Sony and Honda suspend joint electric vehicle project

The joint venture originally planned to develop premium electric vehicles

Summary

Sony Honda Mobility will cease the development and launch plans for the Afeela 1 electric vehicle and its second model.

Sony Group and HMC>Honda Motor are halting a joint venture project initially aimed at producing high-end electric vehicles.

The joint venture, Sony Honda Mobility (SHM), established by these two Japanese companies, has decided to terminate the development and launch of its first model, Afeela 1, and the second model currently in development.

The project was launched during the peak of the 2022 electric vehicle boom. Sony’s then-CEO Kenichiro Yoshida had high hopes for this joint venture, expecting the automotive market to gradually shift toward a service-based model, where consumers pay regularly for software downloads and entertainment content.

Sony Honda Mobility stated on Wednesday that since its inception, the company has been dedicated to combining Sony’s and Honda’s technologies and expertise to create high-value mobility products.

However, the company said that due to Honda’s reassessment of its electrification strategy, the joint venture will no longer be able to utilize some of the technologies and assets originally provided by Honda, making it unfeasible to bring the related models to market.

Earlier this month, Honda announced that due to adjustments in its electric vehicle strategy, it would incur $15.7 billion in related costs and losses, expecting its first annual loss in decades. The automaker stated that, affected by the slowdown in the North American EV market, it has decided to cancel some models’ launch and development plans.

Honda said on Wednesday that the termination of the joint project is not expected to significantly impact its performance outlook for the fiscal year ending March.

Meanwhile, Sony stated that it is evaluating the impact of the project termination on its operations and financials for 2026 and 2027. However, since Sony Honda Mobility has been operating under a lightweight asset model, Sony believes the impact will be minimal.

Just before the announcement of this halt, Sony Honda Mobility’s US subsidiary recently opened a grand Afeela brand experience and delivery center in California. The company said it will refund deposits to customers in California who have pre-ordered the Afeela 1.

The three parties will continue to discuss the future direction of the joint venture and will announce any updates when available.