It looks like Google and Apple have found a new battlefield: the automobile industry. After fiercely competing with each other in smartphone, web browser, and tablet markets, both the companies are now working with leading car manufacturers to develop in-car entertainment and information systems.

According to a Wall Street Journal report, Google and German automaker Audi AG are working together on Android based in-car infotainment systems and they plan to announce their partnership at the upcoming Consumer Electronics Show (CES) in Las Vegas next week. 

The Google announcement is being seen as the answer to Apple's "iOS in the car" initiative, which was launched in June at the company's Worldwide Developers Conference (WWDC). As part of the initiative, Apple is developing technology to integrate iPhones with car's dashboard control panels. The iPhone maker is working with the likes of BMW, Mercedes-Benz, and Honda Motor for the project.

While Apple's technology requires an iOS device connected to the car's built-in display, Google, on the other hand, hopes to have Android running on the car's own built-in hardware.

According to the report, 80 million new cars and light trucks are sold every year. Quite clearly, the market has huge potential and this is the reason Apple and Google are trying hard to penetrate it. The concept of smart cars has also opened the doors for leading chip-makers like Qualcomm, Intel, and Nvidia, to enter the car business.