Isaiah Joel Peoples was arrested after he allegedly deliberately plowed into a group of people. Picture: Sunnyvale Department of Public Safety via AP/African News Agency (ANA)

A California man who deliberately drove into a crowd of people, injuring eight, did so because he thought they were Muslim, police said on Friday.

The driver, 34-year-old Isaiah Peoples, reportedly targeted the family solely on their appearance, according to police in Sunnyvale, near San Francisco, who are now treating the case as a "hate crime".

"There is new evidence that Peoples intentionally targeted victims based on their race and belief that they were Muslim," said Sunnyvale Public Security in a statement.

According to local media, three members of the same family are among the eight pedestrians injured on Tuesday - a father and his son and daughter.

The nationality and religion of the family have not been released.

Picture: Don Draper via AP/African News Agency (ANA)

A lawyer for Peoples said the incident "was clearly the result of a mental disorder", and he would seek psychiatric treatment for his client -- who he described as a military veteran possibly suffering from post traumatic stress disorder.