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.

Currently, Honda is an independent OEM, albeit one with strong links to General Motors. Meanwhile, Nissan currently forms one part of an alliance, together with France's Renault and the also-Japanese Mitsubishi. But the Renault-Nissan alliance has not been entirely smooth.

Honda and Nissan have announced plans to merge as the Japanese automakers struggle with competition from rival brands in the electric vehicle market. The two companies confirmed on Monday that they had signed a memorandum of understanding that would create the third largest car maker by sales,