Afeela

Ichiro Suzuki

Near the end of March, Sony Honda Mobility Inc. (SHM) has officially discontinued the development and launch of the Afeela 1 sedan and its second model. It was a project based on Sony’s entertainment and software prowess and Honda Motor’s manufacturing capability. At the 2020 Consumer Electronics Show in Las Vegas, NV, Sony made it public its desire to enter car business with a display of an electric vehicle, the Vision S. Then, Sony formed a joint venture with Honda Motor for EVs to be marketed in the U.S. Combining Sony and Honda in what they did best, SMH might have a chance to shine in a niche market, it was thought. 

Cancellation of the Affeela project was attributed to Honda’s reassessment of its EV strategy. Honda has turned out to be one of the biggest victims of  a policy shift under the second Trump administration. Earlier in this decade, Honda made a bold strategic move to phase out internal combustion engine cars by the end of the 2030s, to be fully converted to EVs, swallowing its pride in engine technology. Honda is not the only car maker that made a big shift to EVs but no one made more aggressive move than Honda. The company, therefore, was forced to write off massive amount of investments by a MAGA policy shift to “drill, baby, drill”. It is expected that Honda suffers combined ¥2.5 trillion ($15.6 billion) losses in two fiscal years through March 2026 and 2027. This compares with net profit of ¥950 billion in the March 2025 year. While Ford and  Stellantis report larger losses, they are bigger car makers than Honda. Despite the loss, Honda is still in reasonable financial health, underpinned by record  profits from the motorcycle division. Before America’s return to fossil fuels, Honda’s car division was already going through restructuring, and a long-term question about its cars’ future continues to persist. So Honda is in no position to put up with further losses from SHM. 

Aside from the MAGA resurgence factor, there was a question of demand for the Afeela. Its cabin was designed as an entertainment hub, a “Creative Entertainment Space” featuring panoramic screens, PlayStation 5 remote play support, 28 speakers and immersive 360 degree sound. This sounds fantastic to audio-visual enthusiasts. SHM, however, probably has overestimated the number of such enthusiasts, perhaps considerably. It was over the top to think about cars as smartphone-like gadgets, at least at present. Typical enthusiasts for the Afeela would have been twenty somethings, who love gadgets. This age group  isn’t buyers of cars. On top of it, the Afeela is no ordinary car with its ambition to disrupt cabin experiences for passengers, and hence was going to be a great deal more expensive than affordable subcompact cars. While the Afeela might have been a great technological achievement, what a company can deliver technologically isn’t always aligned with marketing success. The Afeela might have been one such case.

Apple had a serious plan of entering the car market for a decade. They once believed car cabins were the next space to be disrupted. Steve Jobs adored Sony cofounder Akio Morita. While Apple has outgrown Sony by a wide margin, the two companies still share the same DNA. Apple’s Project Titan eyed a larger niche market than the Afeela, of course. Having invested over $10 billion into it over ten years, however, Apple cancelled the project in February 2024, almost a year before Trump’s return to the White House. The main reason behind scrapping the project was uncertainty associated with driverless cars. It became increasingly certain that it is taking much longer time than original expectations for fully driverless passenger cars to roam the streets freely. In the middle of the last decade, it was expected that Level 5 driving would be fully available on roads in the U.S. ten years later. As it turned out, Google has deployed Waymo services in several cities in the U.S. so far and is expanding the number of cities. Tesla and Uber are planning to enter the robotaxi business but are likely to do so much later than their original plans, and GM dropped its Cruise project. Level 5 driving for passenger cars is nowhere near even its starting point. Unless self-driving comes to passenger cars, man or woman in the driver’s seat cant’t be freed from steering handles and pressing pedals and hence is in no position to enjoy the cabin experience Apple wanted to offer. Of course, the price tag of the iCar, as it was once called in the market, would have been well over ten times that of the iPhone. Even Apple’s premier customer base would have had to think twice on it. 

When Apple was serious about entering the car market, there was a question of who was going to build the cars. While Apple’s expertise is software, the company still wants to have total control over its hardware. So someone had to build the hardware exclusively for Apple. Then, how much value is left in the boxes when the bulk of the car’s value might have been in software? Taiwan’s Foxconn was considered as a leading candidate for iCar manufacturing after its success with iPhones. In fact, Honda’s name also came up along with other car makers that were not thriving. It was going to be a relatively thin margin business that still required manufacturing prowess to crank out cars at suppressed costs at very high yield.

Despite the recent setback, EVs are still on their way for proliferation, albeit more slowly than originally expected. How money can be made out of EVs, or driverless cars and software defined vehicles (SDVs), is not yet certain but will be different from internal combustion engine cars. The vision that got scrapped by SHM could get a new lease on life at some point in the future, and that will not be the only way to generate profits. For instance Toyota is more interested in safety based on the data the company gathers from its SDVs than offering entertainment. It is almost certain that the companies that got derailed by Trump’s policy change are going to come back with a new strategy. It remains to be seen how the car market develops into the 2030s. 

About the author: Mr. Suzuki is a retired banker based in Tokyo, Japan.