Sony partnering with Honda for Electric Vehicles! What does it mean for the EV Industry?
This week saw a major development in the EV ecosystem. Honda which was under pressure of losing market share to Chinese rivals, partnered with Sony for EV development. This is no surprise for someone who is following the industry closely and understands the technology evolution that is happening in the automotive industry.
Sony, Honda Form New Company for Advanced Mobility Services
Under Pressure Honda Signs JV With Sony To Sell EVs By 2025
This news is in continuation with another such development where technology giant Apple entered in partnership with LG and Magna to produce EVs. And these are not rumors because Apple hired automotive industry veterans from Ford to launch their EV project. (Source)
Why do tech giants Sony and Apple, etc. entering electric vehicles?
To understand the answer to this question, let us understand what’s brewing in the EV ecosystem.
EV Boom — Huge gap in Supply-Demand expected
If you are active on any social media, read news, or even follow TV commercials then you already know how everyone is talking about EVs. And these EVs are not restricted to Tesla, BMW, or Volkswagen.
The governments of the majority of countries have pledged to achieve zero-emission vehicle sales by 2040. This includes the United States, Europe, the majority of Asian countries, Canada, Australia, the UK, and many more. Some of these countries have made intermittent targets to achieve 50% or 70% sales by 2030–2035. This is aided by the subsidies that are given worldwide to shift from gasoline-powered vehicles to electric vehicles.
Everyone in the industry understands that the need for electric vehicles is going to rise and to cater to the huge global population that will buy EVs in the coming years, the existing automotive manufacturers cannot suffice.
There is a huge demand-supply gap predicted in the coming times. It has resulted in a boom in the electric vehicle domain and that’s why everyone wants to enter this domain and make a profit.
EV — It is not a single product but a group of multiple components
An electric vehicle is not a single product but is a group of multiple components. It involves the vehicle platform, electrical peripherals, lighting, battery, software, tyre, seats, motors, fasteners, and a lot of other things.
Now, no manufacturer can make all of these components, and thus various suppliers come into the picture. When the governments are planning to switch from gasoline to electric vehicles, the demand rises sharply and that includes the demand for each component.
Some components are pretty standardized but some others are at a nascent stage and need to be technologically revamped to meet the electric vehicle needs. Thus, there are opportunities to explore the components which need to be made according to EV needs. It includes vehicle platform, battery, software, charging infrastructure, etc.
If the automotive manufacturers randomly start to procure components from various suppliers and assemble them to produce EVs, it will result in a bad experience and would be harmful to their reputation. That’s why the industry is witnessing joint ventures, collaborations, mergers, and acquisitions on a large scale.
These industrial integrations are aimed to fix the suppliers and manufacturers so that the finished vehicle is refined and can create a good user experience.
EV is not just a vehicle, it is a software experience
Unlike combustion engine-powered vehicles, where the performance of a vehicle is directly proportional to the engine. The performance of an electric vehicle depends on its software. Batteries form about 40% of a vehicle’s worth and the battery management software determines the performance of a battery. The control of speed, lightning, air conditioning, anti-theft, and almost everything is associated with the battery. Good battery management means an exceptional user experience.
A more refined software promises a smooth riding experience, long-range, and better control of the vehicle. Also, the functions such as charging, remaining range, etc. are more integrated with the IoT and users love it when their vehicle can guide them to the next charging station, manage the charging cost by scheduling charging, manage the battery consumption by employing machine learning on user riding behaviour, etc.
With the technology evolution, the services such as self-vehicle diagnosis, preventive maintenance, vehicle-to-vehicle communication, V2V & V2G charging, user authentication, and geofencing are becoming standard for almost all vehicles and they all depend on the software capabilities.
That’s where Apple, Sony, Samsung, Google, and other technology giants come into the picture. They understand that they are best in creating the most optimized software and the current EV is just like smartphones and computers but with the additional capability to transport users from one place to another. They are collaborating with the component suppliers and vehicle manufacturers to generate software for EVs.
What’s brewing in the electric vehicle ecosystem?
Apple’s collaboration with LG (leader in battery manufacturing) and Magna (a component supplier for electric vehicles) is its effort to design a perfect vehicle. All they now need is a vehicle manufacturer and they want to check the market by hiring leading automotive manufacturing veterans. If everything goes well, then the entire car will belong to Apple with components from the suppliers. Otherwise, they will simply collaborate with a vehicle manufacturer and license the finished software.
Similarly, Honda is a leading vehicle manufacturer but they are struggling with their electric vehicle development. They haven’t tasted success with their electric vehicles and it can be attributed to slow growth on the software part.
Honda is a leading manufacturer when it comes to vehicle components. They have a robust and reliable supplier base and good driving experience but their issues are concerning battery, battery management software, and the vehicle software. In recent times they have invested in in-house battery development, and other startups working in solid-state batteries. The investments are worth billions and would soon start paying off once they have a good battery ready. The issue of vehicle software development is something they still need to target.
What’s more good for Honda than collaborating with someone from the same place? Someone who shares the same values and who has been a leader in software development and high-tech visualization?
That’s where Sony comes into the picture. Sony is their perfect match. Both need each other to survive. The mobile, display, and software services business of Sony aren’t doing great and they need to reinvent their core business to thrive in market. Honda promises a new start if they together can generate a good EV experience.
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