TOKYO — Toyota will use a newly created $800 million investment fund to seed partners in supplying software to operate the automaker's coming generations of vehicles and technologies.
The fund will operate through Toyota's new high-tech spinoff, Woven Planet, which has an additional mission of creating software in-house.
The plans were announced here last week as Toyota launched the Woven City venture and represent a two-pronged approach to satisfy a roaring new demand for future vehicle operating software.
Toyota's strategy will be to attack from two directions — in-house and through promising outside investments.
James Kuffner, the American CEO of Woven Capital and a Toyota Motor Corp. director, said Toyota can go it alone on core technologies while also cherry-picking the best teammates in niches.
"I think it is a false choice to say we have to do either/or," Kuffner said while outlining the company's ambitions in an online briefing from Woven's headquarters in downtown Tokyo.
"We can do both, and we're lucky that Toyota is big enough to be able to do both."
Other automakers and suppliers, including Volkswagen Group, Robert Bosch and ZF Friedrichshafen, have also launched major initiatives to create in-house software operations.
Volkswagen has said that by 2025, all its new models will run on a new vw.os operating system. Last year, VW unified its fragmented information technology units into an $8 billion subsidiary called Car.Software that is tasked with developing such computer systems in-house.
Toyota last week surpassed Volkswagen to become the world's largest automaker, in terms of the number of vehicles sold.
Woven Planet is working on something similar to VW's software concept. It is called Arene, an open automotive operating system that will allow for "programmable cars." Woven Planet hopes to offer it to other companies.
Kuffner says Arene will be as groundbreaking as Microsoft Windows and Apple iOS were for personal computers and smartphones, ushering in a new era for automobiles. It will allow a vehicle's software to be developed in parallel with its hardware, slashing development time.
Recent weeks also have seen the rise of blockbuster partnerships between old guard carmakers and high-tech heavyweights. In China, tech giant Baidu, that country's answer to Google, joined forces with Chinese automaker Geely on electric vehicles. At the same time, Apple was reported to be in talks with South Korea's Hyundai Motor Group for an EV of its own.
Partnering with tech companies offers automakers a shortcut to the software expertise they need for tomorrow's digitalized vehicles, but it also poses risks. If the value added in next-generation cars comes from the software, automakers may see their traditional role reduced to metal benders and assemblers.
"We decided we would focus on core technologies we would like to retain," Ken Koibuchi, Woven Planet's chief technology officer, said at the launch briefing. "The value of software is increasing within the vehicle, and that's the reason why we decided to do it by ourselves."
Toyota has given Woven Planet the investment fund to spread its bets. George Kellerman, managing director of the fund, called Woven Capital, said it will create a global portfolio of companies in such fields as automated driving, artificial intelligence, data analysis and smart cities.
Hiroshi Saijo, vice president of business development and strategy, said Woven Capital hopes to announce the first projects in the coming months.
