How was the United States able to produce excellent tanks in 1942?

Plenty of answers but I am not sure if any address the terms of OP's question, so I'll had my own:

The question is, AFAI Understand: How did the Americans managed to design good tanks, even before entering the ground campaign with their own troops, while their British allies, failed?.

SHORT ANSWER: British medium and heavy tanks lacked firepower and reliability until the Grant and Sherman came. The M4 was mass produced so became main Allied tank. British tanks designed as infantry tanks were good but for that task only. After 1943, British came back in good realizations, but Sherman was already mass-produced. New British light tanks were not produced after the beginning of the war (it was more about heavy armoured cars, which faired well).

LONG ANSWER:

First reason, partly adressed by other answers, is the engineering capabilities of American industry: Car industry provided reliable and high volume production chains, natural resources and chemical industry provided adapted raw material for each function, resulting in reliability, and electric industry provided fancy things for ergonomy (electrically-powered turret on the B-29 for exampel) and engine control. This is already a lot: the tank can fill many usecase-requirements, that every crew is able to discover and ask, even without war experience. And the tank is reliable.

But reliability put apart (and don't forget that reliability is a main reason for tank crews to prefer one tank over the other), why did M4 Sherman and M3 Grant beat British tanks? This is a matter of doctrine and fire power. British army, at the begininng and from its WW1 experience, wanted infantry tanks. Some people asked for other things (Fuller...) but mostly, infantry tanks were developped. Because of the capacity of contemporary British industry, those tanks (Matilda for example) had following characteristics:

• Speed: in the middle
• Armour: very good
• All-ground capability: very good
• Machine guns: numerous
• Main gun: 2-pounder (40 mm): not that powerful against infantry (not enough space for the warhead)
• Turret and ergonomy : in the middle

The lack of firepower against infantry, and the small range against armoured targets and the medium speed proved catastrophic when facing German forces, because those forces (unlike Italian ones) were mobile, infantry had no fear of tanks and had heavy antitank guns and dive bombers able to defeat the good armour. This situation, discovered by English forces in 1940, forced them to quickly adopt better cavalry tanks (they already existed, but were closer to armoured cars because of their lightness and carried only machine guns). This led to some measures:

• First one: The adoption of the American tank Stuart: a light cavalry tank, with two advantages over British (and French) similar vehicles: reliability and the 37 mm gun, dedicated to antitank firings so it provided a good capability.
• Second one: Another infantry tank was built: the "Valentine", which was supposed to be more reliable
• Third one: programs for cavalry tanks: the realisation for year 1941 /1942 was the Crusader: it was good in theory: fast, well armoured, but lacked reliability in practice. To reduce reliability issues (turrets suffer for the muzzle shot), and because there was difficulty to produce new 57 mm gun, engineers kept the 40 mm gun that lacked firepower.

On the other hand, Americans, studying German victories of 1940 and 1941, but also the British Compass operation, understood that their tanks should be as close as possible to the Panzer IV. But they also understood that tanks should be able to fight infantry in the Matilda or Sturmgeschutz fashion. That is why they realized first the M3 Grant: even if it was in the main body and not in the turret, its 75 mm gun was useful against infantry and antitank guns, and the 37 mm could do the job against thin armour in a fast moving fight. This tank provided the firepower lacking in British tanks, and this is why it was that much appreciated by British crews in the desert: eventually, they had with the Grant the firepower at long range needed when counterattacking Axis forces. Moreover, the tank had all the fancy American things: ergonomy ok, speed ok, reliability on technical and operationnal points of view (spare parts...).

Later, the M4 Sherman was, from the operationnal point of view, a Grant with still good armour, better ergonomy with one gun for all tasks: the 75 mm. Even if that gun lacked antitank power as early as 1943 against the best German tanks (which led to the Wolverine/76 mm and Firefly/17 pounder evolutions), it was still very good compared to British realisations of the time:

• More reliable
• Better speed
• Armour similar
• Better main gun

And don't forget that quantity was there, whereas British tank industry had no way to win the mass production challenge (even if it stood very well).

Eventually, British made other tanks entered the field, notably the Cromwell: It had good characteristics, but this was long after the Sherman was designated as the main Allied tank production, so it only entered service in some Commonwealth units.

Actually the M3 Sherman was considerably undergunned and in the battle of Villers Bocage Michael Wittmann with just one tiger tank destroyed 14 Shermans in succession.

The British up-gunned the Shermann to a 90mm gun and called it the Firefly at which point it was more evenly matched gun wise, but not in terms of protection.

The Sherman had a radial aircraft engine for propulsion therefore used high octane fuel. For this reason the Germans nicknamed it the "Ronson Lighter" for its ease to set alight.

The Cromwell British tank was far superior to the Sherman and led to the Post war Centurion, so other than being able to produce the Sherman in large numbers I don't see the question is all that valid.

British Tanks used in the desert campaign were "Infantry tanks" the product of 1930s philosphy. The Lee Grant and Stewart light tanks were not much different.

The Sherman arrived late in the north Africa campaign developed from lessons learned by mistakes. USA was able to implement changes to the Lee Grant with a new turret and hull quite quickly. It was still only developed to take on the German Mark IV. When it met the Tiger it was outclassed.

I think the writers mean excellent tanks compared to the crappy British tanks rather the German tanks in 1942. British failed to produce a world beating tank throughout WW2 and had lots of unsuccessful tank programmes. Probably the best "British" tank used in wide numbers in WW2 was the Sherman Firefly although the Comet which was about as good as a Panther was coming into service at the end of war.

The build up of the US army from a small, backwards, underfunded, isolationist peace-time army in 1939 to a six million person world conquering colossus in 1945 is one of the under-appreciated triumphs of WWII. Much can be attributed to the cadre of professional, forward thinking officers like George Marshall the US maintained. When it comes to tanks, it was a devotion to automotive quality, focusing on a single design, and "leapfrogging" the enemy in guns and armor.

Let me lay out some ground rules. This answer is in the context of 1942, later war tank developments do not apply. The US tanks will only be compared to their intended and actual opponents, Soviet tanks may be great but the M4 wasn't designed to fight them.

In WWII the main purpose of tanks was not to fight other tanks, it was to support the infantry, either in the infantry support role (infantry / heavy tanks like the Matilda or early Panzer IV) or cavalry role (medium and light / cavalry / cruiser tanks like the Crusader). Good WWII tank design considered these elements.

• Cost
• Speed of manufacture
• Ease of manufacture (simpler parts can be made by more factories)
• Mechanical reliability
• Ease of maintenance
• Fuel consumption
• Road performance
• Cross-country performance
• Silhouette
• Ergonomics (how well can the crew can operate the tank)
• Armament vs infantry (machine guns & high explosive rounds)
• Armament vs armor
• Armor vs high explosive (artillery)
• Armor vs kinetic (anti-tank guns)

This can explain a lot of apparently odd decisions on the part of US tank designers. They liked the 75mm gun because it fired an excellent high explosive round, very effective against infantry, whereas the 76mm gun with better anti-tank performance had a less effective HE round. They considered maneuverability and mechanical reliability more important than heavy armor and anti-tank performance, because the US army was a very aggressive and wanted to make sweeping attacks and avoid slogging matches.

On to the question. The US had a huge advantage over Britain and Germany in 1940-1942, an enormous, underutilized and experienced automotive industrial base. This meant US tank designs would be mechanically well-designed and reliable. Better engines and transmissions can carry more armor at better speed. Their excess of productivity meant the designs could also be lavish, especially relative to the extremely overstretched British.

The US had another advantage. Prior to the war they had almost no tanks to speak of and a very small army. This meant they had no prior stock of parts and ammunition to consider. They didn't have to rush half-finished designs into combat either. They could sit back and watch the development in Europe and stock their new army with the latest and the greatest. While the US Army had little experience in armored warfare, and budgets were miniscule, they knew a war was brewing and had laid the ground work for armored tactics and design.

Rather than working on a whole bunch of different tank chassis (the Germans had at least six in production in 1942, the British were probably as bad) they focused on one. Starting in 1935, they gained experience with the M2 Light Tank, which developed into the M2 Medium Tank or "the tank that proved you can have too many machine guns". But it was fast, reliable, and pretty easy to build.

When a layman considers a tank, they see the gun and armor and that's it. It cannot be overstated how important it is for a tank to have a good drive-train, and how many otherwise excellent tanks were crippled by bad transmissions and weak engines overloaded with too much armor. Tank engines have to move 30-70 tons at 30mph, and their transmissions have to transmit 400-700 horsepower at high torque. It doesn't matter how good your tank is if it breaks down or gets stuck in the mud every 50 miles. It doesn't matter how thick your front armor is if I can drive around behind you. The Tiger never solved their drive-train problems. The early Panther production was crippled by them, in the Battle of Kursk nearly as many were lost to breakdowns as to enemy action. The KV/IS series of tanks was, in some ways, Soviet engineers learning to make decent transmissions.

The Americans avoided all that by using the same Wright/Continental radial aircraft engine on the M2, M3 and early M4. It was a compact, reliable, existing engine, with an existing production line. It had the torque and power necessary to drive a well armored tank at a good speed giving it a better power/weight ratio than the PzIII or IV). When they couldn't produce enough engines, they grabbed another existing aircraft engine, the Ford GAA V8. This had the trade-off of using gasoline, more flammable than diesel, but the Americans thought the extra power was worth it.

The invasion of Poland and France showed the M2 was under-gunned, under-armored, poorly laid out, and too tall, but the British army, having littered France with much of their heavy equipment, needed tanks RIGHT NOW, so the US went about designing an expedient tank. It was known that the 37mm gun was inadequate. Everyone else was incrementally upgunning, the US wanted to leapfrog everyone with a 75mm gun (a huge gun in 1940, the Soviets had the same idea earlier with the T-34), but designing a new turret takes a long time. The M3 Lee/Grant used the same chassis, drive train and 37mm turret as the M2 Medium taking advantage of a known good design and existing production lines. It deleted most of the machine guns, added some armor, and, most obviously, stuck the 75mm out the side of the tank.

The M3 was awkward, but it did the job, and it was quite a surprise at the Battle Of Gazala. The 75mm was far superior to the 2 pounders the British were fielding and could out-range most of what the Germans and Italians had. The best the Germans had was the Panzer III with a 50mm gun and thin armor. Its armor was flawed (the rivets had a tendency to become projectiles), but adequate. It was also fast, as fast or faster than most tanks at the time. In some ways, the M3 was the first Main Battle Tank (ie. it could cover both the infantry and cruiser tank role) fielded by the Western Allies (the Soviets already had the T-34).

With the M3 in production, and the British reporting painful lessons back, the US got down to the business of designing the M4. They chose the simplest. It kept the good parts of the M3 (suspension, transmission, chassis and 75mm gun), fixed the layout, and added a new turret. Like the M3, the M4 was designed to do it all. It had the armor and HE round to support infantry, it had the speed, reliability and cross-country performance for breakthroughs and cavalry dashes, and at the time it had the gun and armor to defeat anything in the Axis arsenal. This was all true until it met the Tiger (and later Panther).

There you have it. A cadre of professional, pre-war officers made sure to keep the US Army up to date and in practice with tanks despite a miniscule budget. They used their extensive automotive industry and experience to design a fast, reliable drive-train and chassis which they continually improved and upgraded. They observed events in Europe (particularly the battles of Poland and France) and altered their plans accordingly, only committing to their final design (the M4) in 1941.

There are at least three criteria for "good" tanks: combat effectiveness, ease of production, and mechanical reliability.

The Americans produced "good" tanks that excelled in the latter two categories. That's because they were the world's best producers of automobiles. To take off on U.S. civil war cavalry doctrine, American generals regarded tanks as a form of transportation.

Sherman tanks were inferior to the better, heavier, Russian T-34s, not to mention the German Tiger and Panther tanks, in combat power. The latter were, however, hard tanks to produce, which is to say that the Germans didn't produce many of them. On the whole, the Shermans were a match in combat power for the Mark III's and Mark IV's that the Germans did have in common use, and were superior in mobility, mechanical reliability and producibility. Put another way, the Americans won World War II because they succeeded in mass producing a lot of "good enough" tanks that were a more than a match for similar German tanks, and also overwhelmed the handful of great tanks that the Germans produced.

The British "Waltzing" Mathildas were slow, clumsy, undergunned tanks that were competitive with the German tanks only in the weight of their armor. The American Sherman tanks represented a clear improvement over that standard.

• Good? No. Lots of them? Yes.

• The Americans were leaders in mass-producing large durable goods at low cost - cars, especially. This translated to mass-producing medium cruiser tanks (the M4 Sherman) almost as quick as they could roll a Buick off the assembly line. What's more, these were brand new machines, they had not spent months and months slogging through the desert and one pitched battle after the next, and the Americans brought plenty of spare parts for them.

• They were designed to be easily repairable and incredibly reliable, and they could move a lot quicker than the German armor. In a stand-up fair fight, the Sherman loses every time. Monty and Patton didn't do stand-up fair fights, they left that to the Russians.

• The Americans chose to incrementally improve and upgrade the Sherman, eschewing clean-sheet designs. This meant the Sherman kept getting better and better, while retaining its low cost. At the beginning of the war they were called Ronsons by German tankers - a brand of cigarette lighter who's motto was "Lights on the first strike". The design was so extensible that not only were they a credible threat to heavy German tanks by the end of WWII, they were used to good effect against modern Soviet armor in the Six Day War.

• It's not how you start, but how you finish.