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Benz's lifelong hobby brought him to a bicycle repair shop in Mannheim owned by Max Rose and Friedrich Wilhelm Eßlinger. In 1883, the three founded a new company producing industrial machines: Benz & Company Rheinische Gasmotoren-Fabrik, usually referred to as, Benz & Cie. Quickly growing to twenty-five employees, it soon began to produce gas engines as well.
The success of the company gave Benz the opportunity to indulge in his old passion of designing a horseless carriage. Based on his experience with, and fondness for, bicycles, he used similar technology when he created an automobile. It featured wire wheels (unlike carriages' wooden ones) with a four-stroke engine of his own design between the rear wheels, with a very advanced coil ignition and evaporative cooling rather than a radiator. Power was transmitted by means of two roller chains to the rear axle. Karl Benz finished his creation in 1885 and named it the Benz Patent Motorwagen.
It was the first automobile entirely designed as such to generate its own power, not simply a motorized stage coach or horse carriage, which is why Karl Benz was granted his patent and is regarded as its inventor.
The beginnings of the Motorwagen in 1885 were less than spectacular. The tests often attracted many onlookers who laughed mockingly when it smashed against a wall because it initially was so difficult to control.
The Motorwagen was patented on January 29, 1886 as DRP-37435: "automobile fueled by gas". The first successful tests were carried out in the early summer of 1886 on public roads. The next year Benz created the Motorwagen Model 2 which had several modifications, and in 1887, the definitive Model 3 with wooden wheels was introduced, showing at the Paris Expo the same year.
Benz began to sell the vehicle - advertising it as the Benz Patent Motorwagen - making it the first commercially available automobile in history. The first customer, in late summer of 1888, is alleged later to have been committed to an insane asylum. The second buyer, Parisian bicycle manufacturer Emile Roger, who purchased an 1888 Benz, had a profound effect on Benz's success...
Source: http://en.wikipedia.org/wiki/Benz_%26_Cie.
Benz photos
