Sony / Honda: the relationship helps each other catch the electric car race
Sony and Honda want to make electric cars. Lex suggests the “Driveman” moniker, echoing Sony’s successful audio product. Plans of Japanese industrial corporations for a Venture to produce battery electric vehicles at the right time.
Honda will manufacture the electric vehicle while Sony develops the mobile data technology in the car. A new company is expected to be formed this year with sales starting in 2025.
Binding makes sense. Honda has cut its domestic production of internal combustion-engine cars by about 40% from its peak because the vehicles are all-electric. However, it lags far behind its rivals in terms of EVs. Honda needs all the help.
For Sony, the market for its image sensor business is already saturated. These chips, used in smartphones, surveillance cameras and digital cameras, were once the engines of growth. They represent about one-seventh of the team’s operating profit, using Visible Alpha data. But with sales now tied to the global smartphone market, the business has cooled.
Sony has lagged behind regional peers like Samsung in developing image sensor chips for cars. However, the typical development cycle for these chips is around three to four years, which gives Sony quite a bit of delay. It also means that demand could increase as more automated features are added to electric cars. Demand for automotive chips used for outside surveillance will more than triple over the next three years to a $25 billion market.
Both companies can use a boost. Shares of Sony are down more than a fifth this year. It revised down sales of PlayStation5 consoles expected last month. Shares of Honda have outperformed domestic rivals over the past year. Even after sales recover to double digits, they won’t reach pre-pandemic levels until March 2023.
Their goal of taking the lead in next-generation electric cars seems daunting. There already exists a huge technological gap with global electric carmakers like Tesla. But the bond shows that the two can help each other navigate new directions for high-tech cars.
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