The position control problem of differential‐driven automated guided vehicles (AGVs) based on the prescribed‐time control method is studied. First, an innovative orientation error function is proposed by an auxiliary arcsine function about the orientation angle. Thus, the problem of position control of AGV is transformed into the stabilisation control of the kinematic system. Second, by introducing a reserved time parameter and a smooth switching function, a novel time‐varying scaling function is proposed. This novel scaling function avoids the risk of infinite gain in the conventional prescribed‐time control method while ensuring the smoothness of control laws. Then, an improved velocity constraint function is proposed using the Gaussian function. Compared with the existing constraint function, the proposed method not only has more smoothness but also solves the balance point errors caused by the large AGV orientation errors. The presented method ensures that the AGV reaches the target position in a prescribed time. Hence, the upper bound of the AGV system state can be determined by adjusting parameters. Matlab simulation results show that the proposed controller can effectively make the AGV system state satisfy the prescribed bound.