While the Type 2 was the first four-wheel vehicle designed by Bugatti, the Type 10 was the first car named after his name.
By 1907, Ettore Bugatti moved to Cologne and worked for Gasmotoren-Fabrik Deutz. That company was established by Nikolaus-Augustus Otto, who was the inventor of the compressed charged internal combustion engine, which led to the modern internal combustion engine. Bugatti was hired as head of the production department, but he was also started to work on his own project with his employees.
For that, he designed the chassis, the suspension, the drivetrain, and the engine. He understood that his car had to be light and agile to win races. He didn't agree with Deutz, who forced him to design vehicles with heavy engines, so he made the little roadster with aluminum bodywork. He made a cockpit just for two occupants, and the vehicle was very narrow. Its artillery-wheels with wooden spokes were the only feasible option for those times.
Bugatti designed a small engine, which produced only ten hp from its 1.1-liter displacement. He installed a multi-plate clutch system to send the power to the rear wheels via a driveshaft, which was an unusual solution. In those times, other carmakers still used leather belts and transmission chains. Since the car was very light, only 365 kg (804 lbs), it was able to get up to 80 kph (50 mph). His car was tested and prised by the French aviator Louis Bleriot. Bleriot was the first man to fly across the English Channel in 1909 in a plane built by himself.
Bugatti chose leaf-springs on the front axle and a rigid axle in the rear without any kind of springs for the suspension. That was not a very good idea on bumpy roads, but it worked for a very light vehicle.