Out of the box Difficult to change legacy system
My friend said that it is when the traditional manufacturers like GM, Ford, Toyota, BMW starts to manufacture electric cars, Tesla will face strong competition. He thinks that Tesla will not be profitable. 

I disagree. 

I told him that it is difficult for the traditional manufacturers to change the legacy systems. Their management and workers are already indoctrinated on the combustion engine car. They will not be able to change their mindset to accept the electric car. 

There is another big obstacle - the dealer network. The traditional manufacturers depend on the dealer network to sell their cars. 

These dealers have vested interest. They want to sell the combustion engine cars because they make huge profits on servicing and parts. They will not be keen to see their profit margins disappear with the electric cars.

When Tesla introduced the fast selling Model 3, they decided to get away from the dealer network. They decided to sell their cars directly by taking online orders from end customers. They do not need to depend on the dealers.

The traditional manufacturers face two big obstacles - the mindset of their people and the vested interest of the dealers. They will not be able to compete with Tesla. 

Tan Kin Lian
 

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