On Monday (24.12.24), the two Japanese automobile manufacturers announced they have signed a memorandum of understanding for the merger and further decision making will be completed in January.

An official agreement will be made by June with the aim to finalise everything by August 2026.

As well as securing their financial future with the merger, Honda insist it's vital for the two firms to "overcome challenging environmental shifts" the industry is facing.

Honda president Toshihiro Mibe said: “Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing."

Honda and Nissan have been talking about coming together for a while now, as both firms face stiff competition in the EV world with the likes of Tesla and Toyota leading the charge.

They confirmed they were considering forming a new holding company in December.

What's more, Bloomberg reported this month that Mitsubishi Motors, which has been one-third (34 per cent) owned by Nissan and is included in the Renault–Nissan–Mitsubishi Alliance, could be involved as well.

Honda and Nissan teased their plans to collaborate on the development of EV technology earlier this year, calling it a "strategic partnership".

A statement read: "As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths.

“If there are any updates, we will inform our stakeholders at the appropriate time.”

Honda has already vowed to make all the cars it sells electric or hydrogen-powered by 2040.