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From WikiPedia:

Steam-powered self-propelled vehicles were devised in the late 18th century. The first self-propelled car was built by Nicolas-Joseph Cugnot in 1769—it could attain speeds of up to 6 km/h. In 1771 he again designed another steam-driven engine which ran so fast that it rammed into a wall, producing the world’s first car accident.

In 1807 Francois Isaac de Rivaz designed the first internal combustion engine (sometimes abbreviated “ICE” today). He subsequently used it to develop the world’s first vehicle to run on such an engine, one that used a mixture of hydrogen and oxygen to generate energy.

This spawned the birth of a number of designs based on the internal combustion engine in the early nineteenth century with little or no degree of commercial success. In 1860 thereafter, Jean Joseph Etienne Lenoir built the first successful two-stroke gas driven engine. In 1862 he again built an experimental vehicle driven by his gas-engine, which ran at a speed of 3 km/h. These cars became popular and by 1865 could be frequently seen on the roads.

The first American automobiles with gasoline-powered internal combustion engines were completed in 1877 by George Baldwin Selden of Rochester, New York, who applied for a patent on the automobile in 1879. Selden received his patent and later sued the Ford Motor company for infringing his patent. Henry Ford was notoriously against the American patent system, and Selden’s case against Ford went all the way to the Supreme Court, who ruled that Ford had to pay a penalty to Selden, but could continue manufacturing automobiles, because the technology had changed quite a bit by that time.