Honda Motor (HMC) and Nissan are exploring an electric vehicle (EV) partnership that will bring together two of Japan’s largest automakers at a time when many companies are scaling back their EV expansion plans amid soaring costs and slowing demand.

The two companies said Friday in a statement that they signed a memorandum of understanding to begin a feasibility study for a strategic partnership. A tie-up would help the two cut costs and achieve economies of scale at a time when Chinese EV makers like BYD (BYDDF) are coming out with cheaper offerings and Tesla (TSLA) has been offering incentives there.

"Our study criteria will be whether the synergy of the technologies and knowledge that our companies have cultivated will enable us to become industry leaders by creating new value for the automotive industry," said Honda President Toshihiro Mibe said in a statement. The feasibility study will look into "automotive software platforms, core components related to EVs, and complementary products."  “It is important to prepare for the increasing pace of transformation in mobility in the mid-to-long term, and it is significant that we have reached this agreement based on a mutual understanding that Honda and Nissan face common challenges,” Honda CEO Makoto Uchida said.

In January, Honda's joint venture with General Motors (GM) began to produce hydrogen fuel cells at a Michigan plant to reduce greenhouse gas emissions and improve mobility.

The tie-up between Honda and Nissan comes at a time than many EV makers are slowing their expansion in the space. Rivian Automotive (RIVN) is halting construction of a $5 billion factory in Georgia, Ford (F) is scaling back production of its electric F-150 Lightning truck, and Apple (AAPL) has canceled its EV plans.

Honda shares were up 2.2% at $36.03 as of about 10:00 a.m. ET Friday.