Toyota Motor Corp. President Akio Toyoda is taking the helm of a battery-powered vehicle project, accelerating the Japanese auto giant’s effort to catch up to General Motors Co. , Tesla Motors Inc. and Nissan Motor Co. in electric-car development.

Toyota, well-known for its leadership in hybrid vehicles that use batteries to assist conventional engines, has long been skeptical of the pure electric-vehicle market, investing instead in hydrogen fuel-cell research. Mr. Toyoda, who in the past also took over leadership of branding efforts at the Lexus luxury division, will lead a newly formed EV Business Planning Department alongside other executives.

The electric push follows Mr. Toyoda’s move to boost autonomous-vehicle research efforts with a $1 billion investment and hiring spree in Silicon Valley. The world’s largest auto maker in sales and profit, Toyota has considerable financial resources to pour into future engineering projects; meanwhile, its top rival, Volkswagen AG , faces billions of dollars in fines and settlement costs related to emissions-test cheating in the U.S.

Mr. Toyoda, grandson of Toyota’s founder, envisions making cars that drive themselves on highways by 2020. Toyota, however, is likely to engineer cars that still keep drivers engaged in the operation of a vehicle—a strategy that departs from Alphabet Inc.’s Google car project.

While Google’s pioneering work on autonomous cars has led to a frenzy of investment in driverless-vehicle research, electric-vehicle research also is thriving. Auto makers need to respond to emissions and other regulatory pressures that overshadow the current lack of strong demand for battery-powered vehicles like Nissan’s Leaf or BMW AG’s i3 small cars.