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    Toyota Announces New Company Devoted to Self-Driving Cars

    New company’s goal is software of high enough quality to be used in passenger cars

    Toyota Research Institute-Advanced Development is intended to get autonomous vehicles, such as the prototype here, into the hands of consumers.
    Toyota Research Institute-Advanced Development is intended to get autonomous vehicles, such as the prototype here, into the hands of consumers. Photo: Gene Blevins/Zuma Press
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    TOKYO— Toyota Motor Corp. TM 0.15% said it would spend nearly $3 billion to build software for autonomous cars, the latest sign that Japan’s biggest car maker is pushing to get the cars into the hands of consumers.

    Toyota, Denso Corp. DNZOY 0.85% and Aisin Seiki Co. 7259 -2.93% will create a new Tokyo-based company, called Toyota Research Institute-Advanced Development, and they said they would invest ¥300 billion ($2.8 billion) in it. The company will start with around 300 employees and aim to grow to around 1,000.

    Toyota is nearing a self-imposed deadline of 2020 for selling cars that can pilot themselves on freeways, with city-street capability a few years later. The new company will try to bridge the gap between researchers at the Toyota Research Institute in California and the engineers who design the vehicles in Japan, said Jean-Yves Jault, a Toyota spokesman.

    The company will be led by James Kuffner, a former Google engineer who is now the chief technology officer at the California institute.

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    “With automated-driving-software development happening around the world, there is a broad spectrum of software being written with a wide variance in quality,” he said. The new company will aim to ensure Toyota’s software is reliable enough to go into a car sold to customers, Toyota said.

    A number of car makers have sought to separate their self-driving units, seeking to attract top software engineers who might not otherwise work for a traditional auto maker.

    Toyota is scouting for office locations in Tokyo and said employees of the company would speak English—another measure to widen the pool of job applicants. It declined to say over what period the $2.8 billion investment would be made.

    “The idea is to create a company where we are not bound by restrictions” on recruiting, said Mr. Jault. “It needs to be a globalized team, and one of the best ways to do that is to create a company separate from Toyota Motor Corp., to create a company with different rules—like a startup.”

    Honda Motor Co. last year opened an office in downtown Tokyo focused on artificial-intelligence research. The company also talked of the need to create a startup vibe to attract talent.

    Car companies and their suppliers are competing for a limited pool of coders, data scientists and artificial-intelligence specialists. Japanese car makers have often found themselves at a disadvantage because of language barriers and lower salaries for software professionals in Japan, and so have opened separate centers in the U.S.

    “I think there is a desire within Japanese makers to have a presence in Tokyo,” said Christopher Richter, a Tokyo-based auto analyst with CLSA. “They want to have some sort of integration between what is going on in the States, which has been the center for autonomous drive, and Toyota Motor, academia and those involved in artificial intelligence in Japan.”

    Over the past year Chief Executive Akio Toyoda has pushed the company to get more serious about electric and self-driving vehicles, shuffling the company’s management frequently. On Friday, Toyota named Philip Craven, former president of the International Paralympic Committee, to its board. Mr. Toyoda has credited a meeting with Paralympic athletes with changing his mind about the need for self-driving vehicles.

    Toyota said former General Motors Co. executive Mark Hogan would leave its board.

    Write to Sean McLain at sean.mclain@wsj.com