Speculation about a potential Honda and Nissan merger began earlier this month, and the two companies confirmed the official start of talks Monday.

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.

Japanese automakers Honda and Nissan have announced plans to join forces, forming world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.