The why matters, but public demand will tip the scales. Right now Tesla is doing well for a small automaker, but all of Tesla's production to date is less than 1% of one year's ICE production. There are a lot of enthusiasts and they drove the Model 3 pre-sales, it's still a tiny fraction of the car market, though getting closer to the tipping point.
Panic time for the established automakers will come when traditional ICE buyers will pass on buying a new ICE and will wait in line for a Model 3 rather than take what they have to offer. At that point, ICE will become an obsolescent technology people only use because there isn't enough of the new tech around.
If VW is piddling around with their own GF, dragging their feet about finishing it, they can push the pedal to the metal and get it done. That leaves them in a stronger place than most of the competition who may have some decent designs that could be put into mass production (like a version 2 Bolt platform with the drawbacks of version 1 fixed), but they won't have the batteries to mass produce them.
At that point I fully expect LG to pull a fast one on their current customers and only provide the bare minimum of cells required under their contracts while launching their own EV using their excess battery production capacity.
When film cameras began to die, a lot of players from other industries jumped into the digital world and made their own cameras. Cell phone cameras pretty much killed the snapshot camera entirely and some of those new players left the still picture market. However there still is a higher end camera market. Hasselblad, the Rolls Royce of professional cameras didn't make it.
I was recently looking for a newer Nikon DSLR to replace my 10 year old rig which was nice, but is getting too far behind the curve for what I need. I found most of the old film camera makers are hanging in there, but Sony looks to be #3 in the DSLR market. Back in the days of film, Sony may have made some still film cameras, but if they did, they were also rans in the market. Sony leveraged their strength in the electronics world to carve out a niche for themselves in the DSLR market, though the big 2 in that niche are Nikon and Canon.
LG could do the same in the EV market. They created a pretty tight relationship with GM to make the Bolt and I suspect it was so they could learn the details of making cars. They already make large appliances and just about every electrical and electronic component needed for an EV.
At that point any car company that doesn't have a large supply of batteries locked down is screwed.
I do expect VW to drag their feet until crunch time happens. I am not sure when that moment will come. It will be sort of the 100th monkey moment when enough potential car buyers realize EVs, when done right, are simply superior to ICE. It will be some point after Tesla catches up on Model 3 pre-orders and it becomes possible for anyone to order a car and get it within at least a couple of months. But it could be a couple of years beyond that.
Predicting when the tipping point happens is difficult to predict. Sometimes it's almost overnight like when music CDs came in. Everyone was expecting the much cheaper vinyl was going to be around for years to come, but it died out in less than a year. (Though made a come back as an audiophile/enthusiast thing as well as a dance club thing.)
Cars were around as an expensive hobby for decades before Henry Ford mass produced Model Ts and the tipping point happened within a year or two of the Model T's introduction. However, it took another 20 years to really push horses out of the market in the US and even longer in other places. Most people don't realize that the German army in WW II used more horse carts to move stuff around than motorized vehicles and as the war went on they became more and more dependent on horse drawn vehicles as oil got scarce.
But once the public realized what a car could do vs a horse, horse drawn transport went into terminal decline. There was little resistance because the horse drawn transport industry had no big corporations to resist the inevitable. There was no "big horse". In fact most people welcomed cars because they were declared "pollution free" (my father remembers people saying that when he was a kid in the 20s and 30s). By 1900 the largest cities in the world had a very severe horse manure problem, the ICE was the answer to one of the worst problems in urban planning. The term "tailpipe emissions" originally referred to horses.
I also heard a little nugget recently that markets began to sell canned pet food in the 1920s because of the car. There were so many horses being retired from the transport industry they were looking for something to do with all the horses, so they fed them to cats and dogs. So the next time your pet is begging for you to open the bag or can of pet food, that whole ritual exists because of the car.
