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Honda and Nissan have acknowledged the possibility of a merger, driving an active trading session in Tokyo for the Japanese auto makers.

Nissan on Wednesday said in a statement to Investopedia that a merger and other collaborations with Honda are possible, confirming earlier reports to the same effect from The Wall Street Journal and other publications that indicate the possibility of a major shakeup for the automotive industries in both Japan and globally .

Nissan ( NSANY ) shares rose nearly 24% in Japan on Wednesday, while Honda ( HMC ) shares fell about 3%. The Tokyo Stock Exchange initially planned to halt trading of Nissan shares until the reports could be confirmed, but reversed course by the time the market opened, Nikkei reported.

Another manufacturer is also reportedly eying Nissan. Taiwan's Foxconn, known for making iPhones, has asked Nissan about acquiring a stake, Bloomberg and other outlets reported.

The two Japanese car manufacturers believe combining forces could help them gain ground in the competitive world of electrical vehicle manufacturing, Nikkei reported. Should the deal progress, both manufacturers envision investing equity in a holding company for a combined entity, the outlet noted. A merger may also pull in Mitsubishi Motors, which is partially backed by Nissan, according to Nikkei.

UBS analysts on Tuesday called a potential deal a "sign of what we believe is much needed consolidation and/or industry capital efficiency to remain competitive in a rapidly changing industry. We believe automakers will continue to look to tie-ups ... which seem more likely than outright mergers."

The three companies have a history of collaborating. Honda and Nissan announced this spring that they would work together in parts of the EV business, and noted in August that Mitsubishi was joining the effort.

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