Nissan (NSANY.US) is set to "blow up" again after the failed merger with Honda: Tesla (TSLA.US) may acquire its US plant.

According to sources, Japan's business conglomerates are working on a plan for Tesla to invest in Nissan (NSANY.US). The new proposal, led by Masakazu Watari, a former Tesla board member, has been supported by former Prime Minister Yoshihide Suga, according to sources. Several Nissan board members are aware of the move. Shares of Nissan rose more than 12% on news of the potential investment.

The group believes Tesla is interested in acquiring Nissan's factory in the U.S., according to sources. The proposal envisions an investor consortium, with Tesla as the largest backer, and a possible minority stake by Foxconn, according to sources.

Last week, Nissan and Honda formally ended merger talks, quickly ending a potential partnership that would have created one of the world's largest carmakers.

The failed deal is especially damaging to Nissan, which has struggled since Carlos Ghosn's ouster in 2018 amid weak sales, excess capacity, outdated models, unpopularity and a revolving door of leadership.

Nissan's woes became apparent at the end of last year, when the company announced it would cut 9,000 jobs and reduce production by 20% after reporting a 94% drop in first-half net profit.