Honda dealers are pushing back against the automaker's partnership with Sony over the Affila electric vehicle, which they deem detrimental to core business. Meanwhile, GM is reconsidering plug-in hybrids as it remains focused on EVs. Inventory levels for new vehicles are stable, with EVs showing slower sales rates. PWC's CJ Finn discusses the challenges of distinguishing genuine automotive tech advancements from hype at CES, emphasizing the importance of strategic partnerships in areas like AI and autonomous driving. The episode highlights the industry's evolving landscape and the balancing act between innovation and consumer demand.
"...the joint venture's Affila electric vehicle is set to start deliveries in California later this year at over $90,000."
The Affila is a new electric car made by Honda and Sony. It's important because it shows how traditional car companies are working with tech companies to create new types of vehicles.
The Affila is an electric vehicle developed through a joint venture between Honda and Sony, representing a significant step in Honda's electric vehicle strategy.
"...It bypasses franchised dealerships entirely through a direct sales model."
A direct sales model means that the car company sells cars straight to customers instead of using dealerships. This can make buying a car easier and cheaper.
A direct sales model allows manufacturers to sell vehicles directly to consumers without going through traditional franchised dealerships, which can streamline the buying process and reduce costs.
"He calls the venture an albatross, urging Honda to cut losses before it drains more resources."
Honda is a well-known car maker from Japan that makes cars and motorcycles. They are popular for their reliable vehicles.
Honda is a major Japanese automotive manufacturer known for producing reliable cars and motorcycles. The company has a strong presence in the global automotive market, particularly in the U.S.
"They say every dollar spent on Affila is one not invested in core Honda and Acura products."
Acura is Honda's luxury car brand. They make more upscale vehicles that focus on performance and technology.
Acura is the luxury vehicle division of Honda, known for its performance-oriented cars and advanced technology. It competes with other luxury brands in the automotive market.
"General Motors is still evaluating plug-in hybrids for the U.S. market."
Plug-in hybrids are cars that can use both gas and electricity. You can charge them at home, and they can drive longer distances on electricity alone compared to regular hybrids.
Plug-in hybrids are vehicles that can run on both gasoline and electricity. They have a larger battery than traditional hybrids, allowing them to be charged from an electrical outlet and providing a longer electric-only driving range.
"General Motors is still evaluating plug-in hybrids for the U.S. market."
General Motors is a big car company that makes many different brands of cars. They are now focusing on electric and hybrid vehicles.
General Motors (GM) is one of the largest automobile manufacturers in the world, producing vehicles under various brands, including Chevrolet, GMC, Cadillac, and Buick. The company is focusing on electric vehicles and hybrids as part of its future strategy.
"Although CEO Mary Barra says electric vehicles remain the company's long-term focus."
Electric vehicles are cars that run only on electricity and don't use gas. They are better for the environment because they don't produce harmful emissions.
Electric vehicles (EVs) are cars that run entirely on electricity, using batteries instead of gasoline or diesel engines. They are known for being environmentally friendly and producing zero tailpipe emissions.
"The OEMs in particular are focusing in on three areas. One is powertrain with electric and that that shows kind of evolved."
OEMs are the companies that make cars and car parts. For example, Ford is an OEM because they build their own vehicles.
OEM stands for Original Equipment Manufacturer, referring to companies that produce parts and equipment that may be marketed by another manufacturer. In the automotive context, OEMs are the car manufacturers themselves, like Ford or Toyota.
"One is powertrain with electric and that that shows kind of evolved. People have figured out who their partnerships and how they're approaching it."
The powertrain is what makes a car move. It includes the engine and other parts that help the car go forward, like the transmission.
The powertrain is the component of a vehicle that generates power and delivers it to the road. It includes the engine, transmission, and drivetrain. In electric vehicles, the powertrain consists of electric motors and batteries.
"And then the third is autonomous. And what you see at the show, but also you see in the industry is no individual company has the capabilities in-house or the capital."
Autonomous means self-driving. These are cars that can drive on their own without needing someone to control them.
Autonomous refers to vehicles that can drive themselves without human intervention, using a combination of sensors, cameras, and artificial intelligence to navigate and make decisions on the road.
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Welcome to Daily Drive for Tuesday, January 13th, 2026.
I'm Kellan Walker in Las Vegas, today on the show.
Honda dealers are calling on the automaker to end its partnership with Sony, calling the
Affila electric vehicle an albatross.
General Motors is still evaluating plug-in hybrids for the U.S. market, though CEO Mary
Bara says EVs remain the long-term focus.
And U.S. new vehicle inventory holds steady to end 2025.
Plus, PWC's U.S. automotive industry leader CJ Finn talks about separating hype from reality
at CES.
That will be a very interesting play over the next three or four years.
Who are the right partners to otherwise decide to engage with?
Let's run through all the news you need to know to keep up in the auto industry.
Honda dealers are calling on the automaker to end its partnership with Sony.
The joint venture's Affila electric vehicle is set to start deliveries in California later
this year at over $90,000.
It bypasses franchised dealerships entirely through a direct sales model.
Bill Feinstein is chairman of Honda's dealer advisory board.
He calls the venture an albatross, urging Honda to cut losses before it drains more
resources.
The California New Car Dealers Association has sued, claiming the strategy violates state
franchise laws.
Dealers' frustration intensified after Honda's U.S. sales grew just half a percent last year.
They say every dollar spent on Affila is one not invested in core Honda and Acura products.
General Motors is still evaluating plug-in hybrids for the U.S. market.
Although CEO Mary Barra says electric vehicles remain the company's long-term focus.
Speaking at the Automotive Press Association, Barra confirmed GM plans to offer some plug-in
hybrids previously targeted for 2027 but did not specify which vehicles or segments would
get the technology.
We are evaluating plug-in hybrids.
We have plans to do some as that we've announced in the past.
The other thing that's I think a really great question when you look at what will the regulatory
environment be beyond 28.
In the past, plug-ins were the only hybrids that actually counted toward the regulatory
perception.
Plug-in hybrids made up just 1.8 percent of the market last year compared to 8.1 percent
for full EVs.
And U.S. new vehicle inventory dropped to 2.92 million units in December representing
a 71-day supply.
That's down from the prior month and holding near the 3 million mark.
The industry has maintained for nearly two years and well below the 4 million that was
typical before the pandemic.
Among specific segments, EVs had the highest supply at 119 days.
Down from 126 the previous month.
Sedans were leanest at 60 days.
Toyota continues leading the pack with the tightest inventory at just 26 days.
Joining me now to talk more about it is our own Larry Velikwet who wrote the story for
us at Automotive News.
Larry, thanks for joining me again on Daily Drive.
Cal, it's always great to be here.
All right, Larry Legend.
So inventory has been hovering around 3 million for nearly two years now.
What's driving this discipline and what do you expect it to hold through 2026?
So what's going on, I think, is that when we came out of the pandemic, automakers and
dealers both realized that if they held their inventories into a more manageable level,
they wouldn't be paying floor plan expenses, especially with interest rates up.
It really makes the entire operation of this industry on the retail level more profitable
for everybody.
So I'd like to think that you're seeing that discipline kind of spread across the
industry that if you remember during the pandemic, everybody was saying, oh, you know,
this is, we figured it out.
This is the way to do it.
Now, it's gone up about a million units from where it was during the pandemic.
But I think we found this level place where everybody can make the, you know,
where we can maximize profitability, both for automakers and for their retailers.
Now, EV inventory is sitting at 119 days compared to just 57 for hybrids.
What does that gap tell us about where consumer demand actually is right now?
It tells us a couple of things.
It tells us that the sales rate for EVs has declined precipitously
because automakers are not putting a whole lot more EVs into or onto dealer
lots right now by the same token that they are pushing hybrids and that those
hybrids remain in demand.
So I think what you're seeing is a reflection of a rebalancing of inventory
levels at the dealership level to better match consumer demand.
Those days supply numbers while they're tricky.
They're a reflection of what the sell rate is in that given month when the
sales rate for say EVs in this instance drops down.
It's not that automakers have dumped a bunch more EVs on dealer lots.
It's just that they're selling slower and that means higher
carrying costs for dealers.
So you're going to see those numbers kind of slowly move down.
It's not because automakers are pushing more onto the lots or their
sales are picking up.
It's just a reflection of the sales rate.
Perfect.
Larry, thank you so much for joining me.
Thank you, Kel.
Always great to be here.
You can read Larry Velikwet's reporting and find more details on all
those stories at AutoNews.com.
Coming up next, PWC's US automotive industry leader, CJ Finn, discusses
what he saw at CES last week, including how to separate hype from
reality when it comes to AI and autonomous driving.
That's next on Daily Drive.
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Welcome back to Daily Drive.
I'm Kellen Walker.
CES 2026 was dominated by AI announcements and demonstrations, but
separating genuine innovation from overhyped promises remains a
challenge for automakers shopping for technology partners.
CJ Finn is PWC's US automotive industry leader.
He spoke with Automotive News executive producer, Jake Neer, on the CES
show floor about what automakers are prioritizing, how to identify
real technology versus hype and whether Ford and GM's eyes off driving
promises for 2028 are achievable.
CJ Finn, welcome to Daily Drive.
I appreciate you having me.
It's the venue is great.
Yeah.
Yeah.
So what do you think?
I mean, you know, you've been to this show many times.
You have a lot of insights into what's going on here on the floor.
Give us your overall impressions of CES 2026.
It continues to be heavy technology focused in auto.
And this is continues to seem to be more and more dominated by
mobility and what's happening in vehicle.
And so that continues to be a key trend that we've seen
automotive kind of taking over CES in many ways.
A couple of things associated with that is last year, I think I was
with the podcast and we talked about how software defined vehicles was
the buzzword of the event.
And this year, it's definitely AI pretty much 85 to 90 percent of the
presentations and the interactions have AI in the title or as the buzzword
that's key in the initiative.
As you look at that, that taking over is also an indication of where
the excitement is from an investment dollar perspective for our clients.
And where the greatest opportunity is, I think in that the opportunity
still is yet to be achieved in many situations and we're still scratching
the surface on the investments there is the tangible output coming.
What do you attribute to that?
Obviously, we've seen a pullback in things like electric vehicle tech
and things like that, which makes a lot of sense because of policy
changes and so forth.
But what is there is there more to it, I guess?
I think if you look at where the automotive industry is spending
the incremental capital and so the stuff that's above and beyond just
the typical get the vehicles out, do a new launch, engage.
The OEMs in particular are focusing in on three areas.
One is powertrain with electric and that that shows kind of evolved.
People have figured out who their partnerships and how they're approaching
it. I think that's still coming, but that's kind of lost some of the excitement.
The second area is the interaction with the consumer.
And so the in vehicle technology and that's very much AI driven to make
sure the user experience and engagement is there.
And then the third is autonomous.
And what you see at the show, but also you see in the industry is no
individual company has the capabilities in-house or the capital
to be able to go attack all three areas by themselves.
And so those companies are looking for the right strategic partners
are looking to figure out where do they have the right to win
and then where do they need the assistance.
And I think some of the showcases here at CES are you're starting
to see how the different players are defining their niche and where
they have the right to win and also highlighting some of the strategic
partnerships that are becoming present in auto.
So you said that it continues to be very much a lot of autofocus here
at the same time, it feels like we're not seeing as many automakers
with big displays and things like that.
It feels at least from my perspective, like there's less of an auto presence here.
How do you square that?
Well, a couple of things.
One is while the big the big reveals or the other activities
minimal compared to what we've seen at either the auto shows of years
past or even CES in years past, the automakers and the suppliers are all here.
I think there's a level of engagement and interaction that's happening
in a B2B forum and an engagement, but they don't necessarily have
that big consumer display.
Is it fair to say they're they're doing more shopping than selling?
They're doing more shopping than selling.
Yeah. Yeah. I think that's a good that's a good tag associated
with what what you see and and they're educating themselves
in terms of the pace of change and the technology innovations.
Everybody is looking to figure out like where where are other people
playing and what are those niches that they have a definitive need?
And where are some of the solutions that are that are available?
And also, like, where are competitors playing and where do we need to catch up?
So putting yourself in the shoes of an automaker shopping here, of course,
everyone's going to be trying to put on a big show for their technology.
And there's always hype here.
How do you separate the hype from the what's what's real?
In order to do that, you got to go more than three questions
deep with some of the people who are presenting and really get into understanding
the the technology and the funding of where their funding is coming from.
How big of a play do they are they making?
If it's a niche, you're looking at an R&D spend
and the funding doesn't necessarily matter.
If they're the larger players, it's the cost to get to where we need to get
to across the powertrain, autonomous and customer experience.
Significant investment spend.
And so you want to make sure that you have a well-funded, well-funded partner.
And so that's a matter of doing the research.
In terms of the engagement and the interactions of the individual booze,
it is fun to see like over a thousand startups here
and where they're solving their individual niche.
Sometimes that's an age activity that there's something unique
from a technology perspective to handle an age item or a disability
or some other unique characterization amongst the consumer base
and the technology to go try and solve or help the OEMs or suppliers attack that market.
And then you have the very broader players and something
that is very inclusive of auto, but beyond auto,
is you have a number of the large players that have a fight for
the different ecosystems where they want to control
the user and consumer engagement at the home, in the car and at work
and seeing the strategies associated with those larger players
has also been pretty interesting at the show.
Can you give me some examples of things that you might see that fall under the hype category
and others that fall under the, well, there's a real future for this?
I think the if I stay to autonomous,
the pace of change of getting to AI to where we're getting to where it's 99% safe.
But man, like 99% is not 99.999 or 100%.
So while still maybe safer than a consumer in many situations,
like solving that last 1% is really hard and really expensive.
I think there's slight level of hype,
but seeing some of these startups working to solve those niches
of like the almost infinite number of user cases,
but a predefined level of user cases that are on the edge of activity.
I think that's real and you're going to start seeing some substantive
improvements of Gus going from level two plus to level four
in a in a shorter time horizon.
And I think a year or two ago there was a like,
are we ever going to get there?
Like, are we ever going to be able to solve that?
And I think the excitement I had from this show is like,
there's enough brainpower going after it.
I think the there's reality on what AI can do there.
So it sort of falls in both buckets in that case,
which makes it even more complicated to figure out without it without a doubt.
Yeah, without a doubt.
And unfortunately, like you're right.
Like on people's natural indication is everything's really, really exciting.
But you don't realize it's hype until it's it's too late
and you've gone too far down the path.
We talk so much about how hard it is to solve that last 1%.
You know, on our podcast shift, this is a through line we hear all the time
is it's just really hard.
One thing maybe we don't talk about is how expensive it is.
I'm curious, you know, especially considering how many people
are working on specific parts of that problem.
Is there is that is that a huge barrier in, you know, that you
I guess how many people do you need to get in your supply chain
or your, you know, partnership wagon to get that solved?
I the challenge is you need the right handful.
But it's got to be the right handful.
And as an OEM, you've got two choices.
And from when it comes to autonomous, either you truly believe
that autonomous will substantively level four will substantively change the game
where the market then looks like there's only a handful of players
and it looks more like this the cell phone market, at which point in time,
you're all in with any incremental excess capital because the stakes are just so high.
Automotive hasn't historically been like that.
Automotive has been much more of a fast follower type activity
and everybody's kind of we can have dozens of players
all with between three and 15 percent, 20 percent market share
in a particular area.
And sometimes that true innovation was just too expensive
and it was much cheaper to be the fast follower.
If you believe in that second bucket, you're not going all in on autonomous
and you're more focused in on that user experience and the user engagement.
I think that will be a very interesting play over the next three or four years.
Who are the right partners to otherwise decide to engage with?
You have to choose some of the bigger players,
and then you have to recognize where those limitations are
and then start spending R&D money to help solve some of those niches.
I got to ask you about the biggest auto news that we've heard so far here
at the at CES, at least in my estimation,
is from an automaker that doesn't have a booth here.
Ford saying yesterday that they are going to be offering
hands off, eyes off, driving.
And then this is following GM saying that I believe by 2028
they're going to be offering a similar thing.
You know, what's your reaction to that?
And and is it achievable?
I think it's achievable, but I'll recognize that there's
there is also a podcast out there from me about 10 years ago
when my daughter was four, she's now 14 and a half.
And I made the statement of like, yes, it's real.
And my daughter will never have to learn how to drive.
And that's been played back to me across a number of automotive executives.
And she starts drivers that in four months.
And yes, yes, she she will learn how to drive.
And compared to some of her peer group,
she's looking forward to it immensely, no different than than than I did.
The that race, though, on an overall basis across the industry
to get to that eyes off, hands off mood.
It's what technology in the vehicle do you need?
Is there adaptability to that the hardware that you have
so that as we continue to make improvements,
you're able to iterate that vehicle crucial also like that's the key
because that's where the productivity improvements change for the consumer.
And what they're then going to be willing to pay for.
Like, well, I'm not necessarily the average consumer,
given the number of vehicles compared to drivers that I have in my house,
or I have five vehicles for two drivers, I'm very vested and I'm willing.
I'm not so sure I'm willing to pay for electric versus ice.
But for me, not to have to worry about putting my hands on the vehicle
and being able to go do other things while in the vehicle as a mode of
transportation or my two kids not driving yet,
being able to have them be driven around and not have to worry about it.
And so I'm not the Uber driver anymore.
I'm willing to pay an extreme premium for that,
because that gives me time back in my day.
And so from a strategy perspective and the announcements that are coming out,
you got to set the milestones and that's the fight for the consumer
because that's what people are going to be willing to pay for.
I've been so engaged in this conversation.
I sort of left maybe one of the best pieces of this for last.
PWC just released your industry outlook study.
Give us the overview, talk about what it found.
Yeah, so from an outlook perspective,
it we've we've highlighted a number of those activities where the investment
dollars are going and so those investment dollars reiterating power
train customer experience and autonomous and making acknowledging
that you need the partnerships to otherwise engage.
We also talk about like at some point in time from a spend perspective
to the corresponding return consolidations going to need to take place.
Is that 26?
Probably not, but not too far away compared to 26
is where I anticipate seeing a level of consolidation.
The last item that we highlighted in the survey,
but also we see here on display is investment in both supply chain,
making sure we have supply chain stability and then relooking
at the productivity on the shop floor.
And how do you accelerate design time and also increase efficiency in manufacturing?
So those back office activities and robotics has been on display here.
And I think it's still early stages of their hype machine.
But I think robotics right now is the manifestation of AI
coming into hardware on the on the shop floor.
That the humanoids gather all the headlines and the attention.
But there's a lot of work that's being done with things that don't look humanoid,
but still qualify as robotics.
True productivity is occurring on a daily basis there.
And I think you're going to see a fair bit of investment
in increased productivity on the on the manufacturing side.
I guess in the taking this full circle,
going back to the hype versus reality question with humanoid robots,
that's been getting so much attention,
partially, I think, because it's the most visually interesting thing here.
It's pretty. It's pretty cool to look at, right?
And I think several have said,
like it's really hard to visualize what what is AI?
Because a lot of that is software.
Well, with the robots, you kind of see that kind of come come to life.
Hype versus reality.
Man, the humanoid robots capture a lot of hype right now.
I think that I think there's a lot of reality there.
It's just probably a little bit further further away.
In terms of hype cycle,
I think we're still early days on the the robotic hype cycle.
Got it. CJ Finn is PWC's US auto leader.
CJ, it was such a great
such a great opportunity to talk to you here today.
Thanks so much. Appreciate the time.
Thanks, everybody.
That's Daily Drive for today.
I'm Kellan Walker.
Thanks to our own Urvash Karkaria,
Lindsey Van Hulley and Larry Velaquette
for their reporting for today's podcast.
You can get the latest news on tech and innovation,
retail and everything happening in the auto industry
at autonews.com.
Come back tomorrow for a look at a new poll
on political attitudes toward EVs,
which might be softening to begin 2026.
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