Noting that the global auto market is approaching 100 million vehicles annually and that, "It is impossible for Tesla to build electric cars fast enough to address the carbon crisis," CEO Elon Musk announced today that the automaker is making all of its patents freely available on a good-faith basis. In a blog post on Tesla's website, the company said it originally feared others would copy its technology, so it was aggressive in protecting intellectual property. But the way things have played out, automakers are making barely any zero-emission vehicles at all, typically less than 1% of their total production. Tesla hopes this move will begin to change that.
Musk held a conference call to discuss the move in more detail, and he clarified the company's intentions: Tesla doesn't believe this will change things overnight. And he's right. Automakers take years to get new vehicles to market and longer still to ramp up production. Nissan's Leaf, the leading EV in the world, which costs a fraction of the Tesla Model S only recently cracked the 100,000 sold mark after more than 3 years. Outside of Tesla, no pure zero-emission vehicle has achieved anywhere near those sales. But in a world with 2 billion vehicles, it's a drop in the bucket.
Still, Musk believes. "In the long term, I hope this improves the rate at which we transition toward sustainable transport," he said. Specifically, he believes Tesla's technology might encourage car manufacturers to consider building batteries with smaller cells, as Tesla does. Because the company uses a standard-sized laptop-battery cell, it has the lowest cost per kilowatt-hour of anyone making electrified vehicles. Perhaps, with Tesla's patents now available to others, car makers can get inspired to follow suit.
He said that Tesla was meeting with BMW as recently as yesterday to discuss various matters, and the idea of opening technology was already on the table. Tesla has mentioned from the beginning that its high-speed Supercharger network would be available to other car companies so long as they built compatible cars and paid a "reasonable cost share, proportionate to usage" of the network. Musk suggested it might even be possible for BMW or another carmaker to construct their own compatible network of chargers and the companies could share them under an agreement. In addition, he suggested BMW build its own giant battery Gigafactory, as Tesla is doing to help push its own costs down.
All this openness raises the question of whether Tesla is giving away the crown jewels without getting anything in return. Musk seemed unconcerned. He basically wants to avoid the EV industry looking like the mobile phone or internet businesses, where constant patent lawsuits threaten the speed of innovation. Musk says Tesla will keep filing for patents to ensure that "patent trolls" don't gain rights to misuse technologies his company invented, but that it will continue to make subsequent patents available freely.
He also said this wasn't some move to get free intellectual property from the industry for Tesla to use: "I don’t know of any patent of any company that we’re using or that we plan on using." And he made it clear that if Tesla needed a particularly valuable patent license from another carmaker, it didn't expect to get it for nothing just because Tesla was making its technology freely available. What he's looking for is "good faith" dealing here. If two companies are using one another's technology and its of similar value, neither should feel the need to sue or collect licensing fees.
Musk weighed in on the state of patents with some concern. "I do think we need some patent reform," he said. "Far too much energy," is going into "patents that do not foster innovation." He believes firmly by creating freely available intellectual property to foster EV development, Tesla will succeed in "attracting and motivating the world’s best technical talent," because those engineers will know their work has the most impact. That will be good for shareholders, Musk believes.
But if Tesla succeeds in pushing more EV development globally, it just be good for Planet Earth too.
Follow me on Twitter. Read the rest of my Forbes posts here.
