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.

Rumors have it that Japan’s Ministry of Economy, Trade and Industry helped to influence the deal to avoid Foxconn's takeover of Nissan after METI endorsed the merger. This set off alarms for scorned ex-Nissan CEO Carlos Ghosn who is watching the unknown unfold from the sidelines.

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.

Honda Motor Co. and Nissan Motor Co. plan to merge under a holding company with the top executives chosen by Honda in a historical reshuffling of Japan’s auto industry meant to keep the country’s second- and third-largest players competitive amid a global onslaught of new competitors and technologies.

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.

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

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.

Japanese auto giants Honda and Nissan are in preliminary merger talks, according to media reports Wednesday, adding that a tie-up would aim to help them better compete against Tesla and Chinese electric vehicle makers.

Honda and Nissan have officially confirmed the rumors that they're pursuing a merger. Both would still operate under their brands but with a new joint holding company as parent. If Nissan-controlled Mitsubishi also came on board,