By Maki Shiraki

TOKYO, March 15 (Reuters) - Nissan Motor ( NSANF ) is

considering seeking a business partnership with Honda Motor ( HMC )

on key components for electric vehicles to cut

production costs, three people familiar with the matter at

Nissan ( NSANF ) said.

The potential partnership with domestic rival Honda ( HMC ) will

help Nissan ( NSANF ) gain scale, which is crucial for Japanese automakers

as they face heavy competition from China's BYD,

Tesla and other electric vehicle makers.

The sources, who declined to be identified as the matter is

still private, said that Nissan ( NSANF ) and Honda ( HMC ) 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 ( NSANF ) is considering partnering with Honda ( HMC ) 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 Honda's ( HMC ) existing collaboration with General

Motors ( GM ), according to two of the sources.

Nissan's ( NSANF ) pursuit of a partnership was first reported by

TV Tokyo. A Nissan ( NSANF ) spokesperson declined to comment. A Honda ( HMC )

spokesperson said there was nothing the company could say.

A source at Honda ( HMC ) said a potential partnership with

Nissan ( NSANF ) 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 tie-up.

Honda ( HMC ) is aiming to increase its ratio of electric vehicles

and fuel cell vehicles to 100% of all sales by 2040.

Nissan ( NSANF ) already cooperates with Renault on EVs, mainly in

Europe. The next Nissan ( NSANF ) electric Micra will share the same

architecture as the new Renault Five and be built in the same

plant in northern France.

Nissan ( NSANF ) has also committed to invest up to 600 million euros

($652.50 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.

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