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.

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 new entity will have a combined market cap of $50 billion. It is expected to have a revenue of $191 billion and profit of $19 billion. Mitsubishi Motors Corp., a smaller player which has Nissan as a majority shareholder,