Sony enters electric car market with risky gamble

Sony has been staking its bets on being a pioneer from music players to video games, but a leap into the world of electric cars takes the risks facing the Japanese group to a whole new level.

Although Chief Executive Kenichiro Yoshida surprised this week at the CES technology fair, saying that the company is creating a mobility division, shares fell 7% this Thursday (6), as the size became clear. the challenge of launching a car equipped with sensors, electronic devices and entertainment services.

The main objective, according to analysts, is to create an autonomous vehicle connected to services such as ridesharing, something that could surpass the sales of the cars themselves.

Market research firm MarketsandMarkets estimates that “mobility as a service” is a market that could reach $40 billion by 2030, up from around $3 billion in 2021.

But analysts point out that Sony will likely have to invest heavily to get its Vision-S prototype, first revealed at CES two years ago, to be able to compete effectively.

“It’s going to be a tough market to succeed,” said Takaki Nakanishi, an automotive industry analyst at the Nakanishi Research Institute in Tokyo.

Electric car leader Tesla has poured billions of dollars into revolutionizing the industry, receiving investor support during years of losses.

Sony is joining a growing list of technology companies that are exploring opportunities in the automotive market, including Apple, LG and Foxconn, Nakanishi added.

In order for these companies’ products to run, they will have to comply with a series of stricter safety regulations than those applied to the electronics world.

“Sony won’t be able to do what Tesla did, the obstacles are too big,” said Nakanishi, adding that an easier path for the company would be to outsource the production of vehicles to companies like Foxconn itself.

Sony has not yet revealed if and how it will make a car with its brand, but it has recruited an automaker to produce the prototype by making an alliance with a factory in Austria controlled by Canadian auto parts maker Magna. The company produces components for brands such as BMW, Mercedes Benz and Toyota.

Other members of the Sony project include auto parts maker Bosch, French automotive technology company Valeo and Hungarian autonomous vehicle startup AImotive.

The electric vehicle market is still small, but the pace of sales has surpassed models with combustion engines.

One consequence of the phenomenon is that Tesla’s market value is now four times that of Toyota, despite its production being only one-tenth of the largest automaker in the world.

But traditional automakers like Toyota, General Motors, Volkswagen and Stellantis are starting to fight back, with investment plans worth billions of dollars, raising the stakes for new entrants like Sony.