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.

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.

Japanese automakers Nissan and Honda have announced plans to work toward a merger that would catapult them to a top position in an industry in the midst of tectonic shifts as it transitions away from its reliance on fossil fuels.