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.

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,

Honda's shares went up by as much 17% when local markets opened on Tuesday.