Honda’s CEO struggles to explain why the merger is happening, analysts remain skeptical, and Foxconn waits in the wings.

The Honda-Nissan-Mitsubishi merger looks increasingly likely to happen. The tie-up could save Nissan, which is experiencing severe financial troubles. Creating a giant Japanese automotive holding company would create an entity that’s more globally competitive than the companies’ current positions.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.

The potential deal would create a $50 billion company that would be the world’s third-largest automaker by sales volume, behind only Toyota and VW Group.

Speculation about a potential Honda and Nissan merger began earlier this month, and the two companies confirmed the official start of talks Monday.

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.

"It's not a pragmatic deal because frankly, the synergies between the two companies are difficult to find," Ghosn told Bloomberg.

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.

Japanese automakers Nissan and Honda have announced plans for a merger that would catapult them to a top position in an industry that's in flux as it transitions away from its reliance on fossil fuels.