Sony / Honda: tie-up helps each other catch up in the electric car race

Sony and Honda want to make electric cars. Lex suggests the moniker “Driveman”, echoing Sony’s successful audio product. The Japanese industrial groups’ plan for a joint venture to produce battery electric vehicles comes at the right time.

Honda will manufacture the EVs while Sony develops the mobile data technology within the cars. A new company is expected to be set up this year with sales to start in 2025.

The tie-up makes sense. Honda has cut its domestic internal combustion engine auto production capacity by around 40 per cent from its peak as it goes all-electric. However it lags its rivals on EVs. Honda needs all the help it can get.

For Sony, the market for its image sensor business is saturated. These chips used in smartphones, surveillance and digital cameras, once provided an engine of growth. They represent about a seventh of the group operating profit, using Visible Alpha data. But with sales now closely tied to the global smartphone market, business has cooled.

Sony has lagged regional peers like Samsung in developing automotive image sensor chips. But the typical development cycle for these chips is around three to four years, allowing Sony some slack. That also means demand could pick up as more automated features are added to electric cars. Demand for car chips used for exterior monitoring should be more than triple in the next three years to a $ 25bn market.

Both companies could use a boost. Sony’s shares are down over a fifth this year. It revised down expected sales of its PlayStation5 game consoles last month. Honda’s stock has trailed local rivals in the past year. Even after a healthy double-digit recovery in its sales, these will not reach pre-pandemic levels until March 2023.

Their aim to jump to the forefront of next-generation electric cars looks a tall order. Already a large technology gap with global electric carmakers like Tesla exists. But the tie up shows that the two can support each other in navigating the new course for high-tech autos.

Would you buy a Sony / Honda EV? The Lex team is interested in hearing more from readers. Please tell us what you think in the comments section below.

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