Source: SHM

Sony Honda Mobility (SHM) officially discontinued the development and launch of the Afeela 1 electric sedan and a second, as-yet-unnamed SUV model on March 25, 2026, citing the collapse of the technology and platform supply chain that Honda Motor Co. (TYO: 7267) had promised to provide.

The cancellation was a direct consequence of Honda's sweeping electrification retreat announced on March 12, 2026, in which the automaker scrapped three North American EV models — the Honda 0 Saloon, Honda 0 SUV, and the Acura RSX revival — and disclosed total losses expected to reach a maximum of ¥2.5 trillion (c. $15.7 billion).

Honda described the cancellations as the product of "various factors including recent changes in the business environment," including US tariff policy shifts and intensified competition in Asia.

Source: SHM

SHM was established in September 2022 as a joint venture between Sony Group Corporation (TYO: 6758) and Honda, with the aim of developing premium, software-defined electric vehicles for the US market. The venture first unveiled the Afeela 1 as a prototype at CES in January 2023, and returned to Las Vegas in January 2025 to present the production-ready version, opening $200 refundable reservations to California residents.

The Afeela 1 was positioned as a technology-forward liftback designed to leverage Sony's entertainment ecosystem — including PlayStation integration, a camera-rich interior, and advanced ADAS features. It carried a dual-motor all-wheel-drive powertrain and a 91 kWh battery pack offering an estimated range of approximately 482 km (300 miles).

The vehicle was offered in two trims: the Signature launch edition priced at $102,900, targeted for mid-2026 delivery, and the Origin at $89,900, which was not expected until 2027.

Source: SHM

Pre-production had begun at Honda's East Liberty Auto Plant in Ohio as of August 2025, making the Afeela 1 one of the few cancelled modern vehicles to have reached the pre-series manufacturing stage before the plug was pulled. A second model — an SUV crossover previewed as a concept at CES in January 2026 — was also discontinued before reaching full development.

In its official statement, SHM said that Honda's strategic reassessment "fundamentally altered" the underlying assumptions of the joint venture's business operations, as the Afeela models depended on motors, batteries, power electronics, and platform technologies that Honda had agreed to supply. Without those assets, SHM said it had no "viable path forward" to bring either model to market.

Source: SHM

SHM confirmed it will issue full refunds of reservation fees to all Afeela 1 holders in California. Sony and Honda stated they would not dissolve the joint venture and plan to announce a new mid- to long-term strategic direction at a later date.

Honda's retreat from EVs has come at historic financial cost. The company now expects an operating loss of between ¥270 billion and ¥570 billion for the fiscal year ending March 2026, against a previously projected operating profit of ¥550 billion. According to the Financial Times, this would represent Honda's first annual net loss since the company became publicly listed in the 1950s.

The Afeela cancellation extends a broader pattern of premium EV retrenchment. Ford has discontinued the F-150 Lightning, Ram cancelled its 1500 REV electric truck, and Tesla (NASDAQ: TSLA) is reportedly planning to phase out the Model S and Model X, as several automakers recalibrate their near-term EV commitments against softening consumer demand and an uncertain US policy environment.

Whether Sony pursues the Afeela concept with a different manufacturing partner — or pivots its automotive technology ambitions into software and sensor licensing — may define what SHM's survival ultimately looks like.