Honda's U.S.-listed shares popped Monday morning after the Japanese automaker and Nissan announced plans to merge in 2026.

Tesla stock rose early Tuesday, adding to recent gains even as the auto industry prepares for its latest shake-up. Tesla stock was up 1.1% to $435.58 in premarket trading. Shares rose 2.3% on Monday.

The proposed deal aims to unify operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, according to Honda's president, Toshihiro Mibe. If finalized, the merger would position the combined entity to better compete with market leaders Toyota and Volkswagen.