Sony Group (SONY) and Honda Motor Company (HMC) have inked a strategic partnership to develop and sell battery-powered electric vehicles (EVs). Reuters reports that the two companies will form a joint venture, with plans to sell its first EV model in 2025. SONY shares fell 1.76% to close at $98.47 on March 4.
Sony is a Japanese company that designs, manufactures, and sells electronic equipment, instrument devices, game consoles, and information technology products.
Joint Venture
Under the joint venture, Honda will develop the first battery-powered electric vehicle model. Sony will focus on developing a mobility service platform. The companies are yet to divulge the financial details of the tie-up.
According to Honda CEO Toshihiro Mibe, they are open to bringing other companies into the joint venture. While they are not currently thinking of taking the joint venture public, it could be an option as the firm grows.
The tie-up with Honda comes when Sony is exploring ways of becoming a key player in the next-generation automobile market. Sony’s dominant position in electronics has been eroded over recent years, but it still boasts an arsenal of sophisticated technologies in areas critical to autonomous driving, like sensors.
Earlier in the year, Sony CEO Kenichiro Yoshida reiterated his plans to create a new company, Sony Mobility, to develop and launch electric vehicles.
Stock Rating
Last month, CLSA analyst Amit Garg reiterated a Buy rating on Sony. According to the analyst, “We see several positives including continued strength in music streaming and margin expansion, solid success of Sony’s Spider-Man Universe (SSU) and its plan to adopt an asset-light model in mobility (EV).”
Consensus among analysts is a Strong Buy based on 3 Buys. The average analyst price target of $150 implies 52.33% upside potential to current levels.
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