Honda and Nissan, two of Japan’s largest carmakers, are reportedly set to begin discussions on a potential merger as they grapple with fierce competition in the fast-evolving electric vehicle (EV) landscape

Both companies released near-identical statements confirming that they are exploring ways to deepen collaboration and would update stakeholders in due course. While neither announced merger talks directly, the reports from Japanese media outlet Nikkei suggest a significant strategic shift could be on the horizon.

Facing growing pressure from Chinese EV manufacturers and strained profit margins in their own electrification efforts, Honda and Nissan have been forging closer ties in recent months. In March this year, the companies agreed to cooperate on electric vehicle development, and by August they had extended their partnership to cover EV batteries, e-axles, and other critical technologies.

Insiders indicate that the two automakers are considering placing themselves under a single holding company, streamlining operations and potentially integrating Mitsubishi Motors—of which Nissan is the largest shareholder with a 24% stake—into the new entity. This development could reshape the global automotive landscape and stand as the sector’s biggest merger since Fiat Chrysler joined forces with PSA in 2021 to create Stellantis.

A combined Honda-Nissan operation would respond to the mounting challenges traditional carmakers face. Together, Honda and Nissan sold 7.4 million vehicles worldwide last year, yet both have seen their influence wane in China’s booming EV market. China accounted for almost 70% of global EV sales last November, where homegrown brands like BYD have soared ahead, putting established players under pressure to consolidate and pool resources for R&D, manufacturing, and supply chains.

Nissan’s recent commitments signal that the company remains determined to meet zero-emission targets in Europe and the UK, despite the market’s volatility. Plans to retool its Sunderland plant into a hub for EV production and build a third gigafactory underscore Nissan’s ambition, while Honda also has substantial interests in accelerating its own electrification strategy.

Should Honda and Nissan finalize a merger, it would mark one of the most significant industry realignments since Stellantis was formed two years ago. Stellantis’s own consolidation was partly driven by similar market pressures and cost-saving imperatives. Amid these shifting dynamics, global players including General Motors and Ford have scaled back EV investments due to weak charging infrastructure, high borrowing costs, and uncertain consumer uptake.

As the auto industry continues to change at breakneck speed, the potential Honda-Nissan merger illustrates how legacy carmakers are striving to adapt, unify forces, and stay competitive in a market that increasingly rewards scale, innovation, and rapid responsiveness to new consumer demands.