Electric vehicle (EV) stocks have been popular with the investing public. Some have even grown so popular among investors that their market capitalizations are larger than many traditional auto companies. But ultimately the economics of the business are likely to bring many EV companies back to earth. The big problem for the EV industry is that the barriers to entry are low. Witness all of the new entrants you have never heard of before. Now Sony and Honda are teaming up to take share in the EV market. The Financial Times reports:
Sony and Honda said they would form a joint venture to produce electric vehicles in a deal bringing together two of Japan’s most storied industrial names to take on Tesla, emerging Chinese players and traditional carmakers.
Targeting the high valuations Tesla and other EV makers achieved before the recent sell-off in technology stocks, chief executives of both companies told reporters in Tokyo on Friday they would be open to floating the joint venture on public markets.
The blockbuster tie-up underscores how Japanese companies are working to catch up in the global race for EV dominance, with Honda’s domestic rivals, Toyota and Nissan, both announcing spending plans worth tens of billions of dollars at the end of last year.
It will also allow Sony to deploy its formidable sensor technology that is critical for autonomous driving, as it works to reclaim its top position in consumer electronics after being undermined by competitors including Samsung.
Honda chief executive Toshihiro Mibe said the new company would “stand at the forefront of innovation, evolution and expansion of mobility around the world by taking a broad and ambitious approach”. The company is expected to be established this year with sales of the first EV due to start in 2025.
Honda said it would take responsibility for manufacturing the first EV model at its plant, while Sony said it would develop the mobility service platform for the new company. The platform could be used by Honda and potentially sold on to other carmakers.
“We want to lead the change in mobility, so we will create a JV, and if Sony’s network platform and services can be used by the JV, Honda, or other car companies, we will be able to contribute more,” said Kenichiro Yoshida, Sony chief executive.
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