A hundred self-driving Volvo cars will roll onto public roads in and around the Swedish city of Gothenburg in 2017, the Chinese-owned car maker says.
The pilot initiative, called "Drive Me", has a 500 million kronor ($A83.74 million) budget and is a joint venture between the manufacturer and several public institutions, such as the Swedish Transport Administration and the city of Gothenburg.
"We aren't the world's biggest country, we aren't the world's largest car maker, but we make up for that by being smarter and working together in a simpler way," Volvo Cars chief executive Haakan Samuelsson said at a news conference in Stockholm promoting the public-private partnership on Monday.
The first driver-less cars will have a maximum speed of 70 kilometres per hour on some 50 kilometres of selected roads including commuter routes with heavy traffic.
The project will begin in 2014 with customer research and technology development.
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Self-driving cars receive data through a 360-degree camera system, GPS and other sensors which act as eyes and ears to navigate safely and avoid collisions.
The "non-drivers" taking part in the project will receive training to properly use the cars, which are expected to respond to everyday traffic situations and to park themselves.
The introduction of self-driving cars raises legal questions particularly around liability, which today always lies with the driver.
"We need to look at the legislation," Infrastructure Minister Catharina Elmsaeter-Svaerd said.
Other car makers - and even US tech giant Google - are also competing to be the first to bring self-driving cars to the public.
Japanese car manufacturer Nissan announced plans to have its first models ready by 2020.
