Driverless cars could be on UK roads within four years under government plans to invest in the sector.
"Some would say that's a bold move, but we have to embrace these technologies if we want the UK to lead the next industrial revolution," he said.
However, the chancellor admitted he had yet to use a driverless car himself.
"I'm promised to go in one when we visit the West Midlands tomorrow," he told the BBC's Andrew Marr show.
Mr Hammond is due to announce regulation changes in Wednesday's Budget which will allow developers to apply to test driverless vehicles on UK roads.
Asked about the potential loss of jobs for drivers, he said the country could not "hide from change" and the government had to equip people with the skills "to take up new careers".