Nissan and Honda are considering battery electric vehicle (BEV) cooperation, seeing opportunity to maximise economy of scale and increase competitiveness in zero emissions vehicles.

The news came as the two companies were reportedly considering making substantial capacity reduction in China as they struggle to compete.

According to local reports, citing an unnamed source ‘close to the companies’, Nissan and Honda have begun early stage discussions about jointly procuring and sharing major BEV components in Japan to help them reduce cost, although the outcome remained highly uncertain.

Any resulting agreement could potentially form the basis of a strong domestic alliance which could help the pair compete better in the fast evolving global BEV market.

As BEVs and other zero emission vehicles set to replace traditional internal combustion engine (ICE) vehicles in major markets in the next 10-15 years, vehicle manufacturers need to invest heavily in this change to remain competitive and a growing number of Chinese manufacturers and Tesla have already established strong early leads.

Nissan has joint BEV projects with Alliance partners Renault and Mitsubishi. It has agreed to invest EUR600m in Renault’s new BEV company Ampere while the next battery powered Micra small car will also share its platform with the upcoming electric Renault 5 with both models to be built in the same factory in Northern France.

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Alliance partners last year agreed to a more flexible working relationship, allowing them to establish deals with outside companies.

Honda has separate BEV development projects with Sony and General Motors.