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.

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.

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.