Tesla’s move to open source may be good for business

David Gura Jun 13, 2014
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Tesla’s move to open source may be good for business

David Gura Jun 13, 2014
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Tesla Motors is going open source. Its CEO, Elon Musk, says the electric car company will no longer enforce its patents, in effect allowing competitors not only to peek at the technology Tesla has pioneered, but to copy it.

“Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters,” Musk said in a statement. “That is no longer the case. They have been removed in the spirit of the open source movement for the advancement of electric vehicle technology.”

“It is important to understand that, in many ways, patents are a tradeoff,” says R. Polk Wagner, a professor of law at the University of Pennsylvania. “Just because you have patents doesn’t mean you get anything out of them, necessarily.”

Sure, they can be valuable, but getting them and enforcing them is expensive.

According to Andrea James, an analyst with Dougherty & Co., the reason Tesla is doing this is “to accelerate electric vehicle adoption and innovation.”

“Tesla is really far ahead, and I think they just want to grow the overall market,” she says.

To succeed, Tesla needs more Americans to feel comfortable driving and buying electric cars. If more companies were to make them, that would help.

“It’s not a charity move,” says Michelle Krebs, a senior analyst with AutoTrader.com. “It’s a very smart business move.”

Competitors could use the network of charging stations Tesla is installing, or they could buy Tesla batteries.

Other car companies have charted a similar course in the past.  Volvo decided not to enforce its patent for the three-point safety belt. GM shared the technology behind its catalytic converter.

Tesla says the move is in good faith. The company will still apply for patents, and if necessary, Musk says the carmaker won’t be afraid to fight back.

 

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