Tesla’s Twist on Patents: Is Open Source the Future of Green Cars?


As you may or may not know, a few days ago Elon Musk, CEO of Tesla said this about patents:

“Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology…”

For me, this further cements my understanding of Tesla as a technology company that manufactures electric car batteries as well as a line of cars.  Musk lays the competitive logic out as well:

“…Given that annual new vehicle production is approaching 100 million per year and the global fleet is approximately 2 billion cars, it is impossible for Tesla to build electric cars fast enough to address the carbon crisis. By the same token, it means the market is enormous. Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.

We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform…”

Tesla isn’t giving their patents away; they’re just not going to sue others for improper use of their tech.  Musk & Co. are taking the first step towards building the same kind of technology development community that is driving innovation in computer hardware and software.  This new community will have it’s own rules and quirks, of course.  This move means that the cutting edge of automotive technology will be collaborative.  If the big auto manufacturers want to compete in the green car market, they will have to partner and collaborate with this new open source community for the bleeding edge tech.  Which saves them R & D costs; unless they simply like to spend money to reinvent what’s already been created. Innovation will come faster, become integrated at a more rapid rate, and drive end pricing for this new technology down faster.

And Tesla is in the center of it all, taking a little piece of everyone’s action.  It’s as brilliant as it is simple.

Of course, there are those still rooted firmly in the 20th century.  From an analysis by Achilles Research that appeared at Seeking Alpha:

“…Though the argument does make sense on some level, I am not too sure whether the strategic move is the right one for the company and its shareholders to take. If I was a shareholder I would certainly not be overwhelmed with joy by the fact, that Tesla is giving away its patents for a “Thank you.” Patents, of course, protect a company’s innovative accomplishments and actually are instrumental in protecting and increasing a company’s moat — for which the business has spent valuable R&D resources by the way…”

Remember that Musk said “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology…”.  So much for Achilles’ reading comprehension skills.  Also, patent suits are a huge black hole of money for companies.  Just recently Apple pledged to settle patent suits instead of paying more lawyers to fight them.  

Now let’s look at the usual argument, as made by Achilles:

“…fossil fuel powered cars overwhelmingly dominate the auto market and this is likely to stay that way for the foreseeable future, particularly in emerging markets, which, quite honestly, don’t care about carbon emissions at all. And who can blame them? After centuries of air pollution from industrialized nations, why would developing countries sign up for strict carbon emission rules, which would only prevent them from lifting millions of people out of poverty?

The political will obviously isn’t there. And that also goes for the United States, which faces strict Republican opposition to any carbon emission reduction initiatives…”

First, you can see the difference of vision.  Musk sees past the horizon.  Apparently Achilles sees the butt of the sled dog in front of him.

Next, let’s get a take on the political will to address carbon.  China cares much more about carbon emissions now that they’re seeing (and paying for) the impact of a few decades of choking smog:

“…Beijing, which was shrouded in thick smog for months last winter, has a specific goal to limit its yearly average of PM2.5 to around 60mg per cubic metre by 2017. This is still well above the national standard of 35, and the safe limit of 10 recommended by the World Health Organisation.

As a major measure to improve energy and economic structure, the plan aims to cut coal consumption in the total energy mix to below 65 per cent by 2017, down from 66.8 per cent in 2012….”

Granted, 1.8% isn’t much.  But would you expect the Chinese to announce larger cuts?  That might lean towards admission of some kind of failure on another front.

(By the way, if you clicked through to the story, did you see the images from the related stories here, and here?  Would you voluntarily breathe that?  Do you think any US politician, not completely bought and paid for, would defend breathing it?)

Lastly, here’s the critical thing that Achilles doesn’t get.  He thinks we actually want to buy gasoline.  If we can pay about the same price, go as fast as we want, haul people and cargo like we want, and be as safe as we want without gasoline, we would do it. These are the basics of transportation, and are the reason why we no longer use feet, oxen and horses to get around. We are tied to the vehicles that allow us to do these things, not their power source.



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Sebastian James


Accept no substitutes

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