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Back in the '70s, Heathkit sold a cruise control package that was basically Dana (now Rostra) hardware. The VSS sensor arrangement was two or four (memory is fuzzy) magnets taped to the driveshaft with a pickup coil placed in close proximity to them. OEM systems based on the same design usually had a speed sensor in the middle of the speedometer cable. IIRC, these devices worked as small generators and produced a voltage that was proportional to vehicle speed.
Today, one could use a Hall effect sensor in much the same way to generate pulses.
--Glen
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