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.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.

In a bold move to counter declining sales and mounting competition from Chinese automakers, Honda, Nissan, and Mitsubishi are in discussions to form a three-way merger. If finalized, the partnership will create the world’s third-largest carmaker, trailing only Toyota and Volkswagen in annual sales.