A UK firm developing artificial intelligence (AI) tech to power self-driving cars has raised $1.05bn (£840m) in funding.

Microsoft and leading chip-maker, Nvidia, are among the companies investing in Wayve’s latest funding round, led by investment firm SoftBank.

It is the largest known investment in an AI company in Europe to date.

Wayve says the funding will allow it to help build the autonomous cars of the future.

Prime Minister Rishi Sunak said it “anchors the UK’s position as an AI superpower”.

“The fact that a homegrown, British company has secured the biggest investment yet in a UK AI start-up is a testament to our leadership in this industry”, he said.

“[The investment] sends a crucial signal to the market of the strength of the UK’s AI ecosystem, and we look forward to watching more AI companies here thrive and scale,” said Wayve head Alex Kendall.

Despite their upbeat tone, all of the world’s most valuable AI firms are based in the United States or China.

The UK’s competition watchdog is investigating whether a handful of big tech firms are set to dominate much of the market.

Wayve is developing technology intended to power future self-driving vehicles by using what it calls “embodied AI”.

Unlike AI models carrying out cognitive or generative tasks such as answering questions or creating pictures, this new technology interacts with and learns from real-world surroundings and environments.

UK transport secretary Mark Harper told the BBC in November that self-driving vehicles could be on some UK roads by 2026.

The government’s rules of the road for automated vehicles – which it says will “unlock a transport revolution” – are expected to be passed by parliament soon.

Its Automated Vehicles Bill establishes a regulatory framework for cars enabled with assistive or autonomous driving features to be used safely on UK roads.

The government says it will clear legal liability for companies and drivers.

Self-driving technology has though faced obstacles on its road to international adoption.

US regulators continue to examine the safety of some manufacturers’ AI-powered assistive driving features following fatal crashes.

Ford is the latest car marker to face a probe by the National Highway Traffic Safety Administration (NHTSA) over its BlueCruise driving tech deployed in its Mustang Mach-E cars.

Tesla, owned by tech billionaire Elon Musk, recalled more than two million of its vehicles in December following an NHTSA investigation into the safety of its assistive driving system Autopilot.

The regulator asked Tesla on Tuesday to hand over information relating to its fix as it probes whether this did enough to address its concerns.