Honda did not respond to Business Insider's request for comment. Honda CEO: Merger is not a Nissan rescue. Honda's shares had initially fallen when news first broke of the merger

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

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.

Japan’s second- and third-largest automakers hope the $50 billion deal would help them catch up with Tesla and China’s BYD in electric vehicles and advanced software.

Both companies are grappling with intense global competition in the electric vehicle market from the likes of Tesla and China’s BYD.

The Japanese car giants say the proposed merger would give them the scale to better compete on the global market.

Nissan and Honda have announced plans to merge by 2026 in a seismic shift for the Japanese auto industry. The two carmakers signed a memorandum of understanding that allows them to continue discussions about integration via a joint holding company,

Japanese automakers Honda and Nissan will attempt to merge and create the world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels

Speed limits are usually intended to prevent drivers from going too fast. Occasionally, though, they warn against bumbling along the road too slowly. Honda Motor boss Toshihiro Mibe and his Nissan Motor counterpart Makoto Uchida will need reminding of this if they don’t soon shift out of low gear for the tie-up they proposed on Monday.