Nissan and Honda plan to enter merger talks as competition for electric vehicles increases

Honda Motor and Nissan Motor are reportedly in the process of merging their companies and are expected to begin negotiations soon, according to Japanese media.

The news, first reported by the Nikkei newspaper on Tuesday, comes as both auto giants struggle to compete with the largest global electric vehicle (EV) makers, including Tesla and Chinese automaker BYD.

The merger plans have not been confirmed by either company. On Tuesday, both companies released identical statements questioning the reports.

“As announced in March of this year, Honda and Nissan are exploring various opportunities for future collaboration, leveraging each other’s strengths,” the companies said in separate statements.

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Nissan and Honda are reportedly in talks to merge their companies. (Getty Images/Getty Images)

Honda and Nissan are the second and third largest automakers in Japan, respectively, with Toyota both at the top.

Honda and Nissan’s respective market capitalizations are approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion), respectively.

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Honda and Nissan are the second and third largest automakers in Japan, respectively, with Toyota both at the top. (Kyodo via Reuters Connect / Reuters Photos)

In November, Nissan cut its offering global workforce by 9,000 led to a series of massive layoffs, reducing global production capacity by 20%.

At the time, the company said it was “in a serious situation” and laid out a plan for “healthy growth.” The goals included reducing fixed costs by 300 billion yen (about $1.9 billion) and variable costs by 100 billion yen (about $649 million).

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Honda and Nissan’s respective market capitalizations are approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion), respectively. (Ty Wright/Bloomberg via Getty Images / Getty Images)

“The company is implementing various measures to reduce selling, general and administrative expenses, reduce cost of goods sold, rationalize its asset portfolio and prioritize capital expenditures and investments in research and development,” Nissan said in a statement at the time.

Reuters and FOX Business’s Elizabeth Pritchett contributed to this report.