DEARBORN – The looming horsepower war between the Ford Mustang, upcoming Dodge Challenger and rumored new version of the Chevrolet Camaro will come to the same conclusion it did in the 1960s, says famed racer and automotive designer Carroll Shelby.

“The insurance companies will be the deciding factor, as well as the (Environmental Protection Agency), the government and so forth,” Shelby tells Ward’s in a wide-ranging interview here.

Shelby says the first horsepower war got out of control, with cars developing more power than their chassis could handle. He predicts this one will peak when cars reach 600-700 hp.

He also offers up another prediction.

“They (competition) won’t get an advantage in the horsepower race like Camaro did last time,” Shelby says, throwing down the gauntlet to General Motors Corp. “You can bet on that; I guarantee that.”

Ford Motor Co.’s relationship with the 83-year-old Shelby, a former chicken farmer, dates back to the early 1960s and still is going strong today, evidenced by the new Mustang GT500 the muscle car guru helped develop.

Despite his legendary status, Shelby downplays his role in the development of the new 500-hp GT500.

“This day and time, with safety and emissions such a big part of things, it’s not like it was years ago,” he says. “You have to depend on the people of Hau Thai-tang (Ford director of Advanced Product Creation and SVT). All I do is sit around, and conceptually we talk about what size the engine ought to be; how much horsepower it should have; what type of brakes, gearbox, gears, gearing and things like that.”

Modesty aside, Shelby did make important decisions in the development of the GT500, including the choice of rear suspension.

While the majority of today’s auto makers are opting for more-sophisticated independent rear suspensions, the high-powered Mustang sticks with a live axle.

“I voted not to go independent suspension, because it was 150 to 200 lbs. (68-91 kg) heavier, cost $5 million to tool up and I couldn’t tell any difference (either) in ordinary driving or driving under extreme conditions,” Shelby says.

Shelby says independent rear suspensions came into vogue in the U.S. shortly after World War II, largely because they were adopted by European auto makers as a better fit with the continent’s up and down “hogback” roads.

“Suddenly (post-World War II), everybody in America thinks they have to have independent suspension,” Shelby says. “It’s completely unnecessary, and we proved that in 1965.

“We had an independent suspension for the Mustangs we built back then, and we found out there wasn’t any advantage. And there were a lot of disadvantages in the camber changes and so forth.”

Much like the debate over independent vs. live axle suspensions, many car buyers have an ill-conceived perception of domestic auto makers, Shelby says.

“All automobile companies make good product now. It’s pretty much parity out there on all of it,” he says.

Shelby is keenly aware of the current alternative-fuels movement and says much of what is being done today could have been implemented years ago.

“I think it could’ve been done a helluva lot better and quicker by just going to compressed natural gas, which there’s plenty of,” he says. “But they decided not to do that, and we probably wasted $500 million (in the meantime),” he says.

“There’s so many different companies that have their own cross to bear, and they’re trying to sell their own products, so it takes 10 times as long to get anything done,” Shelby laments.

“(But) there’s no sense in sitting around griping about any of that stuff. Just get up in the morning and get on with it and drive through it.”

bpope@wardsauto.com