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Analysis-Jumping on EV wagon represents risky ride for tech pioneer Sony -Breaking

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© Reuters. The Vision-S 01 and Vision S 02 electric cars from Sony are on display at CES 2022 in Las Vegas. REUTERS/Steve Marcus

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Tim Kelly

TOKYO, (Reuters) – From personal music players and games consoles. Sony (NYSE:) Group is known for its willingness to gamble in order to become a leader, but the Japanese tech company could be taking a bold step into electric vehicles.

Although investors were all over the news that Chief Executive Kenichiro Yoshida told the Las Vegas tech fair this week that Sony Mobility was being set up, their stock plunged 7% on Thursday, as they thought about the task of actually building EVs that are packed with sensors, electronics, and entertainment.

Analysts say the main goal of Sony-branded cars is to make an autonomous connected car for ride sharing and taxi hailing services. It could even surpass sales of automobiles.

MarketsandMarkets, a research firm, estimates that “mobility-as-a-service” could reach $40 billion in 2030. This is up from $3 billion last year.

Analysts point out, however, that Sony will likely need to spend heavily on plant and equipment in order to get its Vision-SEV prototype, which was first shown in Las Vegas in 2012, to the market in enough numbers to be competitive.

Kenichiro’s announcement was greeted by Takaki Nakanishi (an automotive analyst at Nakanishi Research Institute, Tokyo), who said, “It’s going be a difficult business to succeed.”

Tesla Inc (NASDAQ:) Inc is the industry leader and delivered the first electric car in 2008. It relied on investors to help it overcome years of losses.

EVs are easier to construct than internal combustion engines, and countries are making an accelerated shift towards them.

Nakanishi stated that Sony will join a growing group of tech companies exploring opportunities in automotive, which includes iPhone maker Apple Inc (NASDAQ):, South Korea’s LG Electronics as well Taiwan’s Foxconn.

However, in order for vehicles to be considered roadworthy they will need to adhere to much more stringent safety standards than the ones that are applied to electronics. Components would need to withstand both the harsh elements and road traffic.

Nakanishi stated that “Sony won’t be able do what Tesla did,” and suggested that outsourcing vehicle production to Foxconn would make it easier for them.

Sony is yet to announce if and how it will build a branded vehicle, however it has already partnered with an Austrian autoparts manufacturer to create its prototype EV. Magna International (NYSE): A company that makes cars for BMW, Mercedes Benz, and other companies. Toyota .

The project also includes the European-based members Bosch (German autoparts manufacturer) and a French company specialized in automotive technology. Valeo (PA:), SE and Hungarian autonomous vehicles start-up AImotive.

OLD VS NEW

EVs are still a small market, but sales growth has outpaced that of fossil fuel cars. Tesla is the most benefiting in terms of what value investors have put on it.

Tesla has a market capitalisation of around 4x that of Toyota Motor Corp (NYSE:) Corp. Despite the fact that the U.S. is the largest car manufacturer in the world, its vehicle production is still only tenth.

Toyota, General Motors Co. (NYSE :), Volkswagen (DE 🙂 and Chrysler-owner Stellantis, are starting to fight back. They plan to invest hundreds of millions of dollars which will increase the competition for tech companies like Sony.

Some technology companies have already realized that the benefits of EVs are outweighed by their risks.

James Dyson, inventor of the bagless vacuum cleaner, scrapped plans for an electric car in 2018, citing the difficulty of getting a vehicle onto the road.

Panasonic Corp (OTC) Corp, Sony’s Japanese competitor in consumer tech, also eschewed mass market EVs. However, automotive components such as batteries for Tesla cars are now a significant sales driver.

Panasonic has not yet considered the production of EVs with Panasonic branding,” said a spokesperson.

($1 = 115.9200 yen)

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