Nissan and Honda dropped a bombshell today, December 23, 2024, announcing that they’ve started official talks to merge. If this pushes through, it’ll make them the world’s third-largest automaker by sales.

There’s also buzz that Mitsubishi might jump in on the deal. If that happens, the new group would cement its spot behind Toyota and Volkswagen as the biggest auto manufacturers on the planet. Honda’s expected to take the reins, with most of the top execs likely coming from their camp.

Both Nissan and Honda are feeling the heat as EV giants like Tesla in the U.S. and BYD in China continue to dominate. The pressure’s been mounting, and this merger could be their way to stay in the game.

The announcement gave Nissan’s shares a much-needed boost. Experts say this potential tie-up is a response to Nissan’s financial struggles and the shake-up of their long-standing partnership with Renault. The company’s been having a rough time lately—poor sales, outdated cars, and a shrinking presence at home have all been dragging it down.

Recently, Nissan revealed plans to cut 9,000 jobs and slash its global production capacity by 20%. Peter Wells, a professor at Cardiff Business School’s Centre for Automotive Industry Research, didn’t mince words when he spoke to CNBC’s Street Signs Europe last week. “There are so many warning signs, so many red flags around Nissan at the moment that something had to happen. Whether this is the answer is another question,” he said.

This potential merger could change the game for Honda, Nissan, and even Mitsubishi if they join. It’s a chance to pool resources, streamline production, and finally catch up in the EV race. But it’s not all smooth sailing. Integrating operations and navigating the cultural and strategic differences between the brands won’t be easy. Plus, Mitsubishi comes with its own baggage, which could complicate things further.

Still, this is a bold move at a time when the auto industry is undergoing massive changes. If they play their cards right, this mega-merger could reshape the global automotive landscape. For now, though, all eyes are on Honda, Nissan, and Mitsubishi to see if they can make it happen.