Fiat Chrysler and Peugeot agreed Wednesday to merge into a single company that will become the world's fourth-largest automaker, a giant that could bring consumers a wider variety of cleaner vehicles at a faster pace, including more powered by electricity.

The boards of Fiat Chrysler Automobiles and PSA Peugeot on Wednesday signed a binding merger deal creating the world's fourth-largest automaker with the scale to confront the challenges of stricter emissions regulations and the transition to new driving technologies.