From an investor perspective, traditional players face billions of dollars in restructuring costs as they transform product lines and factories to move away from internal combustion technology
"No one is going to give an OEM [established car maker] a five-year window to say ... you can totally retool your business, and I am going to buy in and fund this journey," said Mark Wakefield, co-leader of automotive and industrials practice at consulting firm AlixPartners.
Start-ups, however, get time from investors to learn, make mistakes and grow, he added.
Investors are betting on Tesla's ability to scale up manufacturing just as they once backed Toyota Motor Corp, which defined the car industry's last era with its mastery of highly efficient, high-quality lean production.
Toyota overtook the market capitalisation of former industry leader General Motors in 1996, though it wasn't until 2008 that it sold more vehicles than its Detroit rival. The Japanese giant also cultivated ties with Tesla, with the US startup helping it design an electrified RAV4 compact sports utility vehicle under a 2010 deal.
Toyota was impressed by the speed with which Tesla came up with the new design, but ultimately decided Tesla's methods were not suitable for mass production by a mainstream manufacturer when Toyota's standards for product quality and durability were applied, two company insiders familiar with the partnership said.
Toyota said the joint project involved cooperation on the development of electric cars, parts and production system.
"Toyota accomplished what the project set out to achieve, and it ended in October 2014 after Tesla delivered roughly 2,500 electric powertrain systems over three years" for an electrified RAV4 crossover SUVs, a spokesperson said.
Both the Toyota and Daimler collaborations were agreed before the Volkswagen emissions-cheating scandal in 2015, which prompted a global regulatory backlash and forced carmakers to step up investments in electric cars.
"That was all before dieselgate, which changed the economics of electric and combustion-engined cars," a senior Daimler manager said.
"Tesla has a lead. Let's see if they can scale up."