Tesla Just Gave All Its Patents Away to Competitors

Jun 16, 2014

Tesla CEO Elon Musk announced that his company will not “initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” In plain English, that means that if other car companies want to produce electric cars, they can use Tesla’s technology to do it, and, in turn, advance Musk’s sustainability vision.

“The mission of the company is to accelerate the widespread adoption of electric cars,” explained Tesla spokesperson Simon Sproule in an interview before the patent announcement was made. “If Tesla acts as the catalyst for other manufacturers … that will have been achieved.”

Later, in a conference call, Musk reiterated the point, saying that “putting in long hours for a corporation is hard, putting in long hours for a cause is easy.”

Of course, Tesla wants to make and sell electric cars (it exists to make a profit, theoretically), but in order to do that on a large scale, the company needs to move past the niche markets that the Model S currently plays in. They need the public to stop thinking of them as electric cars and to start thinking of them simply as cars.

“They need to see Americans … at least be open to switching to an electric vehicle lifestyle,” Kelly Blue Book analyst Karl Brauer said. By themselves, “they’re never going to convert the average American into an electric car fan, even with great press and great publicity.” A $90,000 electric car for celebrities and the Silicon Valley elite isn’t going to save the world. Tesla needs to, and is thinking much bigger.

At the moment, the Model S is the only electric car that acts as a true replacement for a more traditional gasoline-powered automobile, with its 200+ mile range and network of rapid charging stations that stretches from coast-to-coast across 96 stations in the US, with dozens more coming in North America, Europe and Asia. Not enough people are interested in electric cars with 70-100 miles of range, as Nissan and others are discovering. But, if other car companies adopt some of Tesla’s technology to develop long-range electric cars, that’s nothing but good for the company.

Tesla’s longer-term goal is to sell a $30,000 car with 200-miles of range. At that point, a potential owner worries less about whether they can get to Grandma’s house in an emergency, and starts to assess it as a normal piece of transportation. Tesla’s cars remain a curiosity. In order to transition from a technological plaything that nerds get excited about into something that busy regular people want to buy, Tesla needs to prove that driving an electric car is a normal thing to do.

Finally, if other automakers begin using Tesla’s technology, it increases the value of the company and its inventions as well as validating what the company is doing. Tesla has hundreds of patents, but if the company goes bust because not enough people buying electric cars, they’re all meaningless. Tesla needs widespread adoption of electric cars and the easiest way to do that is to get other automakers to sell them too. More electric cars in the world means Tesla’s cars aren’t so weird, and they become an easier sell to a skeptical public.

Releasing its patents is certainly a controversial move, though TSLA shareholders seem fairly indifferent — shares are trading only slightly lower following the announcement.

At the end of the day, the biggest risk for Musk isn’t that BMW or Toyota will steal his technology. It’s that the big automakers might not be interested in electric cars enough to bother building them at all.

Source: WIRED.com