Honda and Nissan have decided to join forces to make electric cars and smart technology.
The bosses of Nissan and Honda told a press conference in Tokyo that they are looking into areas where the two companies can collaborate. They're still figuring out the partnership will work, but the plan is to make core techologies together while the companies retain unique products.
The head of Nissan, Makoto Uchida, said they need to be quick in coming up with technology solutions to make cars for today's needs. "We don't have time," he explained. "It is significant that we have reached this agreement based on a mutual understanding that Honda and Nissan face common challenges."
Toshihiro Mibe, the head of Honda, thinks the two companies have a lot in common and working together will will help them face tough rivals in the sector. Car makers all over the world are switching to electric cars because they're better for the planet compared to petrol.
Japanese car manufacturers like Toyota and Nissan have found themselves lagging behind the likes of America's Tesla and China's BYD in the race to build electric vehicles (EVs). This is largely because their focus has traditionally been on petrol engine vehicles.
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Toyota, the biggest car maker in the world, has often said that we're not quite ready to fully switch to EVs yet because the infrastructure isn't in place to charge them. So, instead, they've focused on making hybrid cars, which use both petrol and electric power.
But now Toyota are also planning to really push their production of all-electric cars over the next few years. Nissan is actually doing pretty well in the drive to produce EVs compared to other Japanese car makers. That's partly because they were one of the first ones to release an EV.
Their Nissan Leaf model, which you can see whizzing around roads today, has been on sale since late 2010. Both Nissan and Honda saw their stock prices go up on Thursday when news started to spread about their possible agreement.
It seems investors welcome the agreement to work together because their shares kept going up on Friday too, with Nissan's ending 3.2% higher and Honda's increasing by 1.7%. However, it was only after trading had finished in Tokyo that the deal was officially announced.
Both companies made it clear that, for now, this agreement doesn't mean they'll swap ownership of any stocks. But, they might consider it later down the line. "How we can raise our competitiveness is what we are determined to pursue," Uchida said.
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