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.

Nissan shares plunged on Wednesday as reports said the struggling Japanese carmaker was walking away from merger talks with rival Honda . The Nikkei business daily and other local media earlier said Honda had proposed making Nissan its subsidiary,