Mercedes-Benz parent Daimler and supplier Robert Bosch are teaming up to develop self-driving cars in an alliance primarily aimed at accelerating the production of "robo-taxis".
They say the cars could be on city streets at the start of the next decade.
The companies would combine expertise in car making, sensors and software so that people in a specific part of town could order a shared car through their smart phone. The driverless car would then come pick them up and take them where they want to go.
The companies said Tuesday the system would let people make better use of their time in cars and help those who do not have driver's licenses.
The auto industry and tech firms have been investing heavily in autonomous driving technology although legal issues surrounding driver responsibility remain to be solved.
