Hidden in your argument there is an even bigger one: traditional car manufacturers have outsourced almost everything to their high level suppliers except for the engines. When they switch to EV they give up on the only part where they have a considerable depth of added value. They could become their own cell manufacturers (and in fact almost all of them have tried, before learning that batteries are too much of a commodity for them to be competitive on the small scale of early EV introduction), but there is zero knowledge transfer opportunity from ICE to battery.

It's not difficult for them to build EV. But it is nearly impossible for them to do so earning money, when they are essentially repackaging third party batteries into shells consisting of all the other stuff they are buying from their existing suppliers.

I think you are overlooking the fact that very few people buy cars for the engine technology.

They buy on design, price, prestige, history and possibly other 'soft' aspects.

But if scale is key to winning here, can anybody compete with china - for mass market vehicles ?

We're already starting to see BYD aiming to have 34GWH battery manufacturing capacity in 2020, same as Tesla.

The i8 only has a small battery. It has a high price because it's a luxurious high-performance car.

My tesla 85D has better performance in every way. More horsepower, faster 0-60, more space etc. Etc.