Honda and Nissan are negotiating a merger to compete in the electric car market

Honda and Nissan They will begin talks to merge, according to the AFP agency citing sources from the Nikkei newspaper. The objective would be to seek a union to better compete in the electric vehicle segment, both against Tesla and other manufacturers.

The two firms seek to operate under a single holding company and will soon sign a memorandum of understanding for the new entity, according to the Tokyo-based Nikkei. This same media reported that Honda and Nissan will consider incorporating Mitsubishi Motors, of which Nissan is the main shareholder, under the holding company to create one of the largest automotive groups in the world.

Honda and Nissan said in March they had agreed to explore a strategic partnership in electric vehicles and other areas. Analysts said then that the move was aimed at catching up with Chinese competitors that were ahead in electric vehicles while Japanese firms lost ground by focusing more on hybrid vehicles.

At the time, the two groups announced “a memorandum of understanding under which they will begin a feasibility study of a strategic partnership in the fields of vehicle electrification and intelligence.” And they added: “To further accelerate efforts towards carbon neutrality and zero traffic deaths, it will be essential to strengthen environmental and electrification technologies, as well as software development. The two companies have reached an understanding based on the conviction that it is necessary to combine their strengths and explore the possibility of future collaboration.

“The scope of the feasibility study includes automotive software platforms, core components related to electric vehicles and complementary products,” they said then.

However, now Honda and Nissan would go much further by exploring a merger that would leave them as one of the great global leaders in the automotive sector only behind brands such as Toyota and Volkswagen.