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.

Honda's CEO said it was "difficult" to explain why Nissan would make a good business partner. Analysts believe that Honda's ideal partner for a merger would be a more "healthy and financially sound company.

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.

Japanese automakers Honda Motor Co. and Nissan Motor Corp. announced Monday their intention to merge by 2026 and create the world’s third-largest car-making operation by sales.

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.

The Japanese car giants will merge to create the world’s third-largest automotive group by 2026, as the two companies struggle to keep up with global competitors.

A potential merger between Honda Motor and Nissan grabbed investor attention as Honda's stocks rose on Monday. Japanese automotive titans Honda and Nissan are working on a potential merger that would create the world's third-largest automaker as the global industry races to adapt to the electric vehicle (EV) revolution.

A tie-up with Honda could help Nissan solve a big problem, car dealers said: It doesn't have any hybrids. A merger could fix that.