In an unexpected turn of events, the much-lauded collaborative EV by Sony and Honda has ended. I know, right? It was just this January when Sony Honda Mobility confirmed that it would start delivering the AFEELA 1 this year and show off the AFEELA Prototype, its second EV. On March 25, Sony Honda Mobility (SHM) announced that it will discontinue the development and launch of its first model, AFEELA 1, as well as the second model that has been under development.
Sony and Honda did not start a new collaborative brand only to let it run its course. The existence of SHM depends very much on the tech each company is willing to chip in, and this decision weighs heavily on the respective companies’ plans for their main businesses.
Now, we do not profess to know what really is going on, but according to the official press words, the decision to stop moving forward is due to the inability to “utilize certain technologies and assets that were originally planned to be provided by Honda at the time of SHM’s initial business planning,” following “Honda’s reassessment of its automobile electrification strategy announced on March 12, 2026 [JP].”
For those not in the know, on March 12, Honda announced that, in light of market conditions, the automaker is canceling three EVs planned for North America, which unfortunately include the superlative Honda 0 SUV, the also beautiful Honda 0 Saloon, and the Acura RSX. But why roll back on its EV ambitions in North America? Honda said it sees slower EV growth in the U.S. due to factors like relaxed fuel regulations, reduced EV incentives, and less-than-expected demand for electric vehicles. Tariffs on gasoline and hybrid vehicles also play a part in the decision.
And then there is the strong competition in China and Asia in general, where customers value software features over hardware specs. That’s not to mention the competition from EV startups. They are moving faster with software-defined vehicle (SDV) tech. All these made Honda arrive at the conclusion that it cannot match the value-for-money offered by these rivals.
Honda is bracing for serious financial losses in the fiscal year ending March 2026. The company is expecting large one-time losses from this decision. We are talking about a massive 820 billion to 1.12 trillion yen in operating expenses, some 110–150 billion yen in investment losses, and special losses coming in at at least 340 billion yen. All told, Honda is preparing for cumulative losses of as much as 2.5 trillion yen over time.
Anyhoo, because of this important move, SHM could no longer benefit from Honda’s expertise and therefore could not deliver as planned. Customers in California who have put down money for the AFEELA 1 will be issued full refunds for the deposits made.
But it does not spell the end of the road for AFEELA. At least, not yet. SHM did not explicitly say it is winding up. Instead, the company will continue to discuss with Sony and Honda on future business plans.