The structural limits of alliances between automakers and information technology companies are becoming increasingly apparent as their collaborations to challenge Tesla in the electric vehicle era have failed to produce results. While Tesla surged ahead through rapid decision-making, automakers and IT firms have been unable to overcome fundamental differences in mindset and decision-making. The retreat of U.S. EV support programs is now dimming what remained of their hopes.
Sony and Honda's jointly pursued EV project has been scrapped, Japanese media outlets including Nikkei and Asahi Shimbun reported Sunday. On June 25, Sony Honda Mobility, a joint venture between the two companies, announced it would withdraw all plans to develop, launch and sell the Afeela electric vehicle.
The Afeela, once touted as a potential Tesla rival, had opened pre-orders in the United States and targeted deliveries in the second half of this year. The vehicle was priced at approximately $89,900 (about 120 million won). However, Sony and Honda declared the suspension of Afeela development and launch plans, and will issue full refunds to U.S. pre-order customers. Nikkei noted that demand for premium EVs is expected to decline sharply as the Donald Trump administration scales back EV subsidies.
The two companies partnered in September 2022 to pursue Afeela development and production. The EV drew attention as a futuristic vehicle combining Sony's digital software technology with Honda's automotive manufacturing expertise. The strategy included configuring the vehicle interior like a smart device and using the car as a platform.
However, as the project progressed, diverging perspectives between the two companies emerged, and voices within both Sony and Honda called for a reassessment of their futuristic EV strategy. Honda in particular reportedly expressed concern about automobiles being perceived as fast-turnover consumer goods like smartphones and other IT devices.
"Cars, including EVs, need to be driven for more than 10 years with safety as the top priority. The prevailing view in the industry is that approaching vehicles as something to be replaced every two to three years like smartphones simply does not work in the market," an automotive industry official said. "Moreover, Honda recently estimated losses of up to 2.5 trillion yen (approximately 24 trillion won, or $17 billion) in its review of its EV business, which I understand added to the burden of Afeela development and production."
A similar pattern emerged with Apple in the United States. Starting in 2021, Apple pursued its autonomous EV development project known as "Apple Car" and discussed collaboration with Hyundai Motor (005380.KS) and Kia (000270.KS). Under the proposed arrangement, Apple would handle in-vehicle digital operating systems and autonomous driving software, while Hyundai and Kia would provide the vehicle platform and manufacturing. However, the discussions never advanced beyond the negotiation stage.
Apple and Hyundai-Kia also had differing perspectives. CNBC analyzed that "Apple wants an automaker that will allow it to control both the software and hardware of the EVs it creates," adding that "Apple wants to build an 'Apple Car,' not produce Hyundai or Kia vehicles equipped with Apple software." Hyundai and Kia were also reportedly cautious, given the possibility that brand leadership could shift to Apple through such a partnership, and that they could be reduced to mere contract manufacturers.
Foxconn, the Taiwan-based contract manufacturer of iPhones, also attempted to enter the EV market but has made little progress. Foxconn explored a partnership with U.S. EV startup Lordstown but failed to achieve mass production. After partnering with Lordstown in 2021, Foxconn produced only 40 electric pickup trucks.
Experts cite differences in development approaches, revenue structures and industry cultures as reasons why automaker-IT collaborations are difficult. "For automakers, safety and reliability come first — vehicle defects lead to massive recalls and safety issues," an industry expert said. "In contrast, the IT sector values rapid launches and continuous updates. Also, automakers center their business on vehicle sales, while IT companies rely on platform and service revenue."
Despite these challenges, industry observers believe collaboration between automakers and IT firms will inevitably continue. As industry boundaries blur, cars — especially EVs — are no longer simply means of transportation but must integrate software platforms and artificial intelligence. The prevailing view in the industry is that for such collaborations to succeed, partnership structure design must be at the core, with both sides functioning as equal partners.
