Open sourcing your IP as a business strategy

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Tesla CEO Elon Musk made the announcement last month that his company would be opening up its technology to the world (photo credit: flickr, Heisenberg Media)

By Oon Yeoh

The phrase “open source” probably conjures up the name Linux, an open source operating system for personal computers. Or perhaps Android, the open source phone operating system. You might even think of the Malaysian Public Sector Open Source Software Masterplan that calls for the widespread adoption of open source applications across government departments.

The last thing that’d come to mind would be automobile technology, and certainly not electric car technology which involves a lot of cutting edge research and development. That’s why when Tesla CEO Elon Musk made the announcement last month that his company would be opening up its technology to the world (and thus, its rivals as well), it was quite a shock.

“Yesterday,” wrote Musk in a company blog post, “there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.”

Musk went on to assure that Tesla “will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

Is Musk naively idealistic or could he be a little bit nuts? Why else would he share his company’s technology secrets with his rivals? The answer is pure economics. Musk isn’t a fool. He realizes that in order for the industry to survive and indeed thrive, he needs other automakers to be interested in electric cars.

Consider this. Tesla launched its 100th supercharging station in April. That’s far from the critical mass of charging stations that would be needed for electric cars to become mainstream.

Musk himself notes that electric cars currently account for less than 1% of all auto sales. Staying a category of one will not push up that number. No doubt, there are other carmakers producing electric cars but Tesla’s Model S, with its 320+ km range, is really the only electric car out there that can replace a petrol-powered car. The Nissan Leaf, for example, can only go for about 135km without recharging. Tesla, in that sense, is all alone.

By giving other carmakers access to its battery technology, Tesla is hoping they will then start to seriously embark on manufacturing long-range electric cars. And if they do build more electric cars with Tesla technology, they will naturally be interested in building compatible charging stations.

This is exactly what Tesla is looking for. It needs electric cars to be popular among the general public rather than just a curiosity for rich, eco-friendly businessmen or celebrities.

When asked what Tesla shareholders thought of his latest move, Musk replied saying it was more important for a company to be constantly creating new technologies than to doggedly pursue lawsuits against other companies.

“You see a lot of these battles going on with giant companies firing massive patent lawsuits against one another, the obvious example being Apple and Samsung. You wonder who’s really benefiting there. And it seems like neither one. It doesn’t seem like it’s actually serving shareholders,” he said.

Musk also thinks the move will also motivate his engineers. “Putting in long hours for a corporation is hard,” he says. “But putting in long hours for a cause is easy. I think it’s quite motivating for people.”

Releasing your company’s patents is not for the faint of heart. And it might not pan out well for some. But in the case of Tesla, where the sector itself is not gaining enough traction, the bigger risk is not that Nissan or some other carmaker will steal its technology. It’s that they end up losing interest in electric cars.

Oon Yeoh is a new media consultant.

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