Nissan is considering cooperating with Honda in the electric vehicle business, sources close to the matter said Thursday, potentially creating a powerful domestic alliance to rival industry giant Toyota.

Nissan is weighing jointly procuring some parts and sharing major components for their respective EVs to lower costs, the sources said. Discussions within Nissan are still in the early stages and Honda's stance on the tie-up remains unclear.

Automakers worldwide are grappling with higher costs for developing EVs than gasoline-powered models, translating into higher prices for all-electric cars.

The two Japanese automakers have been ramping up efforts to strengthen their respective EV businesses in recent years, but overseas rivals such as Tesla and BYD still dominate the global EV market.

Nissan has been increasing cooperation with its alliance partners Renault and Mitsubishi Motors in the area of EVs.

The next Nissan electric Micra will share the same architecture as the new Renault Five and will be built in the same plant in northern France.

Nissan has also committed to invest up to €600 million ($656.64 million) in Renault's new electric vehicle entity Ampere.

But the two firms last year reduced the scope of a years-long alliance to allow for a more agile partnership, and Renault has since signed agreements with new partners such as China's Geely.

"Under the new framework agreement of the alliance, the partners are free to make strategic decisions outside of common projects together," said a Renault spokeswoman.

Honda, traditionally reluctant to partner with other companies, has been developing EVs with Sony Group and General Motors.

Nissan and Honda both lost market share in the world's top auto market, China, last year amid heavy competition from BYD and other electric vehicle makers.