Toyota launches $2.8b car technology investment program
Toyota Group has confirmed it will establish a Tokyo-based investment program that will commit more than JPY300 billion ($2.8 billion) to autonomous driving development.
The initiative entails the creation of a joint venture (JV) known as Toyota Research Institute-Advanced Development (TRI-AD) that will incorporate the resources of two Japanese automotive suppliers, Aisin Seiki and Denso. The entity aims to recruit about 1,000 employees from the existing workforces of the partnering companies, including the Toyota Research Institute (TRI) technology unit set up in 2016.
"Building production-quality software is a critical success factor for Toyota's automated driving program," James Kuffner, chief technology officer at TRI and CEO for TRI-AD, said in a statement. "This company's mission is to accelerate software development in a more effective and disruptive way, by augmenting the Toyota Group's capability through the hiring of world-class software engineers.
R&D will focus on creating a commercialized software pipeline with an emphasis on development of systems based on big data from connected cars. Toyota has described the timing of the program as coinciding with an “era of profound transformation” in the automotive industry. Site selection for TRI-AD headquarters in Tokyo is ongoing.
Efforts by traditional original equipment manufacturers (OEM) to develop advanced technology around electric vehicles (EV), connected cars and alternative mobility business models such as ride-hailing have ramped up in recent months. Earlier this year, Resnault, Nissan Motor, and Mitsubishi Motors launched a $1 billion VC fund focused on these areas. Last week, China-owned and Sweden-based Volvo Cars launched a similar fund of unspecified size.
Private sector investors have interpreted this activity as behind trend in light of the longstanding success of a number of global giants in the fields of EV and ride-hailing. OEM investment, however, is considered an indicator that strategic M&A activity is set to increase in the medium term. This is expected to drive exit opportunities for venture capital firms that support start-ups in new mobility segments at a sufficiently early stage.
Related investment by Toyota includes participation in a funding round of undisclosed size last year for Southeast Asian ride-hailing app operator Grab. The deal, executed through the company’s Tsusho division, extended a round that already includes some $2 billion of commitments from Softbank and Grab’s China-based peer Didi Chuxing.
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