What instrument in a car measures its speed?

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The speedometer and speedometer cable tells the driver how fast the vehicle is going.

What has called a Hall-Effect sensor is used. It uses the principle of magnetic inductance. When a magnetic flux passes through coils of wire, voltage is generated. To use this effect, a magnet is placed in the cars differential. The sensor then can tell when the magnet comes around by a spike in voltage. Since there is a constant amount the car moves with each differential rotation, and with the time between voltage spikes, you can easily divide to get the speed.

This is why changing your cars tires will affect your speedometer. Your car assumes that car moves a certain amount with each differential rotation. If you have larger tires on, then each differential rotation (and axle rotation) your car moves further, and you will move faster than indicated.
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