Sony Group and Honda Motor have decided to halt development of their Afeela electric vehicle, blaming changes in the EV market and Honda's reassessment of its electrification strategy.
The 50-50 Sony Honda Mobility joint venture, with Honda responsible for manufacturing, was established in 2022 with the aim of redefining automobiles and turning travel time into an opportunity to enjoy entertainment such as anime and video games.
The Japanese companies said in a joint statement on Wednesday that "the underlying assumptions of SHM (Sony Honda Mobility)'s business operations, such as the utilization of certain technologies and assets planned to be provided by Honda, were fundamentally altered."
This resulted "in the announcement by SHM today to discontinue the development and launch of its first model, AFEELA1, and its second model." They had also determined to review the joint venture's business direction, they said.
Sony said the venture had taken an "asset-light approach," and it believed there would be no material impact on its financial results.
SHM said it would issue full refunds of reservation fees for Afeela 1 in California. The company had priced the new car from $89,900 upwards.
Honda this month canceled three of its electric vehicle model launches planned for North America and said it expected total expenses and losses of 2.5 trillion yen ($15.7 billion) as it reassessed its electrification strategy amid a global slowdown in sales.
Chief executive Toshihiro Mibe told a news conference earlier this month that the Afeela was "the key project in Honda's SDV (software defined vehicle) strategy, launched in partnership with the Sony Group." However, discussions would be held among the shareholders going forward, he added.
The project marked a key step in Sony's shift from being primarily a hardware manufacturer to creating a platform centered on entertainment and services. The electronics and media company was betting it could monetize in-car time through its content and technology, turning vehicles into recurring sources of engagement and revenue.
Sony was contributing imaging sensors, in-car entertainment and gaming, and user interface design to the joint venture. This positioned the group to embed its services and technology into next-generation vehicles, particularly for driver assistance and immersive cabin experiences, without assuming the full burden of automotive manufacturing.