Mercedes Benz owner Daimler and car supplier Bosch plan to launch a small fleet of driverless taxis in California in the second half of 2019.
The move comes as the two firms race to catch up with competitors in the driverless technology industry.
Daimler and Bosch have been working together on driverless technology since April 2017.
They have already received permission to test autonomous cars in Germany and China as well as in the US.
But in California at least, the miles the firms have logged lag competitors such as Waymo and General Motors.
Representatives for Daimler and Bosch declined to say where in the San Francisco area the driverless taxis will be offered or how large a pilot they are planning, citing ongoing negotiations.
The firms said the service would be free and run on select routes, with taxis able to be summoned by app by passengers.
The taxis, which will have humans on board to monitor performance, are expected to be open to the public, but the number of users is likely to be limited, they said.
They will incorporate technology from US chipmaker Nvidia.
Bigger possibilities:
Daimler announced a partnership with Uber last year, but the ride-hailing company scaled back its driverless car programme after a fatal accident earlier this year.