Japanese automakers Honda and Nissan have announced plans to join forces, forming the world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.

The two companies signed a memorandum of understanding on Monday and said Nissan alliance member Mitsubishi Motors also had agreed to join the talks on integrating their businesses. Automakers in Japan have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.