Honda Motor Co. and Nissan Motor Co. have confirmed in a statement that discussions are ongoing to establish a new company, which is expected to be finalized by 2026.

According to a report by Mainichi JP, this move is seen as a way to create the world’s third-largest automotive group, behind Toyota and Volkswagen, to compete against American and Chinese manufacturers in the electric vehicle segment.

Honda and Nissan, the second and third largest manufacturers in Japan, aim to finalize the discussions by June.

Meanwhile, Mitsubishi Motors Corporation will decide by the end of January 2025 whether to join the new company or not.

In an effort to become more competitive in the market, Honda and Nissan have agreed to collaborate on research and development (R&D), standardize vehicle platforms, and share components across various product segments, in addition to optimizing existing production systems and facilities.