Investing.com — Honda (NYSE:) Motor and Nissan (OTC:) Motor are set to enter discussions about a potential merger, aiming to pool resources to strengthen their position in the electric vehicle market, according to Wednesday. .

The two Japanese automakers are considering the possibility of operating under a shared holding company, the report said, adding that a memorandum of understanding, which will formally begin these negotiations, is expected to be signed in soon.

Details about their respective stakes in the new proposed entity, along with other details, will be determined at a later stage, the report said.

This step represents a strategic response to the rapid evolution of the automotive industry, especially the electric vehicle segment.

By joining forces, Honda and Nissan are looking to better compete with Tesla (NASDAQ: ) and Chinese car producers, which currently have a large share of the market.

The decision to pool resources comes as automakers around the world grapple with the shift toward electric and autonomous vehicles, a trend accelerated by growing environmental concerns and technological advances.

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