Nissan Motor is reportedly considering approaching Honda Motor for a partnership on key components for electric vehicles (EVs) to reduce production costs.

As a Japanese carmaker, Nissan needs help from domestic rival Honda to compete with Elon Musk's Tesla, China's BYD, and other EV carmakers.

Potential Partnership Between Nissan and Honda

Citing three people familiar with the matter at Nissan, Reuters reported that the scope of a possible tie-up between Nissan and Honda is still unclear as the two companies have yet to start discussions formally. Another source noted that the idea of partnership emerged between the two companies' chief executives.

In addition to potential partnerships on EV parts, Nissan is also considering teaming up with Honda on a "kei car" project. Kei cars are boxy, smaller, and less powerful automobiles that are mostly made for the domestic market. 

Based on the two sources, the collaboration can expand to international businesses. However, this could impact Honda's current deal with General Motors.

Read Also: Auto Industry Reassesses Strategies Amid Declining EV Hype

Pursuit of a Partnership by Nissan

TV Tokyo first broke the news that Nissan was looking for a collaboration, but there has yet to be an official confirmation from Nissan or Honda.

According to an insider at Honda, the automaker is seriously considering several prospective partnerships, including one with Nissan. However, several concerns must be resolved before a new tie-up can proceed.

Reuters reported that Nissan has already cooperated with Renault on EVs, mainly in Europe. On the other hand, Honda targets to increase the proportion of its electric and fuel cell vehicle sales to 100% by 2040.

Read More: Fisker's Stock Plunges Over 40% After EV Maker Reportedly Explores Bankruptcy