How Wankel engines works
In the Wankel engine, the four strokes of a typical Otto cycle engine are arranged sequentially around an oval, unlike the reciprocating motion of a piston engine. In the basic single rotor Wankel engine, a single oval (technically an epitrochoid) housing surrounds a three-sided rotor (similar to a Reuleaux triangle, but with the middle of each side a bit more flattened) which turns and moves within the housing. The sides of the rotor seal against the sides of the housing, and the corners of the rotor seal against the inner periphery of the housing, dividing it into three combustion chambers.
As the rotor turns, its motion and the shape of the housing cause each side of the rotor to get closer and farther from the wall of the housing, compressing and expanding the combustion chamber similarly to the "strokes" in a reciprocating engine. However, whereas a normal four stroke cycle engine produces one combustion stroke per cylinder for every two revolutions (that is, one half power stroke per revolution per cylinder) each combustion chamber of each rotor in the Wankel generates one combustion 'stroke' per revolution (that is, three power strokes per rotor revolution). Since the Wankel output shaft is geared to spin at three times the rotor speed, this becomes one combustion 'stroke' per output shaft revolution per rotor, twice as many as the four-stroke piston engine, and similar to the output of a two stroke cycle engine. Thus, power output of a Wankel engine is generally higher than that of a four-stroke piston engine of similar engine displacement in a similar state of tune, and higher than that of a four-stroke piston engine of similar physical dimensions and weight. This design also allows the Wankel engine to have a much higher redline as there is less friction working against the internals of the engine.
National agencies which tax automobiles according to displacement and regulatory bodies in automobile racing variously consider the Wankel engine to be equivalent to a four-stroke engine of 1.5 to 2 times the displacement; some racing regulatory agencies view it as offering so pronounced an advantage that they ban it altogether.
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