Car manufacturers will be given government funding to partner with UK cities to bring driverless cars to roads next January, the Technology Strategy Board has announced.
The government has made good on its promise to boost the automobile industry by awarding up to £10 million for a driverless car trial.
The competition is an attempt to establish the UK as the global hub for autonomous car research and development.
In partnership with the Department for Transport and the Department for Business Innovation and Skills, the Technology Strategy Board is encouraging OEMs (original equipment manufacturers) to partner with cities and local authorities to pitch a business plan.
In January next year, up to three cities will be selected to host driverless car trials lasting between 18 and 36 months.
Business secretary Vince Cable said: "Through the government's industrial strategy we are backing the automotive sector as it goes from strength to strength. We are providing the right environment to give businesses the confidence to invest and create high skilled jobs."
The announcement confirms that the car industry is in one of its most revolutionary phases and IT will have to keep up with changes across machine-to-machine connectivity, the IoT and increasingly big data.
Kai Grambow, global automotive head at Capgemini, said: "The sector is going to witness more radical changes in the next 10 years than we have seen since the first Model T rolled off the production line in 1908.
"The introduction of new technology, such as driverless cars, will have major implications for both the consumer and the industry itself, as it will provide an unprecedented level of data, which will ultimately shape the future of the automotive sector. Data management, ownership and analytics will become the new oil powering the industry."
Connected cars could even assist urban planning, Telefonica said recently.
BMW came under fire for an outage on its connected car services last week. It came as car manufacturers were warned that may struggle to "switch from hardware to software", by security expert Bart Jacobs.