Speculation about a potential Honda and Nissan merger began earlier this month, and the two companies confirmed the official start of talks Monday.

This merger could create the world’s third-largest automaker, with combined resources to dominate the EV market. Honda and Nissan hope to outpace rising Chinese brands like BYD and Nio.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.

Japanese automakers Honda and Nissan will attempt to merge and create the world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels

Japan’s second- and third-largest automakers hope the $50 billion deal would help them catch up with Tesla and China’s BYD in electric vehicles and advanced software.

BENGALURU: Honda and Nissan expect big benefits from their potential merger to create the world’s third-largest auto group but intense competition in the segment raises questions about whether they can make it work in time.