Toyota's $1 billion investment in Silicon Valley shows it wants to become a software maker

Toyota wants to be more than just the world's largest automaker - and its $1 billion investment in Silicon Valley shows its ambition to turn itself into one of the world's largest software developers.

On Friday, Toyota announced that it would be investing $1 billion over the next five years to build Toyota Research Institute, a new company based in Silicon Valley, near Stanford University, focused on artifical intelligence and robotics.

The new research center will work on building safety systems that reduce driving errors and car accidents, under the goal of making driving safer for everyone, instead of completely replacing it with self-driving technologies.

But comments by Dr. Gill Pratt, the CEO of Toyota Research Institute, who was formerly the project manager of DARPA, show Toyota's ambition may go far beyond just making safer cars. It rather sounds like Toyota wants to transform itself into a massive software maker that spans multiple industries.

"I think Toyota will contribute to society by transforming from a successful hardware company to a new company, by integrating software technologies," Pratt said at the press conference following the announcement. "This is why I joined Toyota."

That transformation will likely be based on software that can collect massive amounts of data and dissect it to extract meaningful results.

Pratt said Toyota is expected to sell 100 million vehicles in the next ten years, and assuming each of them runs 10,000 km a year, it could give Toyota "1 trillion km per year of potential real-world data" to work with.

All that data can be applied to artificial intelligence systems that go beyond cars and robotics, Pratt added.

"For example, AI can be used to schedule cars, manage traffic, deliver goods, schedule the operation of a factory even beyond Toyota's famous production system, and accelerate scientific discovery in materials and environmental technology," he said.

"Data which could be collected from Toyota vehicles driving in variety of conditions all over the world will be a key for us to accelerate the evolution of future technology."

This isn't the first time Pratt expressed his ambitions for turning Toyota into a major software maker. In September, when he first joined Toyota, and announced a $50 million AI funding project to Stanford and MIT, the NY Times quoted Pratt as saying, "the initiative was intended to turn one of the world's most successful carmakers into one of the world's top software developers."