Tesla's new strategy

Just a few days ago, Elon Musk did something extraordinary. He vowed to give away Tesla's portfolio of electric patents. In an age where patents are guarded ever more jealously a-la Apple and Samsung, Musk's announcement seems somewhat confusing. Why would he tell his company to give up the major advantages they held over standard gas vehicles? In reality, it's really simple: Rather than dominate a niche market, this move will open them up to be a leader in a mass market.


It's no secret that the US demand for plug in vehicles is growing, but this growth isn't entirely pure electric. The main problem, aside from price, is that many Americans aren't comfortable with the lack of mileage from all electric vehicles. As such, more and more Americans are opting for hybrids; a sort of "being green without giving up options".  In this sense, many can feel good about going green while at the same time retaining a sensible form of travel they are used to.

Enter Tesla Motors.

Aside from the fact that their Model S gets great mileage (around 200-300 miles per charge) for an all electric vehicle, Musk's company promises something that flips the automotive industry on it's head; free fuel and maintenance. Given the nature of the vehicle, many problems can be fixed via over the air software updates - for free. In addition, Tesla has been rapidly expanding it's network of superchargers: a electric station that charges a Tesla up from empty to half-full in 20 minutes - for free. And now, the patents that make up some of Telsa's unique features, patents that won't expire for years, are going to be given away - for free. 

In a nutshell, Tesla right now is basically facing the entire automotive industry, as well as the oil industry. Many car makers are uniting in their efforts to lobby Tesla out of business, and it's starting to work. By giving away their patents, Tesla is allowing other manufacturers to fight with each other. For instance, some companies, such as Mercedes, have finally began to make all electric vehicles, as evidenced by their new B-class. Now that these companies can access Tesla's previously restricted patents, they are in position to focus more on electric vehicles. Once they focus more on electric vehicles, they will amass a more significant share in the electric car market. Ultimately, they will then be on Tesla's side, as they themselves stand to lose a significant source of revenue. If all goes according to plan, soon Tesla will be leading a united automotive industry that combats the oil industry, rather than all of these groups gaining up on Tesla. 

Lost in this debate of how much a patent controls earnings is marketing. Tesla just turned itself into a "good" company, one that many are proud to buy from. In decades past, this may not have been much of a deal. But with today's consumer becoming more moral publicizing such an announcement will only bode good things. Companies like Nike, Walmart, and Coca-Cola have become villains, with certain consumers such as this blogger refusing to buy their products when possible. But having heard this news about Tesla, maybe it's time to sign my dad up for a test drive...