Japanese car manufacturers have been slow to develop EVs, particularly in comparison to Chinese competitors such as BYD Co., causing them to lose ground in the Chinese market, and leaving them vulnerable at home. Both Honda and Nissan are considering cutting production capacity in China as sales decline, while BYD earlier this month said it will introduce a series of new models and expand its dealership network in Japan. 

Read More: China’s EV Revolution Shows Grim Future for Japan Car Titans

Nissan declined to comment on the reports, while a spokesperson for Honda said the company “didn’t announce the news and is unable to comment”.

Nissan’s CEO Makoto Uchida on Wednesday said the company is “facing a tough business environment.”

Bloomberg Intelligence senior car analyst Tatsuo Yoshida said that “it seems Nissan has been pushing for the deal, which is quite understandable. However, Honda, which was approached, may be willing to take advantage of a good deal.”

“If you ask whether it is a positive or a negative, it is more difficult to find a negative in this case,” he said. 

Honda’s EV plans copped a setback last year when the company shelved plans to develop budget-priced battery-powered cars with General Motors Co. The two car manufacturers have also delayed plans to deploy self-driving taxis in central Tokyo, after GM’s Cruise unit grounded its entire US fleet after its California licence was suspended.  

Read More: Honda CEO Says Halting Plans With GM to Develop Smaller EVs