Important update: Stake UK will be closing down.
Read more here
When you invest, your capital is at risk.

Share

Age of the automobile

There are currently over 1.45b cars on Earth. Imagine if you received royalties for each and every one of them. Well, at one point, that was the reality for one man.

Back in 1895, the patent for automobile technology belonged to a single person: George Selden. Instead of manufacturing cars, George demanded royalties for the right to produce them in the U.S. The Selden Patent forced all automobile manufacturers across the U.S. to seek his approval and pay him a fee for every car made.

The Electric Vehicle Company (EVC) was the very first to pay, forking out US$15 (US$483 in 2021) per car. If this royalty existed today, the 162m new cars sold in the U.S. between 2012 and 2021 would have cost an extra US$79b.

Following EVC’s acquiescence, George partnered with William Whitney to create the Association of Licensed Automobile Manufacturers (ALAM) in 1903. ALAM quickly brought the industry to heel, and names like Studebaker, Oldsmobile and Cadillac (NYSE: GM) joined the association. Membership required an initial licence fee of US$10,000 (US$307,921 in 2021) and a royalty on every car produced. 

The association believed the market should focus on the rich with limited production, subsequently denying almost all upstart applications.

Along came Henry Ford, in his now iconic Model T that was cheap and ready to democratise car ownership. That didn’t sound good to the rich folk at the ALAM, who denied Ford’s application and even ended up suing his company, Ford Motor (NYSE: F), and winning in 1909. 

But by then the Model T was a runaway success. Ford took the case higher and won, properly launching the age of automobiles. If the ALAM had won, the masses would have never had the chance to adopt the car. So the next time you go for a drive, honk if you’re grateful to Mr Ford.


Related


Want more?

You know what to do

Insights, trends and company deep dives delivered straight to your inbox.


Stake logo


Stake is the trading name of Hellostake Limited, a company registered in England and Wales (Company no. 11676409). Hellostake Limited is authorised and regulated by the UK Financial Conduct Authority under the Firm Reference Number 830771. Registered address: 85 Great Portland Street, London, W1W 7LT, United Kingdom.

When you invest, your capital is at risk.

The value of your investments can go down as well as up and you may receive back less than your original investment. Any advice is of a general nature only. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate independent taxation and legal advice. The information on our website or our mobile application is not intended to be an inducement, offer or solicitation to anyone in any jurisdiction in which Stake is not regulated or able to market its services.

At Stake, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Please view our Terms & Conditions, Privacy Policy and Disclaimers before deciding to use or invest on Stake. By using the Stake website or service in any way, you agree to our Privacy Policy and Terms & Conditions. All financial products involve risk and you should ensure you understand the risks involved as certain financial products may not be suitable to everyone. Past performance of any product described on this website is not a reliable indication of future performance

Copyright © 2024 Stake. All rights reserved.