Sony and Honda Partner on EVs. Big Tech Needs Big Auto for Its Apple-Car-Like Ambitions.
The Sony VISION-S 02, an SUV prototype vehicle.
lex Wong/Getty Images
The electric-vehicle race just got another entrant —sort of.
Sony (ticker: SONY) doesn’t make cars, but it wants to sell smart EVs so it’s partnering with Honda Motor (HMC). The pair announced a memorandum of understanding Friday about a strategic alliance. They will form a company to develop “high-value battery electric vehicles and commercialize them in conjunction with providing mobility services.”
The goal is to have a Sony-Honda EV on roads by 2025.
“Sony’s purpose is to fill the world with emotion through the power of creativity and technology,” said Sony CEO Kenichiro Yoshida in a news release. “Through this alliance with Honda, which has accumulated extensive global experience and achievements in the automobile industry over many years and continues to make revolutionary advancements in this field, we intend to build on our vision to make the mobility space an emotional one.”
A lot of electronics and technology companies seem to believe that cars are changing, and that connected EVs are an opportunity for others beyond traditional automotive players. Rumors of an Apple (AAPL) car have circulated for months. Apple iPhone assembler Hon Hai Precision Industry (2317.Taiwan), better known as Foxconn, now owns an auto assembly plant in Ohio.
Sony has expressed interested in EVs in the recent past. It showed off a concept EV at the 2022 Consumer Electronics Show in Las Vegas.
The new Sony-Honda partnership demonstrates how tech entrants might get into the field. Tech needs auto expertise to succeed — building cars isn’t easy.
Tesla (TSLA) CEO Elon Musk is fond of pointing out that large-scale manufacturing is very difficult and that Tesla and Ford Motor (F) are the only two large U.S. auto makers to never have gone bankrupt.
The joint venture approach, however, might be a way to build a company that can get an EV-like valuation for a traditional auto maker’s knowhow. Honda stock trades for about eight times estimated 2022 earnings and the company’s market capitalization is in the $50 billion range. EV startup Lucid (LCID), for comparison, has a market cap in the $40 billion range.
The final form of the joint venture — like whether it will it have its own manufacturing or rely on Honda facilities — isn’t known yet. Honda didn’t immediately return a request for comment.
Investors appear to have become inured, somewhat, to EV announcements coming from outside the auto industry. Shares of both companies weren’t getting a bump from the Friday announcement. Honda’s American depositary receipts fell1.5% in premarket trading. Sony ADRs fell about 0.9%. S&P 500 and Dow Jones Industrial Average futures were both down about 0.8%.
Write to Al Root at [email protected]
