Honda and Nissan signed a memorandum of understanding to enter formal merger discussions. The two Japanese automakers would be owned by a joint company under the deal, with the larger Honda nominating a majority of the board. Mitsubishi, which has a partnership with Nissan, will decide by the end of January if it wants to participate. (The Logic)

Talking point: A merger could create the world’s third biggest automaker, potentially surpassing Hyundai, Ford, General Motors and Stellantis by volume. Otherwise, each automaker risks losing relevance. Honda and Nissan have fallen in cleantech ratings as Chinese EV makers become more dominant. While the Renault-Nissan-Mitsubishi alliance once had a respectable share of global sales, that partnership has weakened, and Foxconn has flirted with the idea of buying Renault’s Nissan shares. Honda and Nissan said Monday that the joint company could keep contributing to “Japan’s industrial base” by combining strengths like Nissan’s EVs and Honda’s hybrids and motorcycles.