TOKYO, Jan.6 (Reuters) – From personal music players to game consoles, the Sony group (6758.T) have often performed to be a trailblazer, but a jump into electric cars could take risks to a new level for the Japanese mainstream tech giant.

While investors were in awe when chief executive Kenichiro Yoshida told a Las Vegas tech fair this week that the company was implementing Sony Mobility, its stock fell 7% on Thursday as they considered the challenge to deliver. electric vehicles filled with sensors, consumer electronics and entertainment offerings. .

According to analysts, the main goal of Sony brand cars is to create an autonomous connected vehicle for services such as carsharing and ridesharing, which could eventually overtake auto sales. Read more

Research firm MarketsandMarkets estimates that the market for “mobility as a service” could reach $ 40 billion by 2030, up from around $ 3 billion last year.

But analysts point out that Sony would likely have to invest heavily in factories and equipment to bring its Vision-S EV prototype, first unveiled in Las Vegas two years ago, to market in sufficient numbers to compete effectively.

“It will be a difficult business to succeed,” said Takaki Nakanishi, automotive analyst at the Nakanishi Research Institute in Tokyo, of Kenichiro’s announcement.

Industry leader Tesla Inc (TSLA.O), which delivered its first electric vehicle in 2008, has invested billions of dollars in the auto industry revolution, leveraging investor support as ‘he was going through years of loss.

Now, an accelerated shift to electric vehicles, as countries attempt to cut carbon emissions by phasing out the use of gasoline and diesel cars, is likely to help tech companies because they are easier to build than vehicles with internal combustion engines.

Sony joins a growing list of leading tech companies exploring automotive opportunities, including iPhone maker Apple Inc (AAPL.O), South Korean LG Electronics (066570.KS) and Taiwanese Foxconn (2317.TW), has added Nakanishi.

But in order for their vehicles to be deemed roadworthy, they would also have to comply with much stricter safety regulations than those applied to consumer electronics. And the components should also withstand the rigors of the road and harsh outdoor conditions.

“Sony won’t be able to do what Tesla did, the hurdle is too high,” Nakanishi said, adding that an easier route for the Japanese company would be to outsource vehicle manufacturing. at Foxconn.

Sony has yet to say whether or how it will build a branded car, but it has already hired an established automaker to produce its EV prototype, partnering with a plant in Austria owned by Canadian parts maker Magna International (MG .TO), which builds cars for companies such as BMW, Mercedes Benz and Toyota.

Other members of his Europe-based project include German auto parts maker Bosch, French automotive technology company Valeo SE and Hungarian autonomous vehicle start-up AImotive.

OLD VS NEW

While the electric vehicle market is still small, sales growth is outpacing that of fossil fuel cars and Tesla is benefiting the most in terms of the value investors place on it.

Tesla’s market capitalization is now about four times that of Toyota Motor Corp’s (7203.T), even though the US company’s vehicle production is only a tenth of the world’s largest automaker.

Traditional automakers such as Toyota, General Motors Co (GM.N), Volkswagen, and Chrysler-owner Stellantis are starting to hit back with hundreds of billions of dollars in investment plans, which will increase competition for tech companies. such as Sony.

For some tech companies, the allure of electric vehicles has already been abandoned, outweighed by the risks.

Inventor of the bagless vacuum cleaner James Dyson scrapped his electric car projects in 2018 due to the complexity of getting a vehicle on the road.

And Panasonic Corp (6752.T), Sony’s Japanese consumer tech competitor, has also shied away from consumer electric vehicles, though automotive components, including batteries it makes for Tesla cars, are now a major sales driver.

“Panasonic does not envision the production of Panasonic-branded electric vehicles,” a spokesperson said.

($ 1 = 115.9200 yen)

Reporting by Tim Kelly, additional reporting by Shinji Kitamura; Editing by Alexander Smith

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