According to sources, in an effort to reduce production costs, Nissan Motor is thinking about partnering with Honda Motor on essential parts for electric cars.

A potential alliance between Nissan and its domestic rival Honda may enable Nissan to produce EVs at a lower cost per unit, which is important for Japanese automakers given the fierce competition from BYD of China, Tesla, and other electric car manufacturers. The sources, who wished to remain anonymous due to the ongoing confidentiality of the situation, stated that Nissan and Honda had not yet officially begun talks and had not decided on the parameters of their alliance.

The heads of the two automakers will hold a combined press conference in Tokyo at 3:30 p.m. (0630 GMT). A second report claims that the CEOs of the companies came up with the idea of collaborating.

Nissan and Honda are thinking of working together on important EV components as well as "kei cars," which are boxy, smaller, and less powerful than normal cars that are mostly produced for the home market. Two of the sources said that the cooperation might grow to include international companies, but that would have an impact on Honda's current joint venture with General Motors.

TV Tokyo initially reported about Nissan's alliance pursuits. According to the publication Nikkei, possible concrete actions include developing a unified platform, introducing a common powertrain, and collaborating on procurement.

One of the many options Honda is exploring, according to a source there, is a possible alliance with Nissan. However, before moving forward with a new alliance, a number of issues need to be resolved.

By 2040, Honda wants to reach a 100% sales ratio for fuel cell and electric vehicles.