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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 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 with a four-stroke engine of his own design between the rear wheels. Power was transmitted by means of two roller chains to the rear axle. Benz finished his creation in 1885 and named it the Benz Patent Motorwagen. It was the first automobile entirely designed as such, not simply a motorized carriage, which is why Karl Benz is regarded by many as the inventor of the automobile.

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