It's not even that. alcohol destroys engines.

Sure in retrospect lead is a bad idea. but for the sake of argument. If we ignore all the subtlety of the real world choices, research and development required the argument would probably be.

We have this great additive that will let us make more powerful efficient engines that is also stable and lubricating or we could put something in the gas that degrades quickly and eats all the rubber seals out of our customers engines.

In short even ignoring price alcohol was a non starter then, even today with many years of developing rubbers that handle alcohol better E blends are a lot harder on engines than non E blends.

And a fun science experiment "how do you tell how much alcohol is in the gas?" fill a glass mason jar about a third full of gas, mark a line on the jar where the gas is. put another third of water in and color it with food coloring, put lid on and shake well, let separate and settle out. mark new line on glass where gas is. figure out percentage. The alcohol is water soluble and will have formed a solution with the water, the food coloring will only color the water and will let you see the boundery layer easier.

That used to be true.

For a while now, any petrol car can run on high ethanol mixed without any damage.