The cars, which will not feature a steering wheel, will form part of a ride-hailing service based on the Uber model, the company said.
Unveiling the proposals at an event in the US, Ford’s president Mark Fields said the driverless fleet would have Level 4 autonomy on the scale designed by the Society of Automotive Engineers.
This means that the cars will be able to find their way around a city without input from a human driver.
To achieve the ambitious target to have the driverless technology on the road by 2021, Ford said it would step up its investment in key areas.
These include increasing its funding of a research centre in California and spending more on technology companies in the autonomy sector.
Ford recently joined up with Chinese firm Baidu to make an investment of $150 million in Velodyne, which specialises in light-detection and LiDAR laser radar technologies.
The announcement, which Mr Fields described as “transformational”, has been taken as a sign that Ford intends to shift its focus over the coming years.
It will no longer be just a motor manufacturer, but also a technology company in its own right.
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Mr Fields told the BBC: “As you can imagine, the experience inside a vehicle where you don’t have to take control changes everything.
“Whether you want to do work, whether you want entertainment - those are the types of things we are thinking about as we design the experience for this type of autonomous vehicle.
“There will be a growing per cent of the industry that will be fully autonomous vehicles. Our goal is not only to be an auto company, but an auto and mobility company.”
Earlier this year, Fiat Chrysler revealed that it was to join forces with technology giant Google in a bid to develop self-driving vehicles.
The firm said it would be supplying Google with 100 of its Chrysler Pacifica vans to help with the testing of autonomous technology.
But Ford’s announcement, made at an industry event in Palo Alto, California, included no mention of a similar tie-up.
Observers have interpreted this as a sign that the manufacturer intends to compete with technology firms rather than try to draw on their experience.
Earlier this year Volvo also announced plans to carry out a trial of driverless technology in London early next year.