Although Nicolas-Joseph Cugnot is often credited with building the first self-propelled mechanical vehicle or automobile in about 1769, this claim is disputed by some, who doubt Cugnot's three-wheeler ever ran. Others claim Ferdinand Verbiest, a member of a Jesuit mission in China, built the first steam-powered 'car' around 1672. What is not in doubt is that Richard Trevithick built and demonstrated his Puffing Devil road locomotive in 1801, the first truly successful steam-powered road vehicle.

François Isaac de Rivaz, a Swiss inventor, designed the first internal combustion engine, in 1806, which was fuelled by a mixture of hydrogen and oxygen and used it to develop the world's first vehicle to run on such an engine. The design was not very successful, as was the case with Samuel Brown, Samuel Morey, and Etienne Lenoir who each produced vehicles powered by clumsy internal combustion engines.

In November 1881 French inventor Gustave Trouvé demonstrated a working three-wheeled automobile. This was at the International Exhibition of Electricity in Paris.

Although several other German engineers (including Gottlieb Daimler, Wilhelm Maybach, and Siegfried Marcus) were working on the problem at about the same time, Karl Benz generally is acknowledged as the inventor of the modern automobile.

An automobile powered by an four-stroke cycle gasoline engine was built in Mannheim, Germany by Karl Benz in 1885 and granted a patent in January of the following year under the auspices of his major company, Benz & Cie., which was founded in 1883. He began to sell his production vehicles in 1888.

In 1879 Benz was granted a patent for his first engine, which had been designed in 1878. Many of his other inventions made the use of the internal combustion engine feasible for powering a vehicle.

His first Motorwagon was built in 1885 and he was awarded the patent for its invention as of his application on January 29, 1886. Benz began promotion of the vehicle on July 3, 1886 and approximately 25 Benz vehicles were sold between 1888 and 1893, when his first four-wheeler was introduced. They also were powered with four-stroke engines of his own design. Emile Roger of France, already producing Benz engines under license, now added the Benz automobile to his line of products. Because France was more open to the early automobiles, initially more were built and sold in France through Roger than Benz sold in Germany.

In 1896, Benz designed and patented the first internal-combustion flat engine, called a boxermotor in German. During the last years of the nineteenth century, Benz was the largest automobile company in the world with 572 units produced in 1899 and because of its size, Benz & Cie., became a joint-stock company.

Daimler and Maybach founded Daimler Motoren Gesellschaft (Daimler Motor Company, DMG) in Cannstatt in 1890 and under the brand name, Daimler, sold their first automobile in 1892, which was a horse-drawn stagecoach built by another manufacturer, that they retrofitted with an engine of their design. By 1895 about 30 vehicles had been built by Daimler and Maybach, either at the Daimler works or in the Hotel Hermann, where they set up shop after falling out with their backers. Benz and Daimler seem to have been unaware of each other's early work and worked independently.

Daimler died in 1900 and later that year, Maybach designed an engine named Daimler-Mercedes, that was placed in a specially-ordered model built to specifications set by Emil Jellinek. This was a production of a small number of vehicles for Jellinek to race and market in his country. Two years later, in 1902, a new model DMG automobile was produced and the model was named Mercedes after the Maybach engine which generated 35 hp. Maybach quit DMG shortly thereafter and opened a business of his own. Rights to the Daimler brand name were sold to other manufacturers.

Karl Benz proposed co-operation between DMG and Benz & Cie. when economic conditions began to deteriorate in Germany following the First World War, but the directors of DMG refused to consider it initially. Negotiations between the two companies resumed several years later and, in 1924 they signed an Agreement of Mutual Interest, valid until the year 2000. Both enterprises standardized design, production, purchasing, and sales and they advertised or marketed their automobile models jointly—although keeping their respective brands.

On June 28, 1926, Benz & Cie. and DMG finally merged as the Daimler-Benz company, baptizing all of its automobiles Mercedes Benz as a brand honoring the most important model of the DMG automobiles, the Maybach design later referred to as the 1902 Mercedes-35hp, along with the Benz name. Karl Benz remained a member of the board of directors of Daimler-Benz until his death in 1929 and at times, his two sons participated in the management of the company as well.

In 1890, Emile Levassor and Armand Peugeot of France began producing vehicles with Daimler engines, and so laid the foundation of the automobile industry in France. The first American car with a gasoline internal combustion engine was designed in 1877 by George Selden of Rochester, New York, who applied for a patent for an automobile in 1879, but it expired because none was ever built (a requirement for a patent). In Britain there had been several attempts to build steam cars with varying degrees of success with Thomas Rickett even attempting a production run in 1860. Santler from Malvern is recognized by the Veteran Car Club of Great Britain as having made the first petrol-powered car in the country in 1894 followed by Frederick William Lanchester in 1895 but these were both one-offs.The first production vehicles came from the Daimler Motor Company, founded by Harry J. Lawson in 1896, and making their first cars in 1897.

In 1892, German engineer Rudolf Diesel was granted a patent for a "New Rational Combustion Engine". In 1897 he built the first Diesel Engine. In 1895, Selden was granted a United States patent (U.S. Patent 549,160 ) for a two-stroke automobile engine, which hindered, more than encouraged, development of autos in the United States. Steam, electric, and gasoline-powered autos competed for decades, with gasoline internal combustion engines achieving dominance in the 1910s.

Although various pistonless rotary engine designs have attempted to compete with the conventional pistoncrankshaft and design, only Mazda's version of the Wankel engine has had more than very limited success.

An automobile (via French from Greek auto, self and Latin mobilis moving, a vehicle that moves itself rather than being moved by another vehicle or animal). A motor car is a wheeled passenger vehicle which carries its own engine also known as a motor. Most definitions of the term specify that automobiles are designed to run primarily on roads, to have seating for one to eight people, to typically have four wheels, and to be constructed principally for the transport of people rather than goods. However, the term is far from precise because there are many types of vehicles that do similar tasks.

Another name for an automobile is a 'car' – a shortened form of 'motor car' (which in itself is widely believed to be derived from 'motorized carriage' - as in the Daimler Motorized Carriage) It is believed to originate from the Latin word 'carrus' or 'carrum', meaning wheeled vehicle, the Middle English word 'carre' meaning (from cart Old North French), and 'karros'; a Gallic wagon. The term motor car was adopted initially to distinguish internal combustion engined-cars from steam cars.

There were 590 million passenger cars worldwide (roughly one car for every eleven people) as of 2002.