Competition in the nascent but crowded autonomous-driving market is on track to heat up even more.

Toyota Motor Corp., the world’s second largest automaker by vehicle shipments, on Thursday night revealed plans to form a new company dedicated to developing autonomous driving technology. The group is set to launch this month and will be headquartered in Toyota’s native Tokyo with operations around the world. It’s backed by about 300 billion yen, or $2.8 billion.

The lion’s share of the funding will come from Toyota while the rest is slated to be provided by two of its suppliers, Fortune 500 auto parts makers Denso Corp. and Aisin Seiki Co. Ltd. The latter companies are both part of the Toyota Group, a loose consortium of firms that operate in a variety of markets.

The new self-driving car company in turn will focus primarily on developing the software components necessary for autonomous vehicles. It’s expected to employ about 1,000 workers and will be headed by James Kuffner, who currently serves as the chief technology officer of Toyota’s U.S. research division. The latter group also counts autonomous driving as a core focus, but its efforts are divided among multiple different fields.

Yet even with $2.8 billion earmarked entirely for self-driving vehicle development, Toyota can expect to face an uphill battle. The automaker is joining the fray in a time when players such as Uber Technologies Inc. and Alphabet Inc.’s Waymo are already testing autonomous vehicles on public roads.

To catch up, Toyota may have to partner with one of the several startups that offer autonomous driving software for car manufacturers. One such provider is Aurora Innovation Inc., which this week announced the completion of a $90 million funding round.

As Toyota ramps up its autonomous-driving efforts, rival automakers are doing the same. Ford Motor Co. recently announced plans to launch two fleets of self-driving vehicles in Miami along with a specialized service center to support them. The company has already made the decision to draw upon the startup ecosystem, with one of the fleets set to be powered by software from artificial intelligence developer Argo AI Inc.

Image: Toyota