The optimal velocity model of traffc is extended to take the relative velocity into account. The traffcbehavior is investigated numerically and analytically with this model. It is shown that the car interaction with therelative velocity can effect the stability of the traffic flow and raise critical density. The jamming transition between thefreely moving and jamming phases is investigated with the linear stability analysis and nonlinear perturbation methods.The traffic jam is described by the kink solution of the modified Korteweg-de Vries equation. The theoretical result isin good agreement with the simulation.