Microsoft and Toyota plan to use Windows Azure, the software giant's cloud offering, to build a telematics service that will initially serve people who have the car maker's electric and plug-in hybrid cars.
The announcement comes a few hours before the companies plan to host a press conference to talk about the deal.
They said they will together invest $12 million in Toyota Media Service Co., a Toyota subsidiary that offers digital information services to Toyota customers. The goal, they said in a statement, is to build a global cloud platform by 2015 "that will provide affordable and advanced telematics services to Toyota automotive customers around the world."
Telematics technology combines communications, like mobile networks, with other information technology like GPS and energy management systems.
In Japan, Toyota is testing the Toyota Smart Center, a project that "links people, automobiles and homes for integrated control of energy consumption," according to the announcement. Such systems will rely more on telematics for achieving energy efficiencies, Toyota said.
Japan's Nikkei financial daily leaked additional details of the announcement earlier. The paper said that the project would include the development of smart grid technology through which electricity can be used more efficiently and power can be harnessed from renewable resources. It reported that the companies would develop software that can monitor vehicle battery levels and log the amount of electricity generated from renewable energy.
Toyota has a strong interest in smart grid systems because it needs to develop recharging systems and networks for future electric cars.
Last year the software maker said it would work with Ford Motor to add Hohm for Ford's electric vehicles. The system will help determine the most efficient time to recharge electric and plug-in hybrid vehicles, the companies said at the time of the announcement.
(Martyn Williams in Tokyo contributed to this report.)