Sony-Honda luxury retreat clouds premium ambitions

Sony and Honda have scrapped plans to launch the Afeela, an upmarket electric vehicle that had been intended to showcase the strengths of their 2022 joint venture. The move is a notable setback in the premium segment, where manufacturers had hoped higher-end models could help justify the heavy costs of electric vehicle development.

The Afeela had been due to launch in the US this year with a starting price of almost $90,000. Sony Honda Mobility had set out to combine Sony’s expertise in sensors, entertainment and software with Honda’s engineering capabilities, aiming to create a premium electric vehicle with advanced software functions and in-vehicle infotainment. Despite relatively small targeted volumes, the project carried significance beyond one model, representing a broader attempt by two major Japanese groups to compete more effectively with Tesla and Chinese rivals in a market increasingly shaped by technology as much as manufacturing.

The cancellation comes only weeks after Honda abandoned its flagship electric 0 series and warned of ¥2.5tn in EV-related losses over two years. It also fits a wider retreat across the automotive sector, with more than a dozen carmakers globally reported to have cancelled EV launches and diluted earlier commitments to phase out petrol engines. In the US, where the Afeela had been due to debut, electric vehicle sales have fallen after President Donald Trump ended federal tax credits for EV purchases and rolled back rules intended to cut vehicle emissions.

For Honda, the loss is not confined to a single premium product. The venture had also been expected to support longer-term ambitions in software capability and subscription-based business models, areas increasingly seen as central to profitability in modern vehicles. The companies said the future of Sony Honda Mobility itself had not yet been decided, leaving open whether the partnership can retain a strategic role without its flagship model.

That uncertainty is sharpened by Honda’s broader strategic reset. Its president, Toshihiro Mibe, is expected to place greater emphasis on hybrids when the company unveils a new car strategy in May, while other premium manufacturers such as Rolls-Royce have also extended petrol production beyond earlier targets. The unresolved question is whether luxury electric vehicles can still serve as credible vehicles for software-led ambitions when demand, policy and capital discipline are all moving in the opposite direction.