Japanese automakers Honda and Nissan have announced plans to join forces, forming world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.

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.

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.

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.

Nissan and Honda are reportedly in talks to merge.Nissan's lack of hybrids has affected the success of popular models like the Rogue.Honda has seen big sales increases for popular models with hybrid offerings.

Japanese automakers Nissan and Honda have announced plans for a merger that would catapult them to a top position in an industry that's in flux as it transitions away from its reliance on fossil fuels.

Together, Honda and Nissan would also pose more of a threat to Toyota Motor Corp., which is the world’s biggest automaker followed by Volkswagen AG.

Toyota Motor plans to increase its return on equity to compete globally, reports said Wednesday. Earlier this week, Honda Motor and Nissan confirmed they are in talks about a possible merger at time of auto industry upheaval.

Honda's acquisition of Nissan could strengthen the two struggling brands to better compete with China's BYD Co. in the global auto market. Honda's planned acquisition of Nissan would combine their more than 6 million global sales in 2024,

Analysts questioned the timing of the Honda-Nissan potential deal amid intense competition from Chinese rivals, reported the news agency Reuters.