KEY POINTS
- Sony and Honda scale back Sony Honda Mobility operations, reassigning all employees to parent companies after AFEELA EV programme cancellation
- Honda's March 2026 EV strategy overhaul triggered conclusion that near-term commercialisation under existing SHM framework was not feasible
- Sony and Honda reaffirm founding philosophy, pledging continued talks on software-defined mobility collaboration for advanced driver-assistance era
Sony Group Corp. and Honda Motor Co. said Monday they have agreed to scale back operations at Sony Honda Mobility Co. (SHM) after concluding that, under the existing framework, it would be difficult to find a feasible way in the short to medium term to bring to market the products and services envisioned at the joint venture's founding.
The decision follows Honda's announcement on March 12, 2026, that it was revising its four-wheel electrification strategy, which triggered a rapid reassessment of SHM's future. On March 25, the three parties announced the cancellation of development and launch plans for both the AFEELA 1, the venture's debut model, and a planned second model.
Following that cancellation, Sony, Honda, and SHM conducted further trilateral discussions on the venture's path forward. The companies concluded that realising the product and service launches envisioned at SHM's founding was not achievable through its existing structure within any near- to medium-term timeframe, the companies said.
In response, the partners decided to restructure SHM immediately. Substantially all employees at the joint venture are to be reassigned, in principle, to the two parent companies or their affiliates, taking individual preferences into account, the companies said.
SHM was established in September 2022 as a 50-50 joint venture, positioned as a flagship project merging Sony's software, sensor, and entertainment capabilities with Honda's automotive engineering and manufacturing expertise. The AFEELA brand, unveiled at CES 2023 in Las Vegas, was presented as a premium electric vehicle designed to redefine in-car user experience through deep software integration — an ambition that resonated with investor enthusiasm for software-defined vehicles at the time.
Despite the operational wind-down, the companies sought to frame their broader collaboration as intact. Sony and Honda said the founding philosophy — contributing to and leading the evolution of mobility — remains unchanged. The three parties said they will continue discussions on new forms of collaboration oriented toward creating software-driven user experiences, specifically targeting the coming era in which advanced driver-assistance systems become mainstream.
The setback to SHM's commercial roadmap comes amid broader turbulence in the global electric vehicle industry. Automakers worldwide have repeatedly delayed or scaled back EV commitments as demand growth slowed, cost pressures intensified, and competition from Chinese manufacturers sharpened. Honda is seen as being among several Japanese automakers recalibrating timelines and capital allocation as EV market conditions shift.
The scaling back of SHM raises questions about the future of the Sony-Honda partnership's tangible output. While both companies have reaffirmed their intent to collaborate, the decision to shrink SHM's business leaves unclear what near-term commercial form that cooperation will take. How the two companies may translate a continuing dialogue into concrete products or services — and on what timeline — remains unclear, and is likely to be one of the key questions for investors and industry observers.
Originally published on ibtimes.co.jp
