Uber has been testing prototype Volvo cars for more than a year — with safety drivers in the front seat to intervene if the system fails.
The cars, in theory, would be available through the Uber app to pick up passengers — without a driver.
The deal, estimated to be worth as much as $1.4billion, will see Uber purchase XC90 vehicles between 2019 and 2021.
Uber will add its own sensor array to the roof of the cars and operate them.
Jeff Miller, Uber’s head of car partnerships said: “In a self-driving world there is no human, so you need redundant steering and braking and actuation systems, such that if there is an electrical or mechanical failure, the back-up system can kick in.”
He said 24,000 was a “best guess” of how many cars Uber would need initially.
The deal marks a milestone step in the US firm’s transition from an app used to summon a taxi to the owner and operator of a fleet of cars.