It is instructive that, on news that Sony is setting up a unit to examine going into the electric vehicle market, its shares jumped by more than 4% on the Tokyo stock market.

That response accentuates the faith investors have in Japan’s second-biggest company to deliver on something when it puts its mind to it.

And it is particularly pertinent given how crowded the electric vehicle market is becoming.

That market is already dominated by Tesla, which currently accounts for more than one in six electric vehicles sold worldwide, while all of the globe’s biggest established carmakers – Volkswagen, Toyota, Ford, General Motors, Stellantis, Daimler, BMW and Honda – are ploughing billions into electrification.

So, too, are SAIC and BYD, two of China’s biggest carmakers, which are respectively the third and fourth largest players (behind Tesla and Volkswagen) in the global electric vehicle market.

To them can be added Rivian, the electric vehicle start-up backed by Amazon and Ford, whose stock market valuation overtook that of Volkswagen and Toyota when it came to the stock market in November last year.

There is Polestar, the luxury electric vehicles maker backed by Volvo Cars of Sweden and Geely Automotive of China and Lucid, the luxury electric vehicle maker run by the former Tesla executive Peter Rawlinson. Then there is Nio, a Chinese electric vehicle specialist whose stock market valuation already exceeds the likes of Honda, while it is also an open secret that Apple is working on various electric vehicle projects.

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So, despite Sony’s established excellence in consumer electronics and entertainment, there is no guarantee it will be able to crack the electric vehicle market.

But judging from the company’s comments at the Consumer Electronics Show in Las Vegas – the global technology sector’s biggest annual get-together – Sony is clearly thinking hard about it.

Unveiling a prototype electric SUV, named the Vision-S02, Kenichiro Yoshida, Sony’s chief executive, said the company had been encouraged by a positive response to an earlier prototype, Vision-S01, unveiled two years ago.

He said: “The excitement we received after the announcement… encouraged us to further consider how we can bring creativity and technology to change the experience of moving from one place to another.”

His comments suggest Sony is contemplating launching a car under its own brand name. When it unveiled its earlier prototype, it was with the specific aim of showcasing its sensor technology, which it had been looking at selling to other carmakers and particularly those looking to launch autonomous vehicles.

Investors are also hopeful that Sony, unlike some other entrants to the electric vehicle market, will be able to succeed because of its existing strengths in the consumer electronics market and in fields such as artificial intelligence and robotics.

It set up a subsidiary called Sony AI in April 2020 and has built an AI-powered robot dog, Aibo, which has been involved in the EV project. The prototype unveiled in Las Vegas also showcased the company’s existing electronics products, including a fully integrated digital video service called Bravia Core for Vision-S, which promises shared or individual video playback on the front panoramic screen and individual rear-seat displays. The car would also allow passengers to play PlayStation games through a remote connection to a console at home or play streaming games through the cloud.

Mr Yoshida added: “We believe Sony is well-positioned as a creative entertainment company to redefine mobility.”

Those comments, however, will confirm to some Sony-watchers that the company is merely looking into electric vehicles as a way of showcasing its existing entertainment products – a music and computer games provider on wheels.

Nonetheless, news of the new division, to be called Sony Mobility, comes at a time when the company has its tail up. Sony shares have risen by 50% during the last year, dramatically outperforming the Nikkei 225 index, which has only risen by 8% during the same period. Its shares have also outperformed those of sector peers such as Canon, Panasonic and Nintendo during the last 12 months.

Recent optimism has been driven by Sony’s entertainment businesses which, traditionally, were regarded internally in a business dominated by engineers as playing second fiddle to consumer electronics.

But the company has made a much better fist in recent years of explaining to investors the merit of a business bringing together both hardware and content, as typified by PlayStation, the world’s best-selling games console.

And those businesses have raised their performance. Sony Music Entertainment is, alongside Universal Music and Warner Music, one of the world’s three biggest players in recorded music – a sector that is thriving thanks to the boom in music streaming. So, too, is Sony/ATV, the world’s biggest music publishing business, whose worth has been reappraised by investors at a time when there is a boom in the value of song catalogues.

Sony, whose catalogue already includes hits by the Rolling Stones, Stevie Wonder and Marvin Gaye, has been an active player in the consolidation taking place in the sector, as shown just before Christmas, when it paid a reported $500m for Bruce Springsteen’s entire recorded music and songwriting catalogues.

Meanwhile Sony Pictures, which was bought by Sony 32 years ago when it was still known as Columbia Pictures, also has wind in its sails. One of the big five Hollywood studios, it is currently celebrating the most successful post-pandemic film launch in Spider-Man: No Way Home, which is already one of the 10 biggest-grossing films of all time in the US.

So this is a company not lacking in confidence and it will have some advantages if it does move into electric vehicles under its own steam. The most obvious of these, as with Tesla, is that it will be starting from scratch. It will not, unlike the likes of Ford and Volkswagen, have a legacy internal combustion business to protect in the short-term. Another is that, with its expertise in consumer electronics, it will be well-placed to compete in a product that includes more software and fewer moving parts than conventional cars.

Yet the decision by Dyson in October 2019 to discontinue its interest in electric vehicles shows that even companies with an impeccable record for electronic products and an expertise in technology can find this particular market a tough one. There is still plenty of scope for disappointment.

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