The Tartan Racing team beat Stanford University by minutes, with Virginia Tech coming third. Of the 11 teams chosen to compete, only six managed to finish tests set in 100km of simulated urban traffic.
"The urban setting added considerable complexity to the conditions faced by the vehicles, and was significantly more difficult than the fixed desert courses featured in the first two Grand Challenges," said Urban Challenge programme manager Dr Norman Whitaker.
"Tartan Racing, Stanford Racing and Victor Tango all did a great job getting their vehicles to navigate the course quickly and safely despite the challenging conditions."
Although many of the teams completed the course, none of the systems is ready for commercial use. During six hours of trials the fastest cars averaged only 14mph and there were frequent stops and starts and the occasional collision.
Nevertheless Darpa will fund more challenges as it strives to meet the goal of having a third of all Army transport driven by robots by 2015.
The challenge series started in 2004 with the first Grand Challenge for autonomous cars. The race ended with none of the contestants making it more than seven miles but the idea spurred a huge surge in interest.
"The 2004 event was equivalent to the Wright brothers flight at Kitty Hawk, where their airplane did not fly very far but showed that flight was possible," said Darpa director Dr Tony Tether.
"I believe that the significant progress after 2004 was due to the fact that the community now believed that it could be done."
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