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Why Honda and Sony Canceled Their EV Plans: AFEELA and Honda’s 2026 Strategy Shift

Sony Honda Mobility canceled AFEELA 1 and its second planned model, while Honda separately canceled three North American EVs. The companies cited Honda’s strategy reassessment and changing market conditions; SHM’s future structure remains unresolved.
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Sony Honda Mobility canceled development and launch of its planned AFEELA 1 and second model after Honda reassessed its electrification strategy and EV-market conditions changed. Separately, Honda canceled three planned North American EVs: the Honda 0 SUV, Honda 0 Saloon, and Acura RSX. As of the companies’ April 21, 2026 announcement, Sony Honda Mobility was reviewing its structure and scaling down operations, but had not announced that it was dissolved or settled what products it might pursue next.

What Honda and Sony canceled

The announcements concern two different programs, with different decision-makers. Sony Honda Mobility (SHM), the joint venture established in September 2022, discontinued its planned AFEELA vehicles. Honda separately canceled three EVs intended for North American production.

Program Decision-maker Vehicles affected Announcement
AFEELA Sony Honda Mobility, a Sony-Honda joint venture AFEELA 1 and a second planned model March 25, 2026
Honda’s North American EV plans Honda Honda 0 SUV, Honda 0 Saloon, and Acura RSX March 12, 2026

SHM said Honda’s March 12 strategy reassessment and changes in the EV market fundamentally changed the assumptions about Honda technologies and assets that the venture had expected to use. The March 25 joint statement said SHM would discontinue development and launch of both AFEELA models and review its business direction. Honda and Sony’s March 25 announcement distinguishes the joint venture’s decision from Honda’s own lineup cancellations.

Honda’s three canceled vehicles were not AFEELA models, and their cancellation was not announced by SHM. Honda described those decisions in its own March 12, 2026 strategy announcement.

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Why Honda reassessed its EV strategy

Honda’s explanation points to a mix of market, policy, competitive, and financial pressures. These are the company’s stated reasons, not an independent finding that any single factor caused the cancellations.

EV growth, regulation, and hybrid demand

In May 2025, Honda said EV-market expansion was slowing and that changes in environmental regulations and trade policy had increased uncertainty. The company said its expected global EV sales ratio for 2030 had fallen below its earlier 30% target. It also pointed to strong hybrid demand and said next-generation hybrids would be a key powertrain during the transition toward broader EV adoption. Honda’s May 2025 business briefing summary framed EVs as a long-term direction while describing a more flexible investment pace.

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Tariffs, regional competition, and value

In March 2026, Honda said changes in U.S. tariff policy were affecting its gasoline and hybrid businesses. It also cited weaker competitiveness in Asia after resources had been allocated to EV development, and slower EV-market growth in the United States amid changes to fossil-fuel regulations and EV incentives. In China, Honda described competition from manufacturers with shorter development cycles and strengths in software-defined vehicles and driver-assistance technology.

Honda said it had been unable to offer better value for money than newer EV competitors. In its words, “Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness.” That is Honda’s assessment in its March 2026 announcement.

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Electrification continues, but at a more flexible pace

The cancellations do not amount to Honda declaring that it has abandoned electrification. The company has continued to describe EVs as an optimal long-term solution for passenger-vehicle carbon neutrality, while saying it will adjust investment according to profitability and market trends and strengthen hybrids in the nearer term. The change is in the pace and allocation of plans, not a stated end to Honda’s EV ambitions.

What happens to Sony Honda Mobility and AFEELA?

On April 21, 2026, Sony, Honda, and SHM said that, after reviewing the venture’s direction, they concluded it would be difficult under the existing framework to bring products and services aligned with SHM’s founding purpose to market in the short to medium term. They decided to review SHM’s current structure and scale down operations. Employees were expected in principle to be reassigned to the parent companies and related entities, taking individual preferences into account.

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The announcement did not declare SHM dissolved. The companies said they would continue discussions on an optimal form of collaboration and aimed to create new user-experience value as software becomes increasingly important to advanced driver-assistance systems. They did not announce a replacement vehicle, product timetable, or finalized future structure. The latest stated status is therefore a structure review and operational scale-down, with the venture’s longer-term form unresolved. The April 21 announcement provides the companies’ latest stated direction.

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What Honda’s loss estimates do—and don’t—mean

Honda’s March 2026 financial announcement included estimates related to its broader strategy reassessment, not a disclosed cost for the canceled AFEELA models. For the fiscal year ending March 31, 2026, Honda estimated operating expenses of 820 billion to 1.12 trillion yen and a share of losses of 110 billion to 150 billion yen from investments accounted for using the equity method. Honda also said total losses associated with the reassessment could reach 2.5 trillion yen, an uncertain estimate subject to change.

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Those figures relate to Honda’s wider reassessment, including its own canceled models and investment decisions. They should not be attributed wholly to SHM or treated as the cost of AFEELA’s cancellation. See Honda’s financial and strategy announcement for the company’s qualifications.

What remains unknown for AFEELA customers

The April 2026 announcement did not settle whether SHM will retain a distinct corporate structure or eventually develop other products. The announcements covered here also do not establish whether every AFEELA reservation holder has received a refund. Without a newer official confirmation, neither a final corporate fate nor universal refund completion can be stated.

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