Chief executive Andy Boland told the Press Association that the company is working with a car manufacturer on plans to test the vehicles as it steps up to the challenge posed by digital rival Uber.
He said: "We are talking to a manufacturer about testing driverless cars, but it's early days.
"There's a big debate about insurance and how it would all work, but technology is going in that direction and we are dipping our toe in the water.
"We'll spend £12m this year on tech, more than we've spent before. Money will also go into the app, website and phone service."
The remarks come just a day after Uber confirmed that it is testing driverless cars in the US.
The ride-hailing app has taken the London private hire market by storm and grown market share at the expense of established operators, but Boland said it now was time to "up the ante".
He said: "Uber has said to the industry that there's a new standard to work to, the requirement now is to up the ante."
Addison Lee is also looking at the viability of electric cars, although Boland raised questions about the necessary infrastructure needed to run the vehicles.
"The way the industry is going is towards plug-in hybrid technology. We're very interested in electric, but the infrastructure isn't there yet - where do you plug them in?"
Owned by private equity firm Carlyle, for 2014 the firm reported revenues of £196m and profits of £33.5m and the group is set to release figures for last year in the coming weeks.
Boland said that a new pricing strategy, the introduction of off-peak fares and investment in the Addison Lee app have started to have an impact. Year-on-year growth at its consumer business is up between 5% and 10%.
Earlier this week, the group announced that it had invested £3.2m in 100 Mercedes Benz E-Class saloons in response to a 15% jump in executive car bookings over the past twelve months.
Boland added: "Uber has influenced the consumer market and there have been significant changes, but we are doing pretty well ourselves, especially in corporate bookings.
"We have the advantage of quality of driver and vehicle, a 24-hour telephone service and fully insured cars, an all-round better experience."
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement