The trial is a joint partnership between the state government, RACT and the Hobart City Council.

RACT executive general manager, membership and community, Stacey Pennicott said the demonstration was designed to gain greater understanding around the emerging technology and the opportunities for the future of mobility in Tasmania.

"We've engaged YDrive, who are experts in this area, to deliver the demonstration with the NAVYA Autonom Shuttle," Ms Pennicott said.

"They are designed for 'first and last mile' transport. That is, connecting transport modes together or to service central shopping and business districts."

The driverless electric bus has cameras to detect lane markings, signs and traffic lights.

LIDAR technology uses a laser light to measure distances to certain points, creating a 3D rendering of vehicles, pedestrians, crubs and buildings and radar detects obstacles and speeds.

GPS and the internet are used for navigation and positioning accurate to a few centimetres.

The bus has a maximum speed of 25 kilometres an hour and it can carry up to 15 passengers.

NAVYA engineer Francois Pollet said more than 130 of these buses were in use across 20 countries, with many running in France, Switzerland and across Scandinavia.

Mr Pollet said they were being used for a variety of purposes such as on campuses or to transport people from the exit of hospitals to parking areas.

"This is our main vehicle. We also have an autonomy cab which is built for 6 people [and] a new project which is a small car which is used to carry luggage in airports," Mr Pollet said.

Environment Minister Peter Gutwein said technology such as this was the way of the future.

"One of the key things with autonomous vehicles, whilst for many of us it's awkward thinking about being in a vehicle without a driver, is 93 per cent of accidents are caused by driver error," Mr Gutwein said.

"This is the first step at looking at how we can use autonomous vehicles in a way that might improve not only our emissions and as an opportunity to reduce congestion but also our safety on roads.

"The demonstration will inform longer-term public trials, which may be introduced in future to understand how autonomous vehicle technology interacts with passengers, other precinct users and the broader transport network."

The trial will be conducted in Lower Sandy Bay from December 6 to 13.