Both companies are grappling with intense global competition in the electric vehicle market from the likes of Tesla and China’s BYD.

Japanese automakers Nissan and Honda have announced plans to work toward a merger that would catapult them to a top position in an industry in the midst of tectonic shifts as it transitions away from its reliance on fossil fuels.

Nissan and Honda agreed to consider a merger and set up a joint holding company, which would create the world's third-largest automaker.