TOKYO, March 15 Reuters Nissan Motor is considering seeking a business partnership with Honda Motor on key components for electric vehicles to cut production costs, three people familiar with the matter at Nissan said.

The potential partnership with domestic rival Honda will help Nissan gain scale, which is crucial for Japanese automakers as they face heavy competition from China39;s BYD, Tesla and other electric vehicle makers.

The sources, who declined to be identified as the matter is still private, said that Nissan and Honda are yet to formally start discussions, with the scope of the partnership undecided.

Another source said the idea of collaboration emerged between the chief executives of the companies.

Nissan is considering partnering with Honda on key EV parts, as well kei car boxy vehicles that are smaller and less powerful than regular cars, primarily made for the domestic market.

The partnership could extend to overseas businesses, but that would affect Honda39;s existing collaboration with General Motors, according to two of the sources.

Nissan39;s pursuit of a partnership was first reported by TV Tokyo. A Nissan spokesperson declined to comment. A Honda spokesperson said there was nothing the company could say.

A source at Honda said a potential partnership with Nissan is one of many possibilities that the company is considering, but there are many agenda that need to be sorted out for it to proceed with a new tieup.

Honda is aiming to increase its…