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 struggling Japanese automaker is again at a crossroads after backing out of negotiations with bigger rival Honda to create the world's No. 3 automaker, a deal that would have been the latest major change in the shifting global car industry.

As software-defined vehicles now dominate the auto industry, Nissan could benefit from a partnership with Foxconn, which can procure some of the most advanced semiconductors, Itochu Research Institute researcher Sanshiro Fukao said. In return, Foxconn could use Nissan’s surplus production capacity for its contract manufacturing business.

Nissan has ended merger discussions with Honda and is now open to working with new partners, including technology firms such as Foxconn