Japanese automakers Honda and Nissan will attempt to merge and create the world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.

Nissan and Honda agreed to consider a merger and set up a joint holding company, which would create the world's third-largest automaker.

Both companies are grappling with intense global competition in the electric vehicle market from the likes of Tesla and China’s BYD.