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Sony Group Corp. said it would create a car unit and explore entering the electric-vehicle market, in another sign of how the electronics and car businesses are overlapping.

At the CES technology conference in Las Vegas, Sony showed off a prototype seven-seat electric sport-utility vehicle with all-wheel drive. Sony shares closed up 3.7% in Tokyo on Wednesday after the news.

Sony first displayed an EV sedan at CES two years ago, but it said at the time it didn’t necessarily plan to sell a Sony car. The initial prototype served to show off Sony’s image sensors, which can be a key part of autonomous driving systems.

The new Las Vegas announcement suggested Sony does plan to sell vehicles under its own brand rather than merely supplying its technology to other car makers. The company said it would establish a company called Sony Mobility Inc. in the spring.

The EV market is getting increasingly crowded with Tesla Inc. leading the pack of EV-only companies competing against traditional car makers, almost all of which have announced ambitious plans to expand their EV offerings.

In an interview in September 2020, Sony Chief Executive Kenichiro Yoshida expressed strong interest in getting into the vehicle market. He said he had felt for years that the maker of PlayStation videogame consoles and other electronics should “make something that moves."

“We believe Sony is well-positioned as a creative entertainment company to redefine mobility," Mr. Yoshida said at the conference Tuesday.

Electric vehicles have fewer moving parts than those running on gasoline and rely more on software controls, making it easier for companies that specialize in electronics to get into the business. Apple Inc. has explored entering the EV market for years, although it has never released details about its plans.

Sony is a major Apple supplier because of its image-sensing business, which makes parts used in iPhones and other smartphones.

Sony said 40 sensors were installed in its prototype. It said it eventually aimed to offer what is known as level four autonomous driving, in which the car can drive itself without human involvement under certain conditions.

Another Apple partner, contract manufacturer Foxconn Technology Group, is also making a foray into EVs. Foxconn, known for assembling Apple’s iPhones and other branded tech devices, introduced three electric-vehicle prototypes last October.

Foxconn Chairman Young Liu has said the company aims to supply three million electric vehicles annually by 2027, which he estimated would be about 10% of the global market then.

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