Driverless car market is expected to be worth about £900m by 2025.
Automakers Jaguar Land Rover, Ford and Tata Motors are trialling new technologies in the UK that enable connected cars to talk to each other.
The cars being tested will communicate with roadside infrastructure, such as traffic lights, in the future. The tech aims to help reduce accidents and cut travel time.
The first such cars were showcased recently at a testing ground in central England.
The UK is planning to have driverless cars on its roads by the end of 2020. The country had earlier forecast that the driverless car market will be worth about £900m by 2025.
The UK Government has invested millions in driverless car research, with promises to change the law to encourage the technology to take root in the country.
Jaguar Land Rover is also demonstrating a self-driving Range Rover Sport, which has the capability to overtake slower moving cars automatically.
The testing of these cars was coordinated by UK Autodrive, a three-year project that is trialing the use of connected and self-driving vehicles on the streets of Milton Keynes and Coventry.
Jaguar Land Rover head of research Tony Harper said: “We know that there’s a huge potential for these technologies in future vehicles around the world.
“Until now we have focused on communication between Jaguar and Land Rover vehicles, this collaborative approach is a major stepping stone towards all Connected and Autonomous Vehicles co-operating with each other in the future.”
Other companies such as Google, Ford, Audi, and Volvo are testing driverless cars.
In March this year, Alphabet executive chairman Eric Schmidt had said that the search engine giant was considering testing driverless cars in Britain.
Last month, stakeholders in the telecoms and automotive industries formed a new coalition to address the 5G requirements of connected cars.
The 5G Automotive Association will include Audi, BMW Group, Daimler, Ericsson, Huawei, Intel, Nokia and Qualcomm.