It is not every day that you get to push the boundaries of car number plate design.

Michael Cordell and his management team managed it in a few minutes when they sat down for a brainstorming session in the offices of Hills Numberplates, their Birmingham-based company.

"We were sitting there with this plate, looking at it, saying 'What else can we do with it?'" said the managing director of the UK's leading plate supplier. "Then someone said 'Look, there's a great big lump of plastic in the back - we must be able to shove something inside it'.

"We said, 'Well, you could shove some electronics in it.'"

It may not have been the most exhaustive of research and development procedures, but it did the trick. A few months later, Hills was drawing up plans for the world's first e-plate, a cutting edge, wireless-enabled powerhouse of a number plate that started rolling off the production line this summer.

The electronics that they shoved into the back of their plate was a Radio Frequency Identification (RFID) transmitter, a stamp-sized piece of circuitry designed to send out a wireless signal to anyone listening in with a wireless receiver.

With the addition of that simple piece of wireless technology, Mr Cordell and his team gave their company a brand new line – a rare thing in the mature industry of number plate manufacture.

They also came up with a product that, if it catches on, could have just as profound an impact on the businesses of their customers.

The key selling point of Hill's new e-plate is its ability to send out a unique, encrypted radio signal from both ends of car, lorry or any other kind of marked vehicle. That signal can be picked up be a receiver up to 1,000 metres away, even if the vehicle is driving through thick fog, parked up behind a warehouse or stuck six lanes deep in traffic.

That ability, Hills hopes, will make their e-plate a must-have accessory for the burgeoning fleet-management and car hire sectors in the UK, Europe and beyond.

Up to now, one of the key challenges of the car hire sector has been to keep track of the hundreds of cars moving in and out of their garages.

Companies like Avis and Hertz have had to spend millions employing armies of garage hands to check cars in and out of their yards, then bill their customers for every hour on the road.

With an e-plate, a lot of that could be done automatically. "You can let your customers return a vehicle any time of the day or night," said Mr Cordell. "The receiver would clock the car in, let you in to the garage then shut the gates to prevent you driving out." In a worse case scenario, fleet management companies could also drive around with a mobile wireless receiver to track down lost or stolen vehicles.

Mr Cordell's ambitions do not stop at the commercial vehicle sector. If fleet management companies could use the plates to track down missing vehicles, he reasons, then so could the police.

Once every car in the country was fitted with an e-plate, police would be able to able to set up a receiver at the side of the road and scan for suspect and stolen cars. That vision of the future may not be as far-fetched as it first appears.

The Department for Transport is conducting a consultation on a wide range of electronic vehicle identification (EVI) technologies that could one day be fitted into every car in the country.

Most of the technologies involve some sort of tagging, with various kinds of identification chips lodged in the dashboard, chassis or indeed, in Hill's case, the number plate. Each chip could, conceivably, automatically report a car for anything from speeding and dangerous driving to road tax evasion.

Plans like these have predictably raised the hackles of civil rights and drivers' interest groups. But fears of a Big Brother future miss the point, according to Mr Cordell.

According to him, the wireless technology in his new e-plates could have a much more immediate and subtly subversive impact on the way we live and drive.

Hills currently supplies plates to car retailers and manufacturers for about £4.50 a go trade price. Those retailers and manufacturers then sell the plates on to the consumer for as much as £20-£25.

But new plates will call for a new distribution chain. To ensure the integrity of the radio equipment in each plate, Mr Cordell thinks her will have to cut out the middle man and supply direct to consumers, for about the same £20 price tag. The retailers and manufacturers could miss out on the deal altogether.

"That," he said, "could wind up a few people."