By Christopher Otts and Fabiana Negrin Ochoa
It was supposed to resemble a high-end home theater on wheels: an electric car that would let passengers stream PlayStation games or movies, and eventually drive autonomously. But now, the vehicle won't see the light of day.
Sony Group and Honda Motor announced Wednesday the cancellation of a jointly developed electric sedan called the Afeela 1. Previously set to debut in California late this year with an initial $102,900 price tag, the Afeela 1 represented a kind of Japanese answer to the high-tech EVs from Tesla and China's automakers.
The move comes on the heels of Honda retooling its electric-vehicle strategy in the U.S. Earlier this month, citing a slowdown in the North American electric market, Honda announced it would book up to $15.7 billion in charges and incur its first annual loss in decades following the cancellation of three U.S.-made EVs.
Industry observers speculated that the Afeela 1 -- the first product from a joint venture, Sony Honda Mobility -- would be next on the chopping block. The vehicle used Sony's software, but the car itself was based on Honda's now-canceled future EVs. Honda's backpedal left the joint venture without a "viable path" to bring the new EVs to market, Sony Honda Mobility said.
While the cancellation is the latest retrenchment in the American EV industry, it also represents a setback for Sony as the Japanese tech titan tries to keep pace with more advanced, software-driven electric competitors from China.
The Sony-Honda program was announced in 2022 at the peak of EV fever, when traditional automakers and startups alike were chasing Tesla's skyrocketing valuations. Sony's then-chief executive and now chairman, Kenichiro Yoshida, expressed high hopes for the venture, expecting the car market to increasingly shift to a service model where customers pay regularly for software downloads and entertainment.
The Afeela 1 was first revealed at CES 2023 as a prototype. Its planned features included remote access to a user's PlayStation games, and the ability to stream the vast Sony library of movies and music on the screen that ran across the car's dashboard.
Some critics balked at its price tag and projected performance. While the Afeela 1 targeted up to 300 miles of range on a single charge, luxury rivals from BMW, Mercedes-Benz and Volvo are beginning to exceed 400 miles. Consumer Reports last year called the car "a bit of a head scratcher," saying cheaper EVs offered more impressive specifications.
Still, Afeela seemingly had long-term intentions even recently. An SUV concept made its debut at CES in January, where a tie-up with chip giant Qualcomm was also announced. Honda said Wednesday that it doesn't expect the joint venture's halt to have a material impact on its forecasts for the fiscal year ending in March.
Meanwhile, Sony said it is evaluating the impact of the discontinuation on its operations and financial position for the fiscal years ending March 2026 and 2027, but it believes the impact won't be significant.
The move comes shortly after Sony Honda Mobility of America announced the grand opening of an Afeela studio and delivery hub in California. Sony Honda Mobility said it would issue refunds to reservation holders.
Sony and Honda's backtracking means one less challenge to the United States' prevailing system of independent, franchised dealers handling most new vehicle sales.
Like Volkswagen's new brand Scout, Afeela had planned to sell its new high-end EVs directly to consumers, bypassing Honda dealers. The California New Car Dealers Association last year sued, seeking to block the plan.
As for the future of the joint venture, the three companies will continue to discuss its future business direction and provide updates when available, Sony Honda Mobility said.
Write to Christopher Otts at christopher.otts@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
March 25, 2026 13:26 ET (17:26 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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