Two of Japan’s prominent car manufacturers, Nissan and Honda, are said to be in initial talks regarding a possible merger, as per reports from *The Nikkei*. This bold initiative is intended to enhance their competitiveness in the swiftly evolving electric vehicle (EV) sector, where Chinese companies are making substantial inroads.

While no concrete plans have been revealed, Japanese broadcaster TBS has suggested that an official announcement concerning these discussions might occur as soon as next week. Both firms have so far refrained from commenting on the situation.

The idea of collaboration between Nissan and Honda isn’t completely new. In March, the two companies indicated their interest in exploring a strategic partnership aimed at EV development. However, as highlighted by the BBC, a complete merger between these automotive titans could have significant consequences, possibly disrupting current alliances—such as Nissan’s partnership with French carmaker Renault—and raising concerns regarding job stability.

The necessity for such a move is emphasized by the hurdles both firms are encountering in the Chinese market, which represented nearly 70% of worldwide EV sales as of November. Despite their combined global sales reaching 7.4 million vehicles in 2023, Nissan and Honda are finding it challenging to compete against economical Chinese EV manufacturers like BYD, which have been gradually diminishing their market presence.

A merger of this magnitude would not only transform Japan’s automotive sector but also indicate a considerable change in the global EV arena.