California’s auto dealers are taking aim at Sony Honda Mobility, filing a lawsuit that challenges the new Afeela electric vehicle’s direct-to-consumer sales model. The complaint, lodged in Los Angeles County Superior Court, seeks to block reservations for the Afeela 1 sedan, which is set to begin deliveries in spring 2026.
At the heart of the dispute is California’s long-established franchise system, which requires automakers to sell through independently owned dealerships rather than directly to consumers. Dealer groups argue that Sony Honda Mobility’s approach violates state law and undermines the investment Honda and Acura retailers have made over decades.
The Afeela brand is being positioned as a standalone luxury EV marque, separate from Honda and Acura, but the links between the companies are clear. The Afeela 1 is being built in Honda’s Ohio factory, and Sony Honda Mobility is a joint venture between the Japanese electronics giant and Honda. Dealers contend that this direct sales channel creates an unfair competitive advantage by leveraging Honda’s resources while bypassing the state’s franchise requirements.
California law was recently updated to close loopholes that allowed automakers to create new brands and skirt franchise rules. Under Assembly Bill 473, companies tied to existing automakers are prohibited from launching affiliated brands that compete directly with their dealer networks. Dealers maintain that Sony Honda Mobility falls under this statute and should be subject to the same restrictions as any other automaker operating in the state.
Sony Honda Mobility has opened reservations for the Afeela 1 through its website and intends to use digital storefronts and pop-up locations to connect with buyers. That model mirrors the direct-to-consumer strategies pioneered by Tesla and emulated by several startups, offering customers a streamlined online purchase without dealer involvement. Traditional retailers argue that this approach strips away consumer protections such as transparent pricing, warranty enforcement, and access to local service centers.
The Afeela 1 itself is aimed squarely at the premium EV segment. With a projected starting price near $90,000, it will feature a dual-motor all-wheel-drive system, a 91-kWh battery pack, and an estimated range of about 300 miles. Fast charging capability up to 150 kilowatts is planned, along with advanced driver-assist systems and a technology-heavy interior designed to showcase Sony’s strength in entertainment and software. Reservations began earlier this year following a splashy CES debut.
This battle is not an isolated event. California dealers have taken similar legal steps against other brands attempting direct sales, including Volkswagen’s Scout Motors project. The growing wave of litigation reflects mounting concern that traditional retail channels will be bypassed as more automakers experiment with digital-first business models.
Dealers argue that the stakes are high. They see direct sales as not only a financial threat but also an erosion of consumer choice, since franchise laws were written to prevent automakers from exerting complete control over pricing and customer experience. Supporters of the franchise system say that independent retailers provide a local point of accountability and a layer of protection that online sales cannot replace.
For Sony Honda Mobility, the lawsuit represents a major early obstacle just as the Afeela brand prepares to enter the U.S. market. A favorable ruling could open the door for other automakers with affiliated EV brands to follow a similar direct-to-consumer path. A loss could reinforce the strength of the dealer model and limit the ability of new entrants to chart their own course.
The outcome will be watched closely by automakers, dealers, and consumers alike. As the industry transitions to electrification, the debate over how cars are sold is becoming just as consequential as the vehicles themselves. The Afeela 1 is meant to showcase cutting-edge design and technology, but its launch now doubles as a test case for the future of automotive retail in California and beyond.
Photo Credit: AFEELA.