Mattel Auto Race is the first in the line of many Mattel Electronics games, and is credited with being the first handheld game that was entirely digital, only with solid-state electronics and without mechanical components, even predating the Milton Bradley Company's Microvision, having no moving mechanisms except the controls and on/off switch. Finding one of these systems in working condition is rare.
It was copied in the USSR
Mattel pioneered the category of handheld computer games when it released Mattel Auto Race in 1976 and is sometimes overlooked because of the much more successful Mattel Football that was released a year later. The visuals were represented by red LED lights and the sound consisted of simple beeps. The game itself used about 512 bytes in memory (half a kilobyte, or 1/2048 of a megabyte).
Sales of Mattel Auto Race exceeded expectations. Mattel in the 1970s, known mostly for Barbie dolls and Hot Wheels, was at first skeptical of products based on electronics, especially at what was considered a high price point at the time ($24.99 retail). The success of Auto Race convinced Mattel to proceed with the development of Mattel Football which was often sold out and in short supply and this led to the creation of a new Mattel Electronics Division in 1978, which for a time was extremely profitable.
George J. Klose, a product development engineer at Mattel, came up with the concept of re-purposing standard calculator hardware to create a hand-held electronic game using individual display segments as blips that would "move" on the display. He designed the game play for Mattel Auto Race, inspired by auto racing games commonly found in video arcades in the 1970s. First, George made a proof of concept prototype demonstrating a blip moving on an LED display without using a microprocessor to get approval from Mattel for further development. He then looked for a manufacturer to provide a circuit board that would fit into a compact package. George and his manager Richard Cheng approached the Microelectronics Division of Rockwell International, at the time, a leader in designing handheld calculator chips, to supply Mattel with the hardware and provide technical support.