Oldsmobiles were first manufactured by the Olds Motor Vehicle Company in Lansing, Michigan, a company founded by Ransom E. Olds in 1897. In 1901 (the same year that Horace and John Dodge won a contract to produce transmissions for the Olds company), the company produced 635 cars, making it the first high-volume gasoline-powered automobile manufacturer (electric car manufacturers such as Columbia Electric and steam-powered car manufacturers such as Locomobile had higher volumes a few years earlier).

Oldsmobile became the top-selling car company in the United States from 1903 to 1904. Ransom Olds left the company in 1904 because of a dispute with sales manager Frederic L. Smith, who was questioning production techniques and wanted Mr. Olds to certify that each car that left the plant was free from defects. Mr. Smith then set up an experimental engineering shop without Mr. Olds' knowledge or consent, causing Mr. Olds to leave in 1904 and form the REO Motor Car Company.[1] This was similar to the situation Henry Ford experienced when he was forced out of the company he founded (the Henry Ford Company) before starting the Ford Motor Company in 1903.