I also think maintaining a distinctly 1990s view re: incumbent car companies is potentially strategically disastrous. After the near-collapse of the US car industry, saved by the grace of the government, we've seen a dramatic and near-miraculous turnaround.
Ford went from making cars nobody wanted and burning money at a prodigious rate, to profitable and actually building cars that sell well. It is a common refrain to portray the automotive industry as constantly tripping over their own incompetence and baggage, but the reality is that after their near-death experience they've proven their ability to fight, survive, and even prosper.
Tesla may be on top, and they may be the most visionary of the companies on the playing field, but there are many, many perfectly competent competitors yet, who are far more experienced in factors that Tesla has yet to contend with - i.e., the economics of economy cars.
[1] http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=H...
>That is an insanely stupid thing to do, it has huge risk.
Do you think huge risk is always insanely stupid?
Depends on the risk. Looking at the history of Tesla the huge risk was that it would bankrupt Elon. For pretty much everyone else it was a non-event (they would lose their jobs, some creditors wouldn't get paid). So if I were Elon's financial advisor and he was saying "I want to retire in 10 years." I'm going to suggest that putting your entire net worth at risk over maybe being able to build a car, is not a good idea. I'm happy to watch him do it, and hope for the best.
Perhaps 'stupid' carries too much of a pejorative tone here, how about 'ill advised' ? or 'very unlikely to pay off' ? That distinguishes it from 'stupid' which means 'likely to take out innocent bystanders' such as say creating a financial instrument out of CDOs. Also stupid but the risk there is wider.
I'm not so sure those things follow. There is a tremendous amount of baggage/inertia in existing car companies, no where was that more apparent than seeing GM convulse when it was bought out by the US government. Could I beat Usain Bolt in the 100 yd dash? Hell No! If you tied his shoelaces together? Damn straight I could!
Tesla has no other cars, no other obligations, no other legacies, no other technical debt to pull backwards on it. One of the most interesting things I read was a car analyst comparing Tesla to Fisker. Fisker built an electric car with the best batteries they could find. Tesla didn't build an electric car until they had built batteries that met the requirements of an electric vehicle.
The difference there is profound. Prior to Tesla there were no batteries in the world that could be bought which would let you build a Model S. Car companies weren't telling battery makers how to make batteries, and battery makers weren't telling car makers how to make cars. But Tesla sat down as a company and designed an electric car from whole cloth, from the AC induction motors to the battery chemistry. That is an insanely stupid thing to do, it has huge risk. But they pulled it off.
From a thinking perspective, Tesla should be bigger than GM and Fiat combined. Compare the Volt or the EV-1 (which is unfair since technology has advanced so far since then) to the original Tesla Roadster. One company is thinking, one company is designing. I think thinking wins in this case.