What Does Billionaire Elon Musk Have to Gain From Giving Away Tesla's Patents?
June 12, 2014— -- Tesla CEO Elon Musk, worth an estimated $8.2 billion according to Forbes, has opened up his electric car company's trove of patents. Doing so allows competing car companies like GM to use Tesla's technology for speedy and arguably sturdy electric cars.
Musk writes in a blog post that the company "felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla."
But, he writes, "The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1 percent of their total vehicle sales."
Tesla holds more than 200 patents, a spokeswoman for Tesla told ABC News.
Ben Kallo, an analyst with Robert W. Baird & Co., said Musk has a vested interest in facilitating the adoption of electric vehicles.
Opening patents could help facilitate the expansion of battery charging infrastructure and ultimately create customers for Tesla's future battery factories, Kallo said.
Tesla has a goal of producing a mass-market electric car in about three years, and the company hopes a large-scale factory will leverage its projected demand for lithium ion batteries to reduce their cost.
"Given that annual new 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," Musk wrote in his blog today.
Tesla projects that it will produce about 500,000 Tesla vehicles by 2020.
And who will produce the batteries for these cars and, say, other electric cars?
States are vying to host Tesla's $5 billion "Gigafactory" for battery kits. Competing states include Nevada, Arizona, New Mexico and Texas.
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Musk writes, "Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day."
Tesla might also benefit from increased use of its Tesla Superchargers, which allow Model S owners to travel for free between cities along well-traveled highways in North America, Europe and Asia and charge in as few as 20 minutes.
A large corporation's introduction of "open-source" patents is not entirely novel, though it is for a car company. Unlike Tesla, Toyota Motor has licensed some hybrid-electric technology to General Motors and Ford Motor, Forbes points out.
Last year, GE, which traces its roots to Thomas Edison and is based in Fairfield, Conn., opened some of its patent trove to inventors of Quirky, an invention company based in New York City.
