The UK self-driving car technology startup Wayve has secured more than $1bn (£800m) of investment to develop the next generation of artificial intelligence-powered vehicles, with the funding round led by Japan’s SoftBank.

The $1.05bn investment is backed by the Japanese conglomerate along with the California chipmaker Nvidia and Microsoft, and is the biggest investment to date in a European AI startup.

Wayve, which was founded in London in 2017, will use the funds to develop and launch the first “embodied AI” technology for self-driving vehicles in the UK.

Embodied AI will enable automated vehicles to learn from and interact with a real-world environment, including the ability to learn from situations that do not follow strict patterns or rules, such as unexpected actions by drivers or pedestrians.

Alex Kendall, a co-founder and the chief executive of Wayve, said: “This investment will help us launch our embodied AI products and expand our operations globally. It sends a crucial signal to the market of the strength of the UK’s AI ecosystem, and we look forward to watching more AI companies here thrive and scale.”

Kentaro Matsui, managing partner at SoftBank Investment Advisers, has taken a seat on Wayve’s board as part of the investment, and said Masayoshi Son, SoftBank’s founder, was personally involved.

Matsui said: “We have a vision of a peaceful world, free from traffic accidents. Once we learned that we shared a common vision, our team members and Masa were excited and felt we needed to help. We are very proud that we are taking part in this effort.”

Wayve’s current technology is integrated into six vehicle platforms including electric cars such as the Jaguar I-Pace and the Ford Mustang MachE, as part of advanced driver assistance systems.

All big carmakers are investing in autonomous cars, and a number of startups have sprung up in recent years, including the Alphabet-owned Waymo and the General Motors-owned Cruise in the US.

In the UK, Wayve has carried out autonomous car trials, along with the Oxfordshire startup Oxa, formerly called Oxbotica, and the Academy of Robotics. The transport secretary, Mark Harper, has predicted that self-driving cars could be on Britain’s roads by 2026.

The automated vehicle bill is expected to become law in the coming weeks and is designed to unlock a “transport revolution” by enabling the safe deployment of self-driving cars, according to the government.

The self-driving vehicle industry in the UK is still in its infancy, but the government expects it to be worth £42bn and to create 38,000 skilled jobs by 2035. Between 2018 and 2022, the sector generated £475m of investment and created 1,500 new jobs.

Rishi Sunak said the deal “anchors the UK’s position as an AI superpower,” adding: “The fact that a homegrown, British business has secured the biggest investment yet in a UK AI company is a testament to our leadership in this industry.”