Why Major Automobile Makers Like Toyota And GM Have Yet To Take Tesla's Challenge Seriously?

Tesla may have been a pioneer in manufacturing fancy electric cars, and won the buzz on Main Street and Wall Street. But it may not win the race for the mass market, according to Harvard Business report. The likely winners of this race, if there is one, will be General Motors and Toyota Motor Corporation. For a simple reason: Scale. Tesla isn’t as disruptive as it is broadly believed, argues the report. “Think of it this way: all-electric vehicles accounted for just 119,710 of the 16.5 million sold in the US in 20140—seven tenths of one percent of the market.” That’s why major automobile makers like Toyota and GM have yet to take Tesla’s challenge seriously, and jump into the race. “Established carmakers are paying little attention to EVs not because they are clueless but because so few people want EVs. (And they aren’t completely ignoring EVs; consider the all-electric Nissan Leaf and Chevy Volt, each of which outsold Tesla in 2014). Tesla is betting that preferences will change—that someday millions of people will want electric vehicles.” That’s a big bet. But even if Tesla proves to have bet right, it may not win the electric car race -- as it is very unlikely to match the GM and Toyota scale.