Unity is strength, says an adage.
Sony (SNE) and Honda (HMC) understand this well and have decided to make good use of it.
Rather than venturing alone into an industry in full transformation mode, the Japanese electronics and auto giants have agreed to join forces to bring about a redistribution of the electric vehicle market, seen as the future of passenger cars.
Subject to definitive agreements, this alliance between a technology company playing the leading role in entertainment and a carmaker would take the form of a joint venture to produce and sell electric vehicles.
The new company -- the name hasn't yet been publicly released -- will be formed this year, the two companies said in a statement.
It is expected to plan, design, develop and sell the EVs, but not own and operate manufacturing facilities. It will start selling its first car in 2025.
Sony and Honda will undoubtedly share the tasks to avoid problems of integration and culture shock. The two companies operate in different sectors, even if from now on they often come together, particularly with regard to connected on-board systems in vehicles.
The electronics giant will take care of developing a mobility-service platform that will be made available for the joint venture.
The two companies do not say what this platform will look like. But it should be remembered that Sony is a major supplier of image sensors for smartphones, and the company now also designs the sensors for vehicles.
Sony Already Has Two Prototype Vehicles
Sony
In January, Sony had indicated it would launch a company to prepare its entry in the automobile sector. Called Sony Mobility, this company would rely on Sony's strengths in electronics, in particular its technologies in developing sensors to disrupt the new generation of mobility, Sony announced at the 2022 Consumer Electronics Show in Las Vegas.
Sony at the time had shown a prototype SUV, the Vision-S 02. It uses the same electric-vehicle platform as the previously announced Vision-S 01 coupe, which in December 2020 began testing on public roads in Europe.
Sony's vision of the car is very similar to Tesla's (TSLA): The car is seen as a rolling living room, in which the driver can indulge in different activities once they have activated the self-driving feature.
It's also interesting that the announcement of the Sony-Honda alliance comes at a time when Tesla is clearly displaying its ambition in videogames, as TheStreet wrote recently. Sony produces the PlayStation game console, which could be a big asset for the new Sony-Honda company.
Honda will take care of manufacturing the venture's vehicles in its own factories.
The Japanese vehicle manufacturer is in the midst of a transition from internal combustion engine cars or gasoline cars to electrification. Honda has pledged to stop producing gasoline vehicles by 2040.
"This alliance aims to bring together Honda's mobility development capabilities, vehicle body manufacturing technology and after-sales service management experience cultivated over many years, with Sony's expertise in the development and application of imaging, sensing, telecommunication, network, and entertainment technologies," the two companies said in their joint statement.
The aim is to "realize a new generation of mobility and services that are closely aligned with users and the environment."
What About the Honda-GM Alliance?
Honda does not say whether this alliance with Sony will affect its partnership with General Motors (GM), which also covers the production of electric vehicles.
"Production of these Honda electric vehicles will combine the development expertise of both companies, and they will be manufactured at GM plants in North America," the two companies said in April 2020. "Sales are expected to begin in the 2024 model year in Honda’s United States and Canadian markets."
Developing EVs is very expensive, which pushes legacy car manufacturers to forge alliances, especially as they continue to produce gasoline cars. The latter remain for the moment what brings in money, even if the margins are thin compared with those of electric vehicles.
In April 2020, GM and Honda agreed to produce two electric models together for the Japanese giant. These vehicles are supposed to go on sale in 2024.
Honda's strategy seems to be to play on all fronts as tech firms increasingly eye the automotive sector.
Persistent press speculation indicates that Apple (AAPL) is developing its first electric vehicle, while Chinese companies Baidu (BIDU) and Xiaomi (XIACF) have already formed a joint venture to produce electric vehicles.
"Although Sony and Honda are companies that share many historical and cultural similarities, our areas of technological expertise are very different," Toshihiro Mibe, Honda's chief executive, said.
"Therefore, I believe this alliance which brings together the strengths of our two companies offers great possibilities for the future of mobility."
