Don’t underestimate the pride of an ailing company. After signing a memorandum of understanding in late December to “consider” a merger with Honda, a source told Reuters that Nissan is backing out of the discussion.

The news that Honda Motor Company, Japan’s second-largest automaker, and Nissan Motor Company, its third-largest, are looking to merge by 2026 is an indication of an industry roiled by government demands for electrification and the ascent of Chinese automakers.