It sounds like you don't know much about Tesla's goals. They aren't scared of what you are predicting, they are actively attempting to bring it about. The whole goal is to make a cheap, high quality electric vehicle with good range. First they started with the Roadster to prove the technology. Then they moved to the Model S to work out the kinks in mass production and prove they can produce them at scale. Finally, as stated by Musk in multiple interviews, the goal is to mass produce an electric car for $30k-$40k.
By all indications, what they come up with will be better quality and better featured than the equivalent offering from the traditional auto companies. If they can pull that off, I doubt any investors will end up suffering for it...