Steam-powered self propelled vehicles were devised in the late 18th century. Nicolas-Joseph Cugnot successfully demonstrated such a vehicle as early as 1769. The first vehicles were steam engine powered, probably the most notable advances in steam power evolved in Birmingham, England by the Lunar Society, it was that the term Horsepower was first used. It was in Birmingham also that the first petrol driven automobiles were built in Britain in 1896 by Frederick William Lanchester who also patented the disc brake in the city. Electric vehicles were produced by a small number of manufacturers. In the 1890s, ethanol was the first fuel used by cars in the U.S. In 1919, alcohol Prohibition destroyed corn-alcohol stills which many farmers used to make low cost ethanol fuel. Later on gasoline and diesel engines were implemented. Brazil is the only country which produces ethanol-running cars, since the late 1970's.
Cugnot's invention initially saw little application in his native France, and the center of innovation passed to Britain, where Richard Trevithick was running a steam-carriage in 1801. Such vehicles were in vogue for a time, and over the next decades such innovations as hand brakes, multi-speed transmissions, and improved speed and steering were developed. Some were commercially successful in providing mass transit, until a backlash against these large speedy vehicles resulted in passing laws that self-propelled vehicles on public roads in Britain must be preceded by a man on foot waving a red flag and blowing a horn. This effectively killed road auto development in the UK for most of the rest of the 19th century, as inventors and engineers shifted their efforts to improvements in railway locomotives. The red flag law was not repealed until 1896.
The first automobile patent in the United States was granted to Oliver Evans in 1789; in 1804 Evans demonstrated his first successful self-propelled vehicle, which not only was the first automobile in the USA but was also the first amphibious vehicle, as his steam-powered vehicle was able to travel on wheels on land and via a paddle wheel in the water.
It is generally claimed that the first automobiles with gasoline powered internal combustion engines were completed almost simultaneously in 1886 by German inventors working independently: Carl Benz on 3 July 1886 in Mannheim, resp. Gottlieb Daimler and Wilhelm Maybach in Stuttgart (also inventors of the first motor bike). On November 5, 1895, George B. Selden was granted a United States patent for a two-stroke automobile engine. This patent did more to hinder than encourage development of autos in the USA. A major breakthrough came with the historic drive of Berta Benz in 1888. Steam, electric, and gasoline powered autos competed for decades, with gasoline internal combustion engines achieving dominance in the 1910s.
The large scale, production-line manufacturing of affordable automobiles was debuted by Oldsmobile in 1902, then greatly expanded by Henry Ford in the 1910s. Early automobiles were often referred to as 'horseless carriages', and did not stray far from the design of their predecessor. Through the period from 1900 to the mid 1920s, development of automotive technology was rapid, due in part to a huge (hundreds) number of small manufacturers all competing to gain the world's attention. Key developments included electric ignition and the electric self-starter (both by Charles Kettering, for the Cadillac Motor Company in 1910-1911), independent suspension, and four-wheel brakes.
By the 1930s, most of the technology used in automobiles had been invented, although it was often re-invented again at a later date and credited to someone else. For example, front-wheel drive was re-introduced by Andre Citroën with the launch of the Traction Avant in 1934, though it appeared several years earlier in road cars made by Alvis and Cord, and in racing cars by Miller (and may have appeared as early as 1897). After 1930, the number of auto manufacturers declined sharply as the industry consolidated and matured. Since 1960, the number of manufacturers has remained virtually constant, and innovation slowed. For the most part, "new" automotive technology was a refinement on earlier work, though these refinements were sometimes so extensive as to render the original work nearly unrecognizable. The chief exception to this was electronic engine management, which entered into wide use in the 1960s, when electronic parts became cheap enough to be mass-produced and rugged enough to handle the harsh environment of an automobile. Developed by Bosch, these electronic systems have enabled automobiles to drastically reduce exhaust emissions while increasing efficiency and power.