Sony Honda's direct sales approach for the Afeela electric vehicle is already encountering a lawsuit.

      Tomohiro Ohsumi/Getty Images

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      Next spring, Sony Honda Mobility anticipates starting initial deliveries of its Afeela 1 electric sedan in California. As a result of a partnership between the electronics and automotive giants, Afeela’s vehicles are positioned as their own brand, separate from the well-established Honda and Acura names. However, this distinction is of little interest to franchised dealers in the state, who have petitioned the Los Angeles County Superior Court to prevent SHM from accepting reservations for the upcoming electric vehicle due to its direct sales model.

      “This is a direct assault on the 161 franchised Honda and Acura dealers in California that have been committed partners in building the brand’s reputation and success for decades,” stated Brian Maas, President of the California New Car Dealers Association, as quoted by Automotive News. “By excluding dealers, they are removing essential consumer protections such as local service support, transparent pricing, and warranty assistance.”

      The dispute between franchisees and automakers adopting direct sales has been ongoing since Tesla began to gain traction in the market. The key difference is that Tesla wasn’t an established automaker when it started selling cars directly, allowing it to bypass laws that protect franchises in various states. In contrast, Sony Honda Mobility is partially owned by a company that already has an existing retail network.

      In addition to this, Scout Motors, which acknowledges itself as “a member of the Volkswagen Group” while operating independently, has faced legal challenges for its direct sales approach. As Auto News highlights, a law signed by California Governor Gavin Newsom in 2024 prohibits automotive manufacturers from launching brands that compete with their franchised dealers.

      In Scout’s instance, it’s understandable why VW dealers might be frustrated. Volkswagen has shifted to an SUV-focused lineup in the U.S. over the past decade, but it has not fully connected with consumers. Scout's rugged, patriotic branding and intent to market an electric pickup truck may offer a more attractive alternative in this market.

      Sony Honda's scenario is slightly different. The Afeela 1 is built on the same platform as other EVs being developed at Honda’s Ohio facility, including the Acura RSX and Honda’s 0 Series—models that dealers will be allowed to sell. On paper, it is not anticipated to be the most technologically advanced EV of 2026; the sedan boasts a 300-mile range from a 91-kWh battery with a maximum charge rate of 150 kW. When it debuts in showrooms next year, its starting price will be $102,990, with self-driving features provided for only three years. A more affordable variant is expected in 2027, but even then, it will still be priced at $90K.

      The interior of an Afeela 1 prototype was displayed at CES 2025 in January. Andrej Sokolow/Getty Images

      The Afeela 1 serves as a test in several aspects. Outside of Chinese companies like Xiaomi and Huawei, it is North America's first instance of a consumer electronics business entering the car sales industry. It is also betting on a market segment willing to invest significantly in enhanced self-driving features—features that, even if Afeela 1 includes them, may not be legally usable at launch, depending on how the law stands at that time. Additionally, it is a sedan, a category that American consumers typically avoid.

      This brings into question whether this dispute will ultimately benefit California’s Honda and Acura dealers as much as it might for Volkswagen’s dealers. Nevertheless, the association feels the need to file its case against as many automakers as possible to create consistency and establish legal precedent.

      In the meantime, Afeela seems committed to its expansion strategy, having launched pop-up showrooms across the state in the spring and summer. The first permanent retail locations are expected to open later this year in Torrance and Fremont, and Californians interested in the Afeela 1 can still place a refundable $200 reservation directly on the company’s website.

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