March 26, 2026 | What Afeela cancellations signal for Honda, Sony; Q1 sales preview

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Welcome to Daily Drive.

For Thursday, March 26, 2026, I'm Kellyn Walker

in Las Vegas today on the show,

US auto sales are heading for a rough first quarter.

MG Motor brings semi-solid state batteries

to Europe's mass market

and Stellantis workers face parking tickets

for driving the wrong brand.

Plus, Automotive News Asia Editor Hans Grimel

talks about Sony Honda Mobility's decision

to cancel its Afeela EV models.

Without the cars, it's hard to imagine

where this joint venture is going to go.

They say it's under review.

I think that is just a way of camouflaging

or putting some window dressing on the idea

that they're discussing ways to wind it down completely

and disband it.

Let's run through all the news.

You need to know to keep up in the auto industry.

US auto sales are heading for a rough first quarter

and it's not hard to see why.

March sales are expected to drop 15% compared to last year

when shoppers were rushing to beat

President Trump's tariffs.

First quarter sales overall could fall 6.5%.

That's according to Cox Automotive, JD Power,

and Global Data.

The culprits, high prices, the Iran War,

and the end of federal EV tax credits.

We'll have more on this story in a minute

with our own Michael Martinez.

MG Motor is bringing semi-solid state battery technology

to Europe this year.

It will come in its budget-friendly MG4 EV Urban.

MG is flipping the playbook with this model

instead of debuting the tech in a luxury car or SUV.

MG is putting it straight into a mass market vehicle.

The battery uses just 5% liquid electrolyte

compared to 20% in conventional batteries,

making it safer and more durable.

MG says going for volume first solves a key problem.

Being able to afford the volume of materials needed.

It's a strategy that could accelerate cost reductions

and heat up Europe's EV price war.

And some Stellantis workers who have been called back

to the office recently are getting

an unpleasant surprise in the parking lot.

They're getting tickets for driving the wrong brand.

The automaker is enforcing rules that ban competitors'

vehicles from premium parking spots

at its Auburn Hills Michigan headquarters.

To catch, lots for non- Stellantis cars have shrunk

and often fill up.

The Wall Street Journal reports repeat offenders

could have their vehicles immobilized.

Meanwhile, GM and Ford have mostly

dropped these restrictions for office workers.

And those are today's headlines.

You can find more details on all those stories

at autonews.com.

Our own Michael Martinez has been covering

the Q1 auto sales outlook for automotive news.

Mike joins me now to talk more about what's ahead.

Mike, welcome back to Daily Drive.

Thanks, Cole.

So, co-host, what are the biggest hurdles

right now for the market?

Well, how long do you have?

I mean, there's a lot.

But I guess if you had to boil it down quickly,

it would be affordability from any number of angles

we're talking about still rising transaction prices.

You have affordability concerns in terms of gas prices

that are continuing to go up because of the war in Iran.

And you have higher EV prices because of a lack

of federal tax credits that exist anymore.

So, customers are getting pinched

and we're seeing that in terms of the numbers.

It's a really bad comp compared to last year

because this is the time everybody was rushing out

to get their vehicles before the tariffs hit.

So, year to year horrible numbers.

But if you do take 2026 on its own,

still not necessarily that bad.

There is some resilience in the market.

But as Jessica called well at Edmunds put it,

customers aren't really splurging anymore.

They're making much more practical purchases

because of the prices.

So, down numbers, still some resiliency,

maybe not the worst story in the world.

Well, what's the outlook for the rest of the year?

And are there too many factors

that could change in the coming months

to make a solid prediction?

For a question like this,

you sort of have to turn to the experts,

like Edmunds, like Cox Automotive, JD Power,

and they are all holding steady with their projections.

They're calling for sales of around 16 million,

give or take a couple, 100,000.

That's not that bad.

And I know I think JDP's numbers went down

about 100,000 earlier in the year,

but they held steady as of their first quarter update.

But we don't really know.

It's only the end of March beginning of April.

And as we know, a lot's already happened this year.

Who knows how long this conflict

in the Middle East could last?

If it is prolonged and those prices do stay high,

you could see customers staying home

or maybe flocking more to EVs.

So, a lot of unknowns, even with tariffs,

still given the Supreme Court ruling earlier this year

and you never know what Trump's gonna try next

in terms of imposing new levies.

So, a lot still to be determined,

but for now holding steady around 16 million again,

not the worst in the world.

That would be a fairly strong year.

Well, if it's one thing, it's always something else.

Mike, thank you so much for joining me.

Thanks, Kyle.

You can hear more from Mike on our weekend drive edition

of the show, available Saturday morning.

Coming up, our own Hans Grimel talks about

Sony Honda Mobility's decision to cancel

it's a Phila EV program.

That's next on Daily Drive.

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Welcome back to Daily Drive.

I'm Kellen Walker.

Sony Honda Mobility is the latest

to toss out planned EV models

after the loss of federal tax credits

and slowed demand here in the US.

The joint venture canceled its first two

of Fila electric vehicles just months

before the first model was supposed to reach customers

in California.

Automotive news, Asia Editor, Hans Grimell,

spoke with Daily Drive executive producer Jake Near

about what went wrong with the Fila project

and what it signals about the broader challenges

facing automakers trying to crack the EV market.

Jake reached Hans at his home office in Tokyo.

Hans, always great to have you here on Daily Drive.

Thanks again, Jake.

So maybe help me understand my own reaction to this news.

I told myself in my head, I was like,

you shouldn't be surprised by this.

But for some reason, it felt surprising

to read this this morning.

Maybe that it was something I wasn't expecting

to happen now.

Maybe it's the timing of it, but it's interesting

because we've been hearing about a Fila for so long

and they've had these big splashy reveals,

even as recently as just a couple months ago feels like.

You know, makes sense of it, Hans.

Right.

Well, I think the industry and the Honda Watchers

were waiting for this other shoot to drop.

Ever since CEO of Mibe announced earlier this month

that it was canceling the three EVs for the United States

and really pulling back from its EV first kind of approach.

That was a reversal of a Honda's long time strategy

of going completely, doing away with combustion engines

and going completely electric by the 2040.

It was a very advanced, aggressive approach

for a Japanese automaker.

Although at the time it said it was pulling back

from its own EVs, it didn't mention anything

about a Sony Honda mobility.

And so we're waiting, I think most people were expecting

some kind of fallout to happen for that JV as well.

Yeah, and this also has implications for Honda's production,

even here in the US, that the Fila once a Dan

was slated to be built here in the US.

What does that mean in terms of sort of the Honda's strategy,

building where they're selling to sort of steal a term from Toyota?

Well, the Sony Honda mobility was supposed to bring together

kind of these two iconic Japanese brands,

Sony Honda, known worldwide for at least at one time

for their cutting edge technologies

and to kind of bring the best of both worlds together

and rekindle Japan's prowess for things like the Walkman

or the Sony PlayStation or the Honda Civic

or the Acura NSX or something like that.

These are kind of the power plays

that we were kind of imagining to come out of a Fila.

But you know, the car was very expensive.

The entry model was priced at around 90,000.

It eclipsed 100,000 I think in one of the upper trims.

At those prices, I don't think you could expect

big volumes for this.

So although it was going to be made in the United States,

these Fila vehicles, I don't think Honda

was going to be padding out a lot of Honda extra volume.

So the impact to Honda is really under question.

They never really committed to a volume target

for the Fila brand in the first place.

And by all estimates, it was expected

to be rather limited and meager volumes.

Yeah, you write that it's the same market conditions

that led to Honda canceling those three EV models

earlier that led to this.

But as you mentioned, this is a little bit

of a different segment, right?

This is more in the luxury segment.

What does the say about Honda's, is this just a full on retreat

that we shouldn't expect them to change course

in terms of powertrain anytime soon?

Well, I don't think it's a full on retreat.

They're still committed to electric vehicles

in the long run.

They're keeping a couple of electric vehicles still

in the workbench here.

They've got a zero series that they're still

keeping for India and Japan, I believe,

and they still have some smaller EVs

that they're hoping to sell in the Japan market and elsewhere.

But for the US market, this is really kind of,

they don't have any EVs anymore after this.

So it's a full retreat, I would say,

from the US EV market for the time being.

And what we'll see instead is a doubling down

on their hybrid powertrains.

And in fact, they have a new next generation hybrid powertrain

coming out around 2028.

They just have to get to that point in order

to cash in on this new technology.

You mentioned the relationship and the JV

between Honda and Sony now.

They didn't announce anything about dissolving the JV.

So what is the likely outcome of that relationship

and can something be salvaged out of it?

Right.

Well, this was a JV started back in 2022.

And there was a lot of Bally who around it

kind of teased plans for three vehicles.

The Afeela 1, which is a sedan,

and then the next car would be kind of a compact crossover.

And then maybe perhaps a third vehicle,

which would be a larger crossover.

They've announced that they're canceling at least

the first two cars, development of them and sales plans.

So without the cars, it's hard to imagine

where this joint venture is going to go.

They say it's under review.

I think that is just a way of camouflaging

or putting some window dressing on the idea

that they're discussing ways to wind it down completely

and disband it.

How it might limp on into the future

is unclear without the cars.

Perhaps Sony could, they could keep this joint venture alive

and Sony could contribute its infotainment technology

or its sensors or something to a new software system

that Honda can use in its hybrids

or are using its other cars.

That's a, I can imagine that is one possibility.

So still kind of taking something from Sony's contribution

and using it in Honda's non EV vehicles.

You mentioned in your piece that dealers were very critical

of Afeela for many reasons.

What has been their reaction to this news?

Well, I think the dealers are quite happy about this pullback

of Afeela and the cancellation at least

and for the time being in the United States.

It looks like this will be a long-term permanent decision

and that would be, I think, fine with them.

The dealer association sued the companies in California

saying that Honda's a factory decision to go with Sony

and sell cars puts them in direct competition

with the existing Honda dealers

and therefore violates the franchise law.

So they had that lawsuit already on the books.

What happens to that next?

I don't know, but this Afeela brand

was no a friend of the Honda dealer.

I'm also wondering about the status of electrification

from Japanese automakers generally speaking.

It does seem now that the early adopters,

the Nissan's, the Honda, I guess Honda counts

as at least a more gong-ho about the electrification future.

And then Toyota was sort of the laggard

as many people criticized them if they were pro EV.

So now it seems like the tables have turned almost completely,

that Toyota is actually expanding their EV lineup

where these other automakers are essentially retreating

at least like you said in the US.

Well, you're right.

Toyota is taking really took its multi-path way

approach to heart.

That's been its guiding principle or north star

for its powertrain strategy.

It never says it's anti-EV or against EVs,

but it sees EVs as just one piece of its puzzle, powertrain puzzle.

And it was laid in putting that piece

into the overall chigsaw puzzle, if you will.

But now that it has that piece ready

and is putting it into the puzzle,

it has a full offering of all different kinds of powertrains

to be able to switch flexibly back and forth.

And now we're seeing it being able to dial up EVs

when it wants to.

Of course, it's prime money maker or golden cow

here is the hybrid technology

and that's not going away anywhere soon.

But unlike a lot of automakers that put all of its eggs

into the EV basket, Toyota remains a little bit spread out

and stable with different assets and different places.

Hans Grimel is Asia Editor for us at Automotive News.

Hans, as always, great reporting.

Thank you so much for joining us.

Thanks a lot, Jake.

Have a good day.

That's Daily Drive for Today.

I'm Kellen Walker.

Thanks to Automotive News journalist Michael Martinez

and Nick Bunkley for their reporting for today's podcast.

We also had reporting from William Boston

of our sibling publication Automotive News Europe.

You can get the latest news on electric vehicles,

US sales trends, and everything happening

in the auto industry at autonews.com.

Come back tomorrow for a conversation

with Jake Gunnan of French Way about its voice

of the technician survey.

We found that there wasn't a lot of good data

around how many schools were out there

with automotive programs and even going state by state.

It was a little concerning that we just have no idea

what the education system is putting out.

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