking, “Why don’t you brothers build your own car?”John said they had headaches enough—let Ford cope with the myriad difficulties of putting an automobile in the hands of a buyer. Bloomer reminded them that their contract with Ford allowed either party to cancel it on a year’s notice. What if Ford did that? “Your plant equipment is too heavy to have it all depending on one customer. You’ve got too big an investment not to safeguard it better than you are doing.” John, still merely amused by Bloomer’s suggestion, asked the lawyer if he didn’t believe in the business acumen of Andrew Carnegie, and quoted the steelmaker’s apothegm: “Put all your eggs in one basket, and then watch that basket.”“Yes, I believe that,” Bloomer said, “if you own the basket. The basket belongs to Ford; the eggs belong to you. What is to prevent Ford from kicking over his basket and breaking your eggs?”Despite their initial misgivings they quickly created a popular automobile. Their car was more expensive than the Model T, and thus no competition to Ford, but they were relying on his dividends to get it firmly established. Ford had stopped paying all but the most derisory dividends to his shareholders in order to invest in his own plants. As the Dodge brothers’ friend had told them, it’s fine to put all your eggs in one basket as long as you have control of the basket.Ford, in this case, suddenly decided the basket was his and was going to keep all the eggs.
Thanks for reading and listening. And thank you for spreading the word.
I’ll talk to you next week,
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