Honda Motor Co.’s reassessment of its electric vehicle strategy, prompted by the rapid U-turn in U.S. environmental policy, has forced it to slam the brakes on its cross-industry partnership with Sony Group Corp.
The two companies announced on March 25 that they will cancel the development and the release of two EV models that they have been working on.
“It is deeply frustrating,” a senior Honda official said the same day. “We had to make a painful decision.”
Honda and Sony Group established an EV manufacturer, Sony Honda Mobility Inc., in 2022.
The joint venture has been developing the Afeela series of next-generation EVs, combining Sony’s entertainment expertise in areas such as music and movies with Honda’s vehicle manufacturing technology.
The first model, the Afeela 1 sedan equipped with autonomous driving technology, was scheduled to begin deliveries in the United States by the end of 2026 and in Japan during the first half of 2027.
All deposits collected from customers who have placed orders will be fully refunded.
Development of the second model, a sport utility vehicle, is being abandoned.
Honda will discuss whether to continue its EV partnership with Sony Group, looking ahead to the era of widespread EV adoption, a senior company official said.
Honda announced a review of its EV strategy on March 12, citing a slowdown in the U.S. EV market, among other factors.
The company canceled development of three new EV models scheduled for release in North America.
Sony Honda Mobility had planned to produce its vehicles at the same plant as those new Honda EVs and share some components with them.
Honda’s policy shift upended the premise of the collaboration, which was predicated on utilizing Honda’s production facilities and technologies.
In the United States, incentives for EVs are being scaled back under the Trump administration, which is reluctant to embrace decarbonization.
EV purchase subsidies were discontinued last autumn, for example.
Consequently, the slowdown in the EV market has become increasingly evident, while gas-electric hybrid vehicles are performing strongly.
Honda expects to post losses stemming from the cancellation of EV development and launches due to the review of its EV strategy, including impairment losses on production facilities.
The company is projecting a net loss of up to 690 billion yen ($4.34 billion) for the business year ending in March under International Financial Reporting Standards.
