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.

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.