Sony’s next big thing in tech is helping Honda take on Tesla

In early 2020, Sony Group Corporation Chief Executive Officer Kenichiro Yoshida took the stage at the Consumer Electronics Show in Las Vegas – the tech industry’s main annual event – and announced a pivot once a decade: Japanese electronics manufacturers are joining the electric vehicle race.

As Yoshida was concluding his 30-minute presentation, the lights on the stage were dimmed and the glistening grill emerged from the shadows. The CEO raised his hands as the smooth, Sony-branded car rolled onto the stage. Like mobile phones in the last decade, Sony’s boss has declared that “the next megatrend is mobility.”

With Yoshida’s announcement, the 76-year-old Japanese company has joined a growing list of technology giants shaping their foray into the automobile industry. As vehicles become electric, autonomous, gadget-stock and web-connected, the movement continues to attract a wide range of new players – the most notorious Apple Inc. Along with its stealthy Apple car – all betting has the technologies necessary to disrupt the $ 3 trillion market. .

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Big Tech’s jostling has been greatly reduced by many current car manufacturers, and the 62-year-old Yoshida’s push has earned him an unlikely fan base in Japan: Toshihiro Mibe, who was researching and developing Honda Motor Company at the time.

Of all the Japanese carmakers, Honda has thrown itself into the most aggressive of EVs, aiming to eliminate the full-stage sales of combustion engine engines by 2040. From the outset, Honda has been able to collaborate with Sony on its consumer electronics, autonomous driving sensors and software. As a way to differentiate new models and add value to the low-margin business of making cars.

Behind the scenes, Mibe has spent years admiring Sony’s top management, seeking to sell them in view of the potential synergies of companies, people familiar with the executives’ approach said. When the 60-year-old Mibe became CEO of Honda last year, those proposals gained new weight. After several meetings between individuals from top executives to engineers, the joint venture plans began to tighten by the end of 2021, people who asked not to be identified because the details were not public.

It culminated in two unveiling plans to create a new company to develop and sell the next generation of EVs. Two unrivaled companies are joining forces that are symbols of Japan’s economic recovery from the remnants of the war.

“Companies in completely different industries have different cultures and sources of value,” Mibe said in an interview in April about Honda’s partnership with Sony. “There was an idea that we could create a chemical reaction together. It was a fascinating idea and I met with President Yoshida and said, ‘Let’s do this.’

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For Honda, Myb’s approach makes sense. Over the past few years, Tesla Inc., with its autonomous driving features and the ability to improve car performance through broadcast updates such as the iPhone, has highlighted the knowledge gap when it comes to powering software for the next generation of cars. .

Sony predicts that the cars will be connected to the cloud and equipped with internal sensors that will eventually enable phase-four autonomous driving. At that point, cars do not need human interaction in most cases, thus freeing drivers to play, potentially, or watch Sony content. Honda has confirmed that these technologies are under consideration for future joint-venture models, the first of which will be launched in 2025.

For Sony, the partnership with Honda gives access to supply chains, manufacturing knowledge and vehicle-sales expertise. Automaker operations are conducted in accordance with strict safety standards and they must be responsible for the entire lifecycle of their vehicles, from maintenance to eventual scraping.

While the process of forging Big Tech-Automaker partnerships is challenging, the model is “necessary” to keep pace with the rapid evolution of cars, said Olaf Suckers, co-founder of RedBlue Capital, an early-stage investor in mobility startups.

“There is a clear goal – Tesla – that everyone is falling behind compared to it,” Socceroos said. The alliance with Sony and Honda is “companies need to realize what their core competencies are and where they need technology and partners,” he said. Next up is likely to be more consolidated in the automotive industry, but “the partnership model is becoming more and more visible.”

That does not mean it will be easy. Apple is looking for an ally to help develop and produce its car, but talks like the Hyundai Motor Co. and Ferrari NV have stalled, as they are wary of becoming an assembler for the end product that cannibalize their business. Most tech-auto tie-ups to date have missed Honda and Sony-style 50-50 partnerships.

According to Bloomberg Intelligence analyst Tatsuo Yoshida, operational differences could jeopardize long-term collaboration, including the relatively slow and accurate pace of development in the auto industry.

While Sony has a hand in a wide range of businesses, from gaming to movies and music, Yoshida said Honda’s future is firmly tied to the appeal of its EVs. This means that if the partnership ends after its initial 2025 vehicle release, it will bear the burden of loss. The real question is what will happen then, ”Yoshida said.

Yet Honda has chosen Sony from several potential electronics company candidates and Sony is also looking for a production partner. Companies say they chose each other for a reason.

At a joint briefing in March, Yoshida and Miebe said their common culture of wanting to “challenge the next big thing” could help narrow the divide between their industries. As a proof of this, Sony’s CEO cited the historical ties of their founders Soichiro Honda and Masaru Ibuka.

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Honda and Ibuka famously developed close friendships while building their businesses. The two met for the first time in the mid-1950s, when Honda visited Sony’s headquarters and asked co-founder Ibuca if the semiconductors used in transistor radios could be used to turn engines on and off – a basic idea at the time. The companies tested the idea, but ultimately did not go ahead, Ibuca wrote in a 1990 book about Honda founders.

Nevertheless, Ibuka recalls that his willingness to try new things continued to draw the two leaders together over the years. In their dealings, Honda and Sony “put emphasis on making efforts,” Ibuca wrote, “which means that failure is frequent.”

“Success and failure are two sides of the same paper,” Ibuca wrote, quoting a famous line from the founders of Honda. “Because everyone is so bent on not failing, success cases are very rare.”

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