Tokyo, Japan – Honda Motor Co. and Nissan Motor Co. said on Monday they have agreed to begin talks on a merger that would establish a new holding company in August 2026, creating the world’s third-largest automaker group to compete with U.S. and Chinese rivals in the electric vehicle market.

Honda and Nissan, Japan’s second- and third-largest automakers by volume, respectively, aim to conclude negotiations in June, while Mitsubishi Motors Corp., Nissan’s partner, will decide by the end of January 2025 whether to join the merger, the automakers said.

Honda and Nissan will look to split hefty development costs and reduce spending on production by sharing components.

EVs are one of the most critical segments for growth as electrification reshapes the global auto industry. Honda, Nissan and other Japanese automakers have lagged behind competitors such as Tesla Inc. of the United States and China’s BYD Co.

Honda and Nissan agreed in March to launch a feasibility study on a strategic EV production partnership, including related software technology development, to cut costs and improve competitiveness.

The Honda-Nissan alliance would be the latest in a series of tie-ups among major automakers, with the group’s annual sales reaching around 8 million vehicles if those of Mitsubishi Motors are included.

Kyodo News