It was arguably better to keep them on life support as a means of providing a much more controlled transition from ICEs to EVs.
Ultimately, the ICE car companies still have the innovator's dilemma in front of them. It's not that they don't see the benefits of new technologies, they just don't have a path that allows them to maintain their current size and infrastructure at the same time.
A few of the things Tesla is capitalizing on:
1) Dell's "just in time" manufacturing.
2) Google's use of commodity hardware for scaling. Big iron servers vs linux boxes that can fail individual is like the the li-ion batter pack with several thousand cells vs large nickle-based batteries.
3) Toyota's quality based on open, healthy, workplace relationships that put quality ahead of quantity.
4) Apple's retail store model that seeks to inform without a pressure to buy using a simplified comparison model.
5) The benefit of being the disrupter instead of the disrupted.
6) Engineering focused leadership instead of sales focused leadership; a solid product sells itself.
7) Infrastructure to support interstate EV travel.
In time, the entrenched auto companies will likely fail or shrink to shells of their former selves. Much of what needs to change has been a problem for 30 some years and runs orthogonal to what they're used to.