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Tesla Frees Patents, Challenges Competitors to Join

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Tesla is probably one of the most unique companies in the world, time and time again they’ve proven to us that they simply aren’t what we think they are. First, everyone believed that they were a car company, but they proved that they were a technology company first and a car company second. And now, they’ve once again changed what we believe to be a technology company by freeing their patents and making them available to anyone that wishes to use them, in good will.

In a blog post titled, All Our Patents Are Belong To You (a play on the geeky “All Your Bases Are Belong to Us” Meme) Elon Mus, Telsa’s Founder and CEO, basically talks about how the company once had a wall of patents hanging in the halls of Tesla’s Headquarters in Palo Alto and that they have since been removed. He talks about how the company is doing this for the sake of the open source movement and the advancement of the electric car, and ultimately, the environment. This move is sure to worry investors of Tesla’s stock, who put part of their value in the company’s stock in all of the patents that it currently holds (or held?). Currently, based on how the stock performed yesterday and how its performing in pre-trading hours, the stock does not appear to be affected, yet.

Why? Because this is part of Tesla’s grander vision. They know that they can design and manufacture cars better than any of their competitors and just because their competitors have free access to their patents doesn’t mean that they can build better cars than Tesla. Additionally, and even more importantly, it will spur demand for Tesla’s battery technologies and the need to have them manufactured, you know maybe in some sort of a battery Gigafab? If anything, this will enable more companies to utilize different Tesla technologies and to bring more partners onboard to work with Tesla on improving the electric car industry.

It could also work in Tesla’s favor to promote their own proprietary technologies as standards since they don’t require any licensing. This would mean that people could build Tesla ‘superchargers’ into their charging stations and it would not only widen the network of chargers across the world, but it would also improve the value of owning a Tesla.

There’s no denying that this move is a risky one, but I believe that ultimately it is a very smart one and it helps solve Tesla’s problem of not having enough demand to build a battery Gigafab and make it profitable. After all, Tesla sees themselves as a battery technology company first and foremost, not a car company. So, this is clearly in line with their long term strategy.

This could also encourage current or future partners to want to work with Tesla to build batteries since they won’t have to pay for licensing the technology. Maybe Toyota will rethink moving to hydrogen fuel cell and move back to using battery based electric vehicles. Some may worry about how Tesla’s current partnerships may suffer from these developments, but the truth is that most of them are buying batteries directly from Tesla, which means that there isn’t really much licensing revenue that Tesla has to worry about losing, which may also have been a factor in the decision.