Why Tesla gave away its patents

Last year, Tesla Motors, the makers of premium electric cars, made news after the company’s CEO, Elon Musk, boldly announced that Tesla Motors is treating its patents as open source. Musk said, ‘Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.’

When one considers the patent wars in the mobile space where the likes of Apple and Samsung battle it out over multibillion dollar patent issues, this decision appears highly unorthodox and seems contrary to the very purpose of a patent.

A patent rewards an inventor with a temporary monopoly for an invention they might otherwise attempt to keep secret. A definite patent term, usually 20 years, encourages the inventor to fully exploit the market for their intellectual property. Without this exclusivity innovation would in most cases be discouraged.

Tesla has taken the gambit of not seeking to protect its inventions because it is a very unusual situation. The highest hurdle that an innovative company like Tesla faces may not be theft of their ideas, but rather the development of new markets.

Given that new annual 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, the market is enormous. Tesla’s true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of petrol fuelled cars pouring out of the world’s factories every day. Zero-emission vehicles account for less than one percent of the world’s total new car production. There are literally billions of potential customers, and the real challenge for Tesla is to persuade them to abandon petrol fuelled cars for electric cars. By utilising its ideas, Tesla’s competitors would improve the product and marketing so that all electric car manufacturers could sell more vehicles and establish new markets.

Tesla also stands to benefit if its roadside charging stations become the industry standard. Currently, Tesla has a small network of superchargers across the United States, so a lack of stations is an obstacle to longdistance travel in an electric car. But with other manufacturers using Tesla technology and making cars that could plug in at Tesla Superstations, Musk’s company could make a fortune simply from giving away its blueprints to ‘competitors’.

Only time will tell if Tesla’s invitation to others to use its technology will work. The drag on an innovative company like Tesla is credibility and trust. How many people are waiting on the sidelines before buying a Tesla because of other companies’ failure? The fledgling electric car industry as a whole would certainly benefit if this technology becomes more popular and widespread. So why not share the knowledge?


Tesla’s wall of patents before the bold announcement
Tesla’s wall of patents before the bold announcement