Around 1860, Otto heard that Etienne Lenoir (1822-1900) had recently invented the gas engine, the first usable internal combustion engine. Otto realized that the Lenoir gas engine would be much more useful if it could be run on liquid fuel, since in this case it would not have to be connected to a gas line. He soon invented a vaporizer, but his patent application was rejected by the patent office because someone else had already invented a similar device.
Otto was not discouraged and did his best to reform the Nulawa gas engine. As early as 1861, he envisioned building an essentially new type of engine, one using four strokes (as opposed to the two-stroke Nulawa prototype). In February 1862, Otto produced a working prototype of a four-stroke engine. He encountered difficulties in making the new engine practical, particularly with the ignition, and soon put it aside. But he also invented the "normal pressure engine", an innovative two-stroke engine powered by gas.
He obtained a patent for this innovation in 1863, and soon found a partner to fund him, named Eugene Langen. The two established a small company and continued to improve the engine. In 1867 their two-stroke engine won a gold medal at the Paris World's Fair. Since then, sales have been smooth and the company's profits have soared. In 1872, they hired Gotlieb Daimler, an engineer with extraordinary talent and management experience, to help produce engines.
Although the two-stroke engine produced huge profits, Otto still couldn't forget the four-stroke engine he originally envisioned. He was convinced that a four-stroke engine that compressed the fuel-air mixture before igniting it would be much more efficient than any improved Lenoir two-stroke engine. In 1876, Otto designed an improved ignition system, with which a practical four-stroke engine could be built. The first such prototype was built in May 1816, and a patent was issued the following year. The power and performance of the four-stroke engine were obviously superior, so it immediately entered the market and became a great success. With more than thirty thousand units sold in the next decade alone, Lenoir engines of all types were quickly made obsolete.
In 1886, Otto's German patent for the invention of the four-stroke engine was overturned by a patent lawsuit. It turned out to be Frenchman Alphonse Beau. Rorschach designed and patented a basically similar device in 1862. But one should not regard Beau Rorschach as an influential figure. His invention never hit the market. In fact, he never built a prototype, and Otto did not know anything about his invention. Any situation. Although Otto lost valuable patent rights, it continued to make money. By the time of his death in Cologne, Germany, in 1891, the company was prospering and had a fortune.
In 1882, Gottlieb Daimler left the company, determined to apply the Otto engine to transportation. In 1883, he invented an advanced ignition system (but not the one commonly used today) that allowed the engine to run at 700-900 rpm (the maximum speed of Otto's engine was 180-200 rpm ), and also took great pains to create a very light engine. In 1885, he attached an engine to a bicycle and created the world's first motorcycle. The following year Daimler built his first four-wheeled car. But Karl Benz was ahead of the game. He had built his first car a few months earlier - a three-wheeler - an undeniable car. Benz's car, like Daimler's, was powered by an Otto engine. Benz's engine was nowhere near the 400 rpm rate required to make his car of practical value. Benz continued to improve his car and within a few years successfully entered the market. Gottlieb Daimler's car entered the market slightly later than Benz's, but it was also a success.
Finally, the two companies Benz and Daimler merged into one, and the famous Mercedes-Benz brand cars were produced by this merged company.