A Midland manufacturer has been chosen for the UK’s first driverless cars project.

Coventry-based RDM Group will work alongside Oxford University experts to create three test vehicles to carry two passengers unmanned at speeds of up to 7mph.

The firm has been announced as the manufacturing partner for the futuristic Low Carbon Urban Transport Zone (LUTZ) Pathfinder project, which will see electric powered pods used in Milton Keynes next year.

It will now work with Oxford University’s Mobile Robotics Group (MRG) after beating off competition from five other bids.

David Keene, chief executive at RDM Group, said: “ We have invested heavily in attracting the right people with skills in advanced electronics, software development, mobile apps and vehicle engineering and all of these attributes will be brought into play to make sure this ambitious vision becomes reality.”

RDM Group, which employs 39 people at its Bilton Industrial Estate facility, will undertake the manufacture of the pods at its new £400,000 advanced engineering centre and is planning to complete the first vehicle by the end of this year.

This will allow the Oxford University robotics experts to install their technology and begin test-track trials in early 2015.

Once these are completed, the pods will be ready for testing in public on the pavements of Milton Keynes, transporting passengers around the town’s key places of interest.

With safety issues of paramount importance, the vehicles will continue to be manned by trained human operators throughout the duration of the assessment programme.

The LUTZ project is being developed to explore the potential for intelligent mobility concepts within the urban environment and received £1.5 million of government backing.

By mid 2017, it is planned that 100 pods that are fully autonomous will be running on pathways alongside people and will use sensors to avoid obstacles.

“The LUTZ Pathfinder project will redefine how people think of ‘driving’, and therefore fits in perfectly with our mission to promote UK business growth in the field of intelligent mobility,” said Neil Fulton, programme director at Transport Systems Catapult.

“The appointment of RDM Group as the manufacturers of the pods is obviously a major milestone for the project and I am very happy to welcome the company on board.”

The LUTZ programme grew out of the Automotive Council’s Intelligent Mobility Summit which was held in April 2012 in London.

On funding the project, Business Secretary Vince Cable said: “With the continually increasing number of people living in cities, city authorities are facing some real challenges with regards to ensuring future levels of mobility.

“The LUTZ project has the potential to deliver a truly autonomous low carbon transport option within the context of a city centre and we’re delighted to be using this funding to take the project into the first stages of design.”

RDM Group, which celebrates its 21st birthday this year, is expecting to turn over £8 million in 2014.