Veteran Era

The first production of automobiles was by Karl Benz in 1888 in Germany and, under licence from Benz, in France by Emile Roger. There were numerous others, including tricycle builders Rudolf Egg, Edward Butler, and Léon Bollée. Bollée, using a 650 cc (40 cu in) engine of his own design, enabled his driver, Jamin, to average 45 kilometres per hour (28.0 mph) in the 1897 Paris-Tourville rally. By 1900, mass production of automobiles had begun in France and the United States. The first company formed exclusively to build automobiles was Panhard et Levassor in France, which also introduced the first four-cylinder engine. Formed in 1889, Panhard was quickly followed by Peugeot two years later. By the start of the 20th century, the automobile industry was beginning to take off in western Europe, especially in France, where 30,204 were produced in 1903, representing 48.8% of world automobile production that year.

In the United States, brothers Charles and Frank Duryea founded the Duryea Motor Wagon Company in 1893, becoming the first American automobile manufacturing company. However, it was Ransom E. Olds and his Olds Motor Vehicle Company (later known as Oldsmobile) who would dominate this era of automobile production. Its large scale production line was running in 1902. Within a year, Cadillac (formed from the Henry Ford Company), Winton, and Ford were producing cars in the thousands.

Within a few years, a dizzying assortment of technologies were being produced by hundreds of producers all over the western world. Steam, electricity and petrol/gasoline-powered automobiles competed for decades, with petrol/gasoline internal combustion engines achieving dominance in the 1910s. Dual- and even quad-engine cars were designed, and engine displacement ranged to more than a dozen litres. Many modern advances, including gas/electric hybrids, multi-valve engines, overhead camshafts, and four-wheel drive, were attempted, and discarded at this time. In 1898, Louis Renault had a De Dion-Bouton modified, with fixed drive shaft and ring and pinion gear, making "perhaps the first hot rod in history" and bringing Renault and his brothers into the car industry. Innovation was rapid and rampant, with no clear standards for basic vehicle architectures, body styles, construction materials, or controls. Many veteran cars use a tiller, rather than a wheel for steering, for example, and most operated at a single speed. Chain drive was dominant over the drive shaft, and closed bodies were extremely rare. Drum brakes were introduced by Renault in 1902. The next year, Dutch designer Jacobus Spijker built the first four-wheel drive racing car: it never competed, and would have to wait until 1965 and the Jensen FF to be used on a production car.

Innovation was not limited to the vehicles themselves, either. Increasing numbers of cars propelled the growth of the petroleum industry, as well as the development of technology to produce gasoline (replacing kerosene and coal oil) and of improvements in heat-tolerant mineral oil lubricants (replacing vegetable and animal oils).

There were social effects, also. Music would be made about cars, such as "In My Merry Oldsmobile" (a tradition that continues), while in 1896, William Jennings Bryan would be the first Presidential candidate to campaign in a car (a donated Mueller) in Decatur, Illinois. Three years later, Jacob German would start a tradition for New York City cabdrivers when he sped down Lexington Avenue, at the "reckless" speed of 12 mph (19 km/h). Also in 1899, Akron, Ohio, adopted the first self-propelled paddy wagon.

By 1900, it was possible to talk about a national automotive industry in many countries, including Belgium (home to Vincke, which copied Benz : Germain, a pseudo-Panhard; and Linon and Nagant, both based on the Gobron-Brillié), Switzerland (led by Fritz Henriod, Rudolf Egg, Saurer, Johann Weber, and Lorenz Popp), Vagnfabrik AB in Sweden, Hammel (by A. F. Hammel and H. U. Johansen at Copenhagen, in Denmark, beginning around 1886), Irgens (starting in Bergen, Norway, in 1883, but without success), Italy (where FIAT started in 1899), and as far afield as Australia (where Pioneer set up shop in 1898, with an already archaic paraffin-fuelled centre-pivot-steered wagon). Meanwhile, the export trade had begun to be global, with Koch exporting cars and trucks from Paris to Tunisia, Egypt, Iran, and the Dutch East Indies.

On 5 November 1895, George B. Selden was granted a United States patent for a two-stroke automobile engine (U.S. Patent 549,160). This patent did more to hinder than encourage development of autos in the USA. Selden licensed his patent to most major American auto makers, collecting a fee on every car they produced. The Studebaker brothers, having become the world's leading manufacturers of horse-drawn vehicles, made a transition to electric automobiles in 1902, and gasoline engines in 1904, but they continued to build horse-drawn vehicles until 1919. In 1908, the first South American automobile was built in Peru, the Grieve.

Throughout the veteran car era, however, automobiles were seen as more of a novelty than a genuinely useful device. Breakdowns were frequent, fuel was difficult to obtain, roads suitable for travelling were scarce, and rapid innovation meant that a year-old car was nearly worthless. Major breakthroughs in proving the usefulness of the automobile came with the historic long-distance drive of Bertha Benz in 1888, when she traveled more than 80 kilometres (50 mi) from Mannheim to Pforzheim, to make people aware of the potential of the vehicles her husband, Karl Benz, manufactured, and after Horatio Nelson Jackson's successful trans-continental drive across the United States in 1903.