In a blog post, Chris Urmson, director of Google's self-driving car project, said several of the cartoon-like vehicles will begin whizzing through the roads of Mountain View at under 25 mph.
A safety driver, removable steering wheel, accelerator and brake pedal will be on board in case human intervention is needed, he said.
Among the challenges are what a vehicle would do if it could not stop at its programmed destination, perhaps due to congestion or construction.
"In the coming years, we'd like to run small pilot programs with our prototypes to learn what people would like to do with vehicles like this," Urmson said.
The newest prototype is bare bones but more sophisticated than the version unveiled last year, which was so basic that it included fake headlights.
The latest self-driving car is electric, doesn't have air bags and has to be re-charged after every 80 miles of travel.
"We're looking forward to learning how the community perceives and interacts with the vehicles, and to uncovering challenges that are unique to a fully self-driving vehicle," Urmson wrote.
Earlier this week, Google revealed its self-driving cars have been involved in 11 minor accidents resulting in light damage and no injuries -- but by no fault of their own, according to the company.
With more than 20 cars in its driverless fleet constantly being tested with safety drivers in the front seat, Google said the accidents occurred during the collective 1.7 million miles Google's fleet has logged.
The self-driving cars are driven a total of 10,000 miles per week, mostly on city streets.
With 360 degrees of awareness, the self-driving cars are gaining new insights into dangerous driving behaviors, including drifting lanes and red light running -- both of which can contribute to accidents.