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With just the key on, the alternator does nothing. With the engine running, a belt drives a pulley on the alternator. Giving the simplest explanation, that pulley is connected to a rod which turns magnets inside a field of copper wiring. That produces electricity. That electricity is alternating current. So it then goes through a diode which converts it to direct current. Then it goes through the voltage regulator, which ensures that your car's battery doesn't get cooked from overcharging. The alternator keeps the battery charged, and that supplies electrical power to vehicle systems.

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Q: How alternator works when the ignition key is on?
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