On This Day In Finance: July 23 - Ford Delivers First Model A

By Joseph Nguyen | July 22, 2009 AAA

On July 23, 1903, Dr. Ernst Pfenning of Chicago became the first owner of Ford Motor Company's first production car, the Model A. Also know as the "Fordmobile", the fancy looking two-seater boasted specs of 8 horsepower, a 3-speed transmission, 1,240 lbs weight and an impressive top speed of 45 mph. Additional luxury options could be added like a rubber roof ($30), a leather roof ($50), and a rear tonneau with an extra two seats ($100).

The Beginning
When Henry Ford started the company, he had $28,000 in startup capital, which was equivalent to nearly $700,000 in today's dollars. Before the first Model A was sold, the company had spent almost every penny and had just $223.65 left in the bank. As well, cash was being consistently drained from the company's coffers.

The turning point of Ford's financial health was likely the purchase of the first Model A by Dr. Pfenning for $850 in cash. The cash infusion held creditors at bay and may have saved the company from bankruptcy. From there, the direction of Ford's cash flow reversed, and consistently went up.

Only 1700 Model As were produced in total, but the money Ford got from selling the Model A helped him ramp up the development and production of new cars. Five years later, Ford would introduce the famous Model T that undoubtedly changed the face of the automobile industry.

Transforming Production
Switching from time-consuming by-hand assembly, Ford - inspired by the 'disassembly' line at a slaughterhouse - introduced the mass production assembly line and greatly increased the speed at which Model Ts could be built. Ford sold over 15.5 million Model Ts through two decades. The affordability of Model Ts led to mainstream adoption of the automobile and transformed this method of transportation from an upper class luxury to a middle class necessity.

Today Ford is one of the largest automobile manufacturers in the world and trades on the New York Stock Exchange under the symbol F with a market capitalization of over $20 billion. (Take a look at our Industry Handbook on Automobiles and Henry Ford: Industry Mogul and Industrial Innovator to learn more.)

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