The Japanese companies’ decision to call off negotiations highlights the challenges legacy automakers face in partnering to tackle new technologies.

The deal may fall through as Honda reportedly wants to make Nissan its subsidiary, an act the latter vehemently opposes.

But the merger talks unravelled in a little more than a month due to Nissan's pride and insufficient alarm about its predicament, as well as Honda's abrupt decision to revise the terms and propose that Nissan become a subsidiary, according to six people familiar with the matter.