Japanese automaker Nissan may call off talks to merge with Honda, adding that Nissan board members will meet soon to finalize a decision.
The decision has raised questions about the relationship between Japan's third-largest automaker and how Nissan can survive a sales crisis without outside help.
The news of the cancellation of the merger sent shares in both companies higher, with Honda up 2% and Nissan up 1.6%, compared with a slight decline in Tokyo's Nikkei 225 index.
Last year, Japan's second-largest automaker Honda agreed in talks to merge with Nissan as a major change to face a major threat from China's BYD and other new electric vehicle companies.
However, the talks for both parties have become increasingly complicated.
Nissan's board of directors said in a statement that they would meet to call off merger talks after Honda moved to designate them as a subsidiary.
The proposal deviates from the original purpose of their discussions.
Honda, which has a market value five times greater than Nissan, has voiced concerns about the progress its rival is planning to make to revive its business.
Nissan has been hit harder than other automakers that have been shifting to EVs for years after the arrest and ouster of former Chairman Carlos Ghosn in 2018.
