The investment reflects one of the biggest challenges automakers face in bringing fully autonomous cars to market.
Toyota has outlined a plan to spend the equivalent of $2.8 billion USD developing "production-quality" software for autonomous vehicles.
The Japanese automaker will form a new company known as the Toyota Research Institute - Advanced Development (TRI-AD), with a staff of around 1,000 employees including internally and externally recruited workers.
The significant investment and workforce commitments suggest Toyota still has lots of work ahead before it can deliver a fully autonomous vehicle. The automaker is not alone, as nearly all players, save for Waymo, appear to be falling behind the industry's most optimistic progress forecasts.
"Building production-quality software is a critical success factor for Toyota's automated driving program," says Toyota Research Institute CTO James Kuffner. "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."
The company is currently reviewing potential locations in Tokyo to place TRI-AD's headquarters.