Tesla Open Sources its Patents – Altruistic or Cynical?

Electric cars at charging stationTesla’s announcement that it would open up all its patents for use by others who want to use its technology “in good faith” was applauded by Elon Musk’s many fans as a testament to his altruism, driven by a desire “for the advancement of electric vehicle technology“.

I’m a huge fan of Musk’s. But it’s not for his passion to leave the world a better place. Although I admire that enormously, on its own it doesn’t make him any different from quite a large number of us.

No, my admiration of Musk is for his ability to combine that desire with commercial acumen, and turn activities that better the world into commercially viable ventures. The recognition that it is precisely by making ‘good’ things commercially competitive that we are most likely to change the world for better.

Then crucially, and this is what sets him apart, his ability to find ways to make that happen. And I don’t think this open source initiative is any different.

My instinctive response when I saw the announcement was “there he goes again – he’s finding a way to make altruism pay”. Some are attributing his move as a “a last ditch effort to retain market share” in the face of competition from hydrogen-fuelled cars, as though in some way a commercial motivation sullies the drive to do good. But in my view, that’s an outdated concept: a concept that commercial and altruistic motives must always be in conflict.

I disagree. If Tesla is in a position to reap the rewards of a move to Lithium-Ion batteries, then this move to encourage use of its electric car patents makes perfect commercial sense, while accelerating the trajectory towards a cleaner world. After all, for all the sales that Tesla has had since its founding in 2003, it has only delivered one quarter of profit, and if a better commercial trajectory is in the provision of batteries, then given this is still taking us to cleaner emissions, that can surely only be a good thing?

Now if hydrogen cars are better than electric in the drive to zero-emissions, a graver question would be whether this move makes commercial sense for Tesla only because it attempts to crowd out a better answer. That would be somewhat more sinister. In that case, Tesla would be looking to distort the market for the cleanest technologies for its own commercial gains.

Early evidence, however, would suggest that this is not the case on a number of counts. But this race has a long way to go, and if better sustainable alternatives to electric cars were to be found, Tesla may face a conflict between its mission and the conscience which its fans have imputed to it. Because although Tesla’s mission is “to accelerate the advent of sustainable transport”, it does also explicitly say it would do this with electric cars, which does somewhat place it at odds with more sustainable alternatives as they arise.

Conjecture apart, though, I remain somewhat awed by Musk’s ability to do the right thing and be commercially successful with it at scale. It is an example we’d do well to learn from in whatever line of business we’re in.

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Post Script – Within days of this announcement, NASA independently announced that 1200 patents would be opened up to startups free of charge. There are some conditions attached, notably that it stops being free once you start selling it and you would pay a royalty of 4.2% of net sales, but to be fair, that doesn’t seem like a bad exchange for use of a patent which probably took millions of dollars to develop.

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