Two years ago, when Sony and Honda unveiled their joint electric vehicle venture with a flashy prototype at CES 2023, the pairing seemed inspired. Sony brought its entertainment software, sensor technology, and brand cachet. Honda brought a century of manufacturing expertise and a global dealer network. Together, under the banner of Sony Honda Mobility (SHM), they promised to build a new kind of car — one that would double as a rolling entertainment platform.
That vision just got cut in half.
Honda announced this week that it has canceled two of the four electric vehicles it was co-developing with Sony, according to Ars Technica. The two surviving models — the Afeela 1 sedan and an SUV — will proceed as planned, but the other two nameplates, which were to be built on Honda’s dedicated EV platform, have been scrapped entirely. The decision reflects a broader recalibration at Honda as the Japanese automaker confronts slowing EV demand growth, margin pressure, and an increasingly hostile trade environment shaped by U.S. tariffs.
The Afeela 1, which SHM first showed in prototype form at CES, is still expected to begin deliveries in 2026. Preorders opened in the United States with a starting price around $89,900. The SUV variant is reportedly on track for a later release. But the two Honda-badged EVs that were supposed to round out the partnership’s product portfolio? Gone.
Why Honda Pulled the Plug
Honda’s decision didn’t happen in a vacuum. The company is in the middle of a sweeping cost-reduction effort that aims to cut roughly $3.5 billion from operations over the next several years. Executive Vice President Shinji Aoyama told reporters that the canceled models no longer fit Honda’s strategic priorities, particularly given the capital demands of its own zero-emission transition plans and the need to protect profitability in a period of economic uncertainty.
The tariff picture matters enormously here. President Trump’s escalating auto tariffs — including a 25% levy on imported vehicles and mounting duties on parts — have thrown the cost calculus for every foreign automaker selling into the U.S. market into disarray. Honda, which manufactures many of its North American vehicles domestically but still imports a significant share of components and finished cars, faces real exposure. Building out additional EV models with Sony, especially ones requiring new tooling and supply chain arrangements, became harder to justify when the return on investment looked increasingly uncertain.
There’s also the demand question. EV sales in the U.S. grew in 2024 and into early 2025, but the pace has decelerated. Consumers have shown more interest in hybrids and plug-in hybrids than in fully battery-electric models, particularly at higher price points. The Afeela 1’s near-$90,000 sticker places it squarely in the luxury segment, competing not just with Tesla’s Model S but with established players like BMW, Mercedes-Benz, and Porsche — all of which have their own electric lineups. Adding two more EVs to that mix, in a market that’s proving pickier than anticipated, looked like a risk Honda wasn’t willing to take.
Sony, for its part, has been relatively quiet about the cancellation. The entertainment and electronics giant holds a 50% stake in SHM and has invested heavily in the venture’s software and sensor suite. Sony’s PlayStation division, its camera sensor business, and its audio engineering teams all contributed technology to the Afeela platform. But Sony has also made clear that it views the car venture as a long-term bet, not a short-term revenue driver. Losing two models from the roadmap doesn’t appear to have triggered any public alarm from Sony’s leadership — at least not yet.
The broader context is that Honda itself is undergoing a significant strategic pivot. The company abandoned its planned merger with Nissan earlier this year, a deal that would have created the world’s third-largest automaker by volume. That collapse left Honda needing to chart its own path forward on electrification, and the math has changed. Rather than spreading investment across multiple joint ventures and partnerships, Honda appears to be consolidating around its own platforms and its own brand.
This is a pattern across the industry. Ford slashed billions from its EV spending plans in 2024. General Motors delayed several electric models. Volkswagen scaled back its battery factory ambitions in Europe. Even Toyota, long skeptical of a full BEV transition, has adjusted its timeline repeatedly. The common thread: automakers are discovering that building electric cars profitably is far harder than building them at all, and that consumer adoption curves don’t always follow corporate PowerPoint projections.
For SHM, the path forward is narrower but not necessarily doomed. The Afeela 1 has generated genuine curiosity, if not yet blockbuster preorder numbers. Its interior, which features a massive dashboard-spanning screen and deep integration with Sony’s entertainment content, represents a genuinely different approach to what a car’s cabin can be. Whether that’s enough to command luxury pricing in a crowded field remains an open question.
And the SUV variant could prove more commercially important than the sedan. American buyers have shown a strong and durable preference for SUVs and crossovers across every powertrain type. If SHM can deliver an Afeela SUV at a competitive price point with the same tech-forward interior, it may find a more receptive audience than the sedan will.
But two models do not make a brand. The original four-vehicle plan was designed to give SHM enough product breadth to establish itself as a credible automaker, not just a tech demo. With only two nameplates, the venture risks being perceived as a niche curiosity rather than a serious competitor. Dealer networks, service infrastructure, brand awareness — all of these scale better with a fuller lineup.
Honda’s stock has been under pressure in recent months, weighed down by tariff fears and the Nissan merger fallout. The EV cancellations may actually be received positively by investors who prefer capital discipline over ambitious expansion. Wall Street has punished automakers for overcommitting to electrification without clear paths to profitability, and Honda’s pullback signals that management is paying attention to margins.
Still, the optics are awkward. Sony and Honda launched SHM with considerable fanfare, positioning it as a fusion of mobility and entertainment that would attract a new generation of tech-savvy buyers. Cutting the product plan in half, before the first car has even reached a customer’s driveway, raises fair questions about the partnership’s long-term viability.
Neither company has suggested that SHM itself is at risk of dissolution. But partnerships in the auto industry have a mixed track record, and joint ventures tend to fray when one partner’s strategic priorities shift. Honda’s priorities have clearly shifted. Whether Sony’s patience holds — and whether the Afeela brand can build meaningful momentum with just two vehicles — will determine whether this venture becomes something real or joins the long list of automotive what-ifs.
The first Afeela 1 deliveries, expected in mid-2026, will be the real test. Not of the technology. Of the market.
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