Company founder and CEO Elon Musk announced this month that he has decided to open Tesla Motors’ patents to other competitors. Musk was interviewed by Business Week magazine and stated that “You want to be innovating so fast that you invalidate your prior patents, in terms of what really matters. It’s the velocity of innovation that matters.”
Electric cars have been slow to catch on with other auto manufacturers, and Musk is essentially saying that he wants increased competition in the electric car market. He cites climate change as a reason, and believes that this move will speed the transition away from conventionally powered vehicles. A reason this could be good for Musk is that the infrastructure to support electric cars such as charging stations, is not well developed nationally. Increased competition will increase market pressure to build the infrastructure necessary to expand the overall electric market which will be good for Tesla Motors in the end. Innovation is what builds a business, and Musk recognizes this. Tesla Motors has the first mover advantage in the electric car market and has accrued significant name recognition for the brand.
The voluntary move to open it’s patents is not something we commonly see in a market. Usually a company will try to fight tooth and claw to protect it’s patents and rack up huge legal costs for itself in the process. There are libertarians on both sides of the patent issue. Some claim that having patent law restricts overall innovation while others argue just the opposite. I see this as a great move in support of free markets and look forward to future innovations by Tesla and the new companies that will take advantage of the technology.
Here’s the article from Business Week: http://www.businessweek.com/articles/2014-06-12/why-elon-musk-just-opened-teslas-patents-to-his-biggest-rivals