Sony and Honda have jointly announced that they will collaborate on the development and sale of a range of battery-electric vehicles. Honda is one of the world’s largest automakers but Sony’s automotive business has in the past been limited to supplying electronic components for vehicle projects. Now, however, the Japanese electronics giant looks keen to put its brand name on a battery-powered vehicle.

So why does Sony want to move into the auto industry in the first place? Historically, auto players have battled overcapacity in an industry defined by high volumes, high expenditure and low margins. This stands in contrast to Sony’s familiar wheelhouse industries such as photography, consumer electronics and music, film and video game production where profitability is easier to achieve.

Sony already enjoys a number of trading relationships within the automotive industry as a key supplier of image sensors and electronic components such as infotainment systems. There is a question mark over how much additional value Sony would be able to unlock by co-developing an entire EV project. Sony’s CEO noted that the plan was to leverage “Honda’s long experience in mobility development and vehicle body manufacturing technologies”, so Sony is unlikely to play a large role in the development of key EV components such as the battery pack or motor drive units.

Where Sony’s influence is much more likely to be felt is in the cabin. With the move away from characterful combustion engine powertrains towards more uniform EV drivetrains, automakers will be looking to in-cabin technology to differentiate their offerings, especially as increased semi-autonomous functions give cabin occupants more time to focus on non-driving activities. Here, Sony’s wealth of knowledge in telecommunications, infotainment and UX design could help set a future Sony car apart from rivals with less-advanced in-cabin experiences.

But does the plan make sense? Companies around the world are queueing up to launch their EV strategies including traditional auto players with decades of experience, new-age EV startups with novel designs, and even established players in adjacent industries such as electronics, with the like of Foxconn building out its EV production capabilities. Any Sony EV would be entering this highly contested space and, if it fails to make an impact, could cost Sony and its partner dearly thanks to the sheer costs involved in setting up vehicle projects.

On the other hand, Sony has perhaps never had a better opportunity to make the leap to becoming an auto player. The transition to EVs is a once-in-a-lifetime industry shift that is resetting supply networks across the world, potentially opening the door for new companies to enter and disrupt the market. EVs are likely to be much less defined by their powertrains but instead by the strength of their technology packages and, here, Sony has the potential to make a big impact.

See also: Sony to launch unit to explore EV opportunities