McKinsey Quarterly

The 125th anniversary of the little engine that couldn’t

Once upon a time, the Stanley Steamer was the “car of the future” that broke speed records, drove beautifully, and famously climbed Mount Washington. What could go wrong?

What would you imagine as the “car of the future,” if you were imagining it 125 years ago? At the end of the 19th century, the Stanley brothers—twins Francis and Freelan—imagined an automobile that would be aesthetically pleasing. They aspired for high but safe speeds. They strove for a vehicle that was intuitive and reliable. And, inculcated by 19th-century industry, they imagined a car that would run on steam. They created their automobile in a rapidly industrializing United States, in 1897, and five years later branded it the Stanley Steamer. For two remarkable years, in the days before the Ford Model T, it was the highest-selling car in the country.

A start-up gets its long head of steam

When the Stanleys put their working model on the road, steam dominated commerce. Steam had been ascendant for a century; it powered the Industrial Revolution. Steam propelled the world’s navies and gave rise to an intricate network of coaling stations, coaling islands, tugboats, cruise ships—not least, nor most fortunate, the RMS Titanic—battleships, and dreadnoughts. Most important for overland mobility, steam powered the railroads. Before the steam engine, distance could be destiny. But in the 1800s, the century of the railroads, steam-powered trains gradually and then seemingly inexorably brought together disparate areas across Africa, Asia, and Europe. (Russia, quite purposefully, chose a different track gauge than its neighbors.)

In the United States, railroads made an indelible impression. People and products moved across the United States along great trunk lines and arteries, tied with the Golden Spike at Promontory Summit, Utah, in 1869. The Midwest became a center of commerce. Chicago, first recorded in the late 1670s as a trading post among Native Algonquin peoples and French traders, numbered fewer than 5,000 residents as late as 1840. In 1848, the city opened its first railroad station and then grew exponentially. In 1860, Chicago’s population topped 100,000; by 1890, it exceeded one million.

Henry Ford, from prospering, midwestern Dearborn, Michigan, famously averred that “if I had asked people what they wanted, they would have said faster horses,” and the equine, as measured in “horse power,” remains part of the automobile’s DNA. But only a part. The automobile is no less an outgrowth of imagining and expressing mobility through steam-powered trains: cars, trucks, drivetrains, brakes, signals, tanks. That’s the argot of railroad engineers.

The success of steam-powered railroads did not make steam-powered automobiles a sure thing in 1897. Just like today, multiple powertrains—including internal-combustion engines (ICE) and electric motors—were available. Records show that in 1900, US companies manufactured, in all, about 4,200 automobiles: 40 percent were steam-powered, 38 percent were electric, and 22 percent were ICE. When patrons of that year’s inaugural National Automobile Show were polled about which type of automobile they favored, electric actually edged out steam; ICE cars finished third. Even the Stanleys gave electric vehicles their due, sort of: “It would be ideal,” the company admitted of the electric car, “but for its four principal limiting factors: range, speed, staying power, and hours to charge.”

In 1900, US companies manufactured about 4,200 automobiles: 40 percent were steam-powered, 38 percent were electric, and 22 percent were powered by internal combustion engines.

Taking a product perspective

Francis and Freelan built the Stanley Steamer with product details in mind. They weren’t amateurs. The Stanleys had already made a fortune from patenting the airbrush, and made even more money from developing dry-plate photographic technology, which they sold to George Eastman, who built the Eastman Kodak Company. The Stanleys designed their 1897 automobile with railroad precision: a minimum of parts, so it wouldn’t readily break down; a minimum of noise, so driver and passenger could easily have an intelligible conversation; and a sturdy steam boiler. In 1899, Freelan and his wife, Flora, drove their steam-powered car to the peak of Mount Washington, the highest elevation in the northeastern United States, in one-third of the time it would take a horse and carriage to make the same trip. In 1898 and 1899, the Stanleys’ motorcar company outsold every other US automaker. In 1906, a racing version of the Stanley Steamer broke the world record for the fastest recorded speed in an automobile—127.7 mph—a mark that no car would surpass for more than five years.

From a product standpoint, the Stanley Steamer had other advantages, as well. To start (quite literally), ICE vehicles wouldn’t engage unless they were first cranked up with a cumbersome, external turning bar that had to be inserted into the car’s front, a process which required not only physical strength but a bit of luck that the crank wouldn’t jerk back and break the turner’s thumb, hand, or arm. ICE vehicles also required the technical chops to know the vehicle’s correct timing at ignition, in degrees from top dead center. Today, only those with expertise in general automotive knowledge would know that. But at the turn of the century, every ICE driver had to know ignition timing. Not so for the Stanley Steamer: steam vehicles didn’t need a crank. They did, though, need to be warmed up first for about 20 minutes, sometimes more, particularly on cold days, to build their head of steam. Electric vehicles also didn’t need a crank; they started immediately.

In fact, electric cars enjoyed something of a mini boom at the turn of the 20th century. Electric taxis operated in several cities, including London and New York City. When President William McKinley was fatally shot in 1901, he was rushed to a Buffalo, New York, hospital in an electric-powered ambulance. (It was his second trip in an automobile; his first was in a Stanley Steamer.) Yet while electric cars worked for short jaunts—or tragic rushes—they were critically challenged by their limited range: their batteries needed to be recharged.

Steam cars, which could be powered by a variety of fuels—from coal and charcoal to kerosene and wood—had an uneven range, at least from the driver’s perspective. One steam car reached 1,500 miles on a single load of fuel. Practically speaking, however, steam automobile range was restricted by the requirement to keep adding more water. Drivers needed to stop for water-tank top offs to keep their car kettles boiling. A car, after all, is constrained by its ecosystem.

Thinking in systems

But the Stanleys missed the system point—or, more correctly, they never really aimed for it. They set out to build a great car, arguably the best car. They fixated on their automobile. By 1917, the Stanley Steamer line would come in several models and feature, among other amenities, a Klaxon push-button horn. Its upholstered seats, while neither rich nor Corinthian, were made from soft, genuine leather. Stanley Steamer produced about 500 cars in 1917; its four-passenger touring car was priced at $2,550.

Ford produced more than 600,000 Model Ts that same year; its five-passenger touring car was priced at $360. And Ford’s seven largest competitors at the time—ICE manufacturers all—combined to produce an additional 600,000 vehicles. Demand for ICE-powered cars had begun to eclipse both steam- and electric-powered-vehicle market share by about 1903, and then left both electric and steam powertrains far behind as demand surged during the First World War (1914–18). After the war, ICE vehicles dominated the automobile market for the rest of the 20th century.

Unlike the Stanleys, Henry Ford did think in systems, relentlessly in systems; he cogitated about “the real foundation for an economic system … [o]ur whole competitive system, our whole creative expression”—the system should be one with the car. 1 Ford thought in systems when developing the assembly line, a systemic change from the piece-work method. Ford rapidly bent the cost curve, enabling the company to turn out vastly more vehicles that would meet—and often exceed—consumer expectations on speed, power, range, reliability, and, especially, price. Ford priced his cars so that his workers, in particular, could afford one. Henry Ford built the Model T “for the great multitude.” The multitude kept buying, and Ford and other ICE manufacturers worldwide kept building. By 1924, the Ford Motor Company had produced more than ten million Model Ts. Stanley Steamer shuttered production that same year.

ICE-powered vehicles catalyzed an ICE-vehicle ecosystem. If an ICE-vehicle ecosystem wasn’t made precisely by design, it wasn’t by sheer accident, either. The Stanleys derided gasoline as “explosive liquid fuel,” but hardware stores sold it and farmers kept it around. As Model Ts and other ICE vehicles poured out of factories, a network of service stations sprung up to keep gasoline pumping. The more people could travel, the more people wanted to ride. ICE-powered buses began to roll on city streets and intercity highways, competing with electric trams. More automobiles drove the demand for more paved roads, a network of them, which increased fivefold from 1905 to 1920: roads that had gas stations but not electric or steam vehicle infrastructure; cities and towns that had parking lots and parking garages—two cars in every garage, rang the slogan—but not garages with water pumps, or charging capabilities.

As Model Ts and other ICE vehicles poured out of factories, a network of service stations sprung up to keep gasoline pumping. The more people could travel, the more people wanted to ride.

Lessons for cars and the future

Looking back helps sharpen our perspective going forward. Steam travel powered, and was encapsulated by, one age; internal combustion advanced and epitomized another. Yet there are remarkable parallels between the dawn of the 20th century’s transition from steam to ICE, and the 21st century’s challenges of moving from ICE to electric (or possibly, or in tandem, to hydrogen or to other non-carbon-emitting fuels).

First is the challenge of form and function: What exactly does a great car mean? It should be a reliable, well-running vehicle to move people and goods, to be sure. But a great car is fundamentally about providing mobility that people will want, enjoy, and can afford—both individually and as a society, particularly as we confront the societal costs of traffic accidents, the repercussions of carbon and other emissions, and the urgency to move to a net-zero world. And increasingly, a great car is a platform, bringing technologies to bear that enhance driving safety and efficiency.

Second is the challenge of resources to make and to run the vehicle. As Henry Ford recognized, but the Stanleys seemingly never fully grasped, making a great car requires not only operating a great factory but also thinking in terms of both physical and human capital. Today, given immense interdependencies across the automotive industry, potential raw-material shortfalls, and supply considerations, taking a holistic approach to production is increasingly becoming a point of competitive advantage—particularly for those who move early.

That challenge ties into another parallel: the need to consider supporting infrastructure. Great vehicles—vehicles that are fun to drive, fun to be in because they can drive themselves, and fundamental to productivity because of the multiplier effect they have in efficiently moving people and goods—are not self-contained. In the early 20th century, steam powertrains failed and ICE succeeded because an entire infrastructure developed for ICE automobiles. Even as market demand for electric vehicles today catches up to forecast expectations, leaders know that they must do everything they can to advance investment in effective supporting infrastructure, which connects cars to the electric power grid for refueling convenience, bolsters the grid’s resilience, and provides new electric-power utility via the power plant within each vehicle.

Disruptiveness at the turn of the 20th century used the same recipe that disruptions follow today, including launching a “good enough product” that others are disincentivized to copy (because it disrupts their value pools), and expanding the way that people perceive a product and how it impacts their lives. Cars, after all, are not self-contained. Cars have consequences. A great car can create great change, but the future always has the last word. Imagine the ecosystem of the future, and you can imagine the car of the future. In exactly that order.

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