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.

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

This move comes as the industry transitions away from fossil fuels and towards electric vehicles, where Japanese companies have lagged behind their rivals.