13 Jun 2014 Why Tesla’s technology sharing is beneficial for the electric vehicle market (and for Tesla)
Yesterday Tesla announced that it was making its electric vehicle patents available to open source users. This is seen by many as a bold move – Tesla has developed a different battery technology to other players in the market, using smaller cells that run more efficiently. This technology might be seen as their competitive advantage; other firms would keep this information in the height of secrecy. But Elon Musk, CEO of Tesla Motors, says they are releasing this information for open source use “for the advancement of electric vehicle technology”.
Releasing this technology is undoubtedly good for the global electric vehicle market – it will enable other to innovate and to get products to market more quickly. But it is also a great move for Tesla itself.
The electric vehicle market is still small – it needs to grow for Tesla to grow
An estimate at the end of 2013 put the size of the global electric vehicle market at just 400,000 units – from a global fleet in excess of 1 billion cars. The electric vehicle market is still small and niche – whilst Tesla is a notable player in this market it is still shipping a relatively small number of cars each year.
There is huge scope for this market to grow – regulation and consumer behaviour change is helping to grow demand for electric vehicles. A growth in the volume and range of cars available will help to massively grow the market further – creating more awareness and more demand. By opening up its technology, Tesla is helping to grow the overall market. With it’s established market position and luxury brand image it will certainly benefit from any overall growth in the market.
Let others innovate with you
As we see in other markets where open source technology is the norm, democratising access to technology allows people with different areas of expertise to innovate. Tesla is already an example of where people not from the automotive industry are able to build a product that is competitive and that thinks about some design and marketing challenges in different ways.
Opening up access to its technology will encourage innovation in areas that Tesla might not previously have considered – new apps will be built, the technology will be tested and stretched in new and different ways. This will make the customer experience of the product better and complement Tesla’s own technology.
Tesla want their standard to be THE standard for electric vehicles
Other industries have been bogged down in battles over formats and IP – taking time and effort away from the important task of innovating and growing your business. This open sourcing of their technology is clearly an attempt by Tesla to make their standard the standard for electric vehicles. Giving them an advantage and meaning that they can get on creating new products, growing their market and competing with existing and new competitors without the challenge of long and complex legal disputes over formats and standards.