Let's say every major automaker pulls this off. Let's say 10 automakers pull this off including Tesla that gives us 2025 EV sales of 8M. Maybe OPEC is right. Global % of gas vehicles on the road is not likely to decline as fast as we hope. Let's say all 10 get to 2M EVs by 2025, thats still only 20M EVs. A long way away from replacing the 1.2 billion vehicles on the road. What does that mean for Tesla? Nothing really. Except that none of this impacts Tesla's growth at all.
It all comes down to the ability to build batteries. Tesla's Gigafactory is estimated to cost about $5 billion when completed and it will produce enough battery packs for 500,000 cars a year when complete. That's $10,000 per car-year ($5 billion/500,000). That is the best number we have now for what battery production capacity costs. Gigafactory II may by cheaper, other ways of going about making the necessary batteries may be more expensive. But let's use $10K as the number to expand BEV production capacity by one car per year (assuming long range BEV here).
For GM to get to 800K BEVs a year, it will cost them $8 billion. According to 2014 numbers, VW's entire R&D budget was $13.5 billion, GM's was $7.2 billion, Ford's was $6.4 billion, and Honda's was $6.3 billion. GM spent $9 billion on capital expenditures in 2015. That $8 billion expanding battery production capacity wouldn't all be spent in one year and it would be a mix of R&D and capital expenditure (more capital than R&D). And even if they farmed all that out to LG Chem or whoever, somebody needs to put $8 billion in to build enough capacity to build 800 K cars and ultimately GM would be footing the bill. If they farm if out to a sub-contractor, they will likely pay more for it than $10K per car capacity because the vendor needs to make a profit too.
My point is that while that $8 billion is in the same order of magnitude of the R&D and capital budgets of the largest automakers, it's far from chump change and boards are very wary to invest huge sums into something that is a totally different direction and could possibly be investing in a dead end technology that becomes obsolete just as the batteries start production and the plant needs to retool or they end up selling tech nobody wants because it's behind the curve. Traditional car companies (like most big companies) are also very slow to change. Many of the older executives are going to hold on to the old way until they can retire. Look at what happened to GM and Chrysler and almost happened to Ford. All three companies saw they needed to make major changes to their cultures as early as the 1980s, but it took until the first decade of this century to finally make the changes (about 20 years) and it was almost too little too late.
And the changes that needed to be made were seen by just about all the executive management back in the 80s, they just couldn't bring themselves to do it. The changes to BEVs is not something the top brass is sold on in most big car companies. There is a lot more denial going on there than there was back in the 80s about corporate culture.
For big car companies, switching to BEVs means completely abandoning technologies the companies have invested many of billions into. They also have many factories dedicated to making engines and engine parts, supply chains dependent on their existence for these engines, and repair shops all over the world that depend on this technology for their incomes. Just the engine technology is a very big business. Add on top of that the pressure for the oil companies to keep using oil, and talk that oil prices may remain low for many years to come, and executives have an incentive to continue business as usual. Expanding their use of hybrids allows them to put toes in the water with electrics, but continue with their engine investments.
For established car companies the risk-reward for mass producing BEVs leans way over on the risk side right now. On the risk side, they abandon technology they sank a lot of money into, could suffer a huge loss on a battery factory if they settle on the wrong technology too early, there is no proof customers want BEVs except a few eccentrics who are willing to pay $100K for a Tesla or eco types who want a Leaf. On the upside they could potentially be an early player in a niche that takes off, but while most analysts agree that BEVs are the long term future, there is no guarantee they will take off in the next decade. Many are speculating more like 2050. The reception for the Model 3 could change all that, but that won't be known until almost 2020 and by then it will be too late to ramp up to 800K production by 2025.
Factors that may change the thinking are how the Model 3 sales go. If Tesla ends up with a huge waiting list, the big car companies will start getting serious. If there is a major breakthrough in batteries soon, that will still take a decade or more to get to production, but it will probably soften resistance to investing in factories as soon as the production methods are somewhat known. Many car companies are building low production BEVs to get a foot in the water and learn the lessons necessary for when the demand starts going up, but they will not be able to mass produce long range BEVs until battery production increases a couple of orders of magnitude over today and they know it will be a huge investment. That means they will sit on the sidelines and watch to jump in.
Tesla on the other hand is moving ahead as fast as it can. If the Model 3 is a hit, it will be the only mass produced, moderately priced, long range BEV available. It doesn't matter if other car companies have long range BEVs on the market before or just after the Model 3, they won't have the battery capacity to compete with it on volume. The Model 3 will probably sell more cars in the long range BEV market for at least 3-5 years and the Model S and X will probably be #2 and #3. Tesla will be selling more long range BEVs than everyone else combined.
It's all there in the math. Even if GM made a deal to suck up 100% of LG Chem's Li-ion battery production to put in Bolts, leaving zero for anything else, they would not be able to build as many Bolts as Tesla will be building Model 3s.
