Japan's Honda and Nissan said Monday they had embarked on formal merger talks that would create the third-largest car manufacturer globally with sales of as much as $191.4 billion and more than $19 billion profit.

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

Honda, Nissan, and Mitsubishi are joining forces to operate together under a single holding company, in a bid to stave off fierce competition around the world.