If Mitsubishi Motors joins Nissan and Honda, the merger could result in a behemoth worth of about $55 billion based on the market capitalization of all three automakers.

Honda and Nissan said they had signed a memorandum of understanding and that Mitsubishi also had agreed to join the talks.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.