How Japan is losing the global electric-vehicle race

The green floors of JATCO’s Fuji Area 2 factory hum with quiet confidence. Diligent inspectors appraise the gears and pulleys that make up the Japanese car-parts maker’s transmission systems. Robots stamp parts and flip them onto production lines. For decades, JATCO, like the rest of Japan’s vaunted auto industry, has perfected carmaking. Japan has been at the forefront of the industry, pioneering just-in-time manufacturing and leading the development of hybrid cars. But the next big evolution—the shift to electric vehicles (EVs)—has become a source of angst. “The EV shift will be a big transformation, there’s no denying that,” says Sato Tomoyoshi, JATCO’s CEO. “Our company will have to change drastically.”