Elon Musk, the highly popular CEO of Tesla Motors (and SpaceX) made a bold move. It's a move that many consider controversial in the intellectual property arena. He wrote this blog post explaining why Tesla is willing to let any competitor, who wants to use the patents in good faith, do so without charge and without fear of a lawsuit.
When Musk first hinted at doing something controversial with their IP, which he said on stage at the company's annual general meeting of shareholders a couple of weeks ago, I and many other Tesla fans began speculating as to what he meant. Some folks thought they'd release the designs for Tesla's supercharger equipment, which are used to power this awesome network of chargers that only Tesla drivers can use right now. Others felt Musk would open source the entire patent portfolio, which turned out to be right.
Elon Musk very much takes a "go big or go home" attitude, so I suppose nobody should be surprised that if they're going to do something controversial, it might as well be really controversial.
As Musk explained it in his blog post, they initially filed for a lot of patents because they were concerned big auto would crush them if they didn't have protection. But that's not at all how things turned out. Instead Tesla released the Model S, which is permanently connected to the Internet via 3G (side note: please bring us 4G!) and features a dashboard UI powered by a 17" capacitive touch screen. My kids think it's a gigantic iPad. Meanwhile we have practically nothing happening of any significance among Ford, GM, BMW, Chrysler, Audi, Toyota, and most of the other big auto companies. Nissan has done a nice job with the Leaf all-electric vehicle, but the real world range of this car is 120 km and therefore can't function as a primary family car for most families. Although I think it's a great second (commuter) car.
As a shareholder of Tesla Motors I think Musk is making a good decision. The only possible downside risk is increased competition from gigantic automotive companies that have shown very little interest so far. If this helps speed up competition it might be bad for Tesla, right? I'm not so sure. There are about 100 million passenger vehicles sold around the wold per year. For Tesla to climb to 1% of that number … yes, one percent … they'd have to grow their planned 2014 delivery figure by a factor of 28.
In other words, Tesla's global market share is so puny at this point that they'd have to increase deliveries 28-fold (from 35,000 for this year) in order to just hit a measly one percent global market share in the car market.
This is not an industry where competition for electric cars matters at all. It's an industry where electric cars must compete with gasoline cars. So if Musk's bold move to open source Tesla's patents helps accelerate electric car growth, then it will also accelerate consumer appeal for electric cars and therefore accelerate Tesla's own growth.