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    The Real Reason Tesla Opened Its Patents, And Why It Makes Business Sense
    By Robert Cooper | June 27th 2014 07:00 AM | 2 comments | Print | E-mail | Track Comments
    About Robert

    I have given up on categories. I did a BA in physics, a PhD in molecular biology, and now a postdoc in a bioengineering department. So call that...

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    Tesla Motors CEO and Tony Stark do-alike Elon Musk recently raised a great deal of consternation by releasing Tesla’s patents for anyone to use “in good faith”.  Amid the hue and cry of befuddled business analysts, multiple theories bubbled up.  Is Musk angling to make the Tesla supercharger technology the industry standard?  Is he trying to sell batteries from his upcoming gigafactories?  Does he want more electric cars to give Teslas more legitimacy and attract investment?  Is he simply disillusioned with patents and claiming some open-source caché?


    Curiously enough, the answer is on Tesla’s website, right where it’s been since the beginning.  The most important motivation for Tesla is climate change - its mission is to help move the world “towards a [sustainable] solar-electric economy”, meaning away from fossil fuels*.  Sure Tesla makes money; that’s what it takes to change the world.  Electric cars can’t displace exhaust spewers without being a self-sustaining business model.  Tesla was founded because the existing manufacturers simply weren’t moving, and Musk was trying to prod them into electric innovation.  Unfortunately, the major automakers’ collective response has been less than electrifying, and Tesla isn’t yet at enough scale to make a dent in tailpipe emissions.


    Musk made the climate point in his announcement - “it is impossible for Tesla to build electric cars fast enough to address the carbon crisis” - and in his subsequent conference call - “I don’t think people quite appreciate the gravity of what is going on or just how much inertia the climate has.  We [humanity] really need to do something.”  Most analysts summarily dismissed these points, looking instead for a hidden advantage to Tesla in the next quarter.  Not taking Musk at his word, however, would be a mistake.


    Consider Musk’s other ventures.  It’s pretty clear that SolarCity is about addressing climate change.  SpaceX is about backup plan(et)s.  In explaining his aim to colonize Mars, Musk explained that “the thing that matters long term is… to make life multiplanetary.”  Ultimately, he reasons, keeping humanity on a single planet is a high-stakes gamble, and putting some eggs in another basket (even if it is a fixer-upper) is a way to ensure our long-term survival.  That’s a bit farther out than slowing climate change, but the point is, Musk thinks bigger-picture longer-term than Wall Street analysts are used to.


    With the real reason for open-sourcing Tesla’s patents explained (it’s the climate, stupid), here’s why it makes good business sense.  Cars are big ticket items, and as we’ve learned, major economic disruptions tend to have a negative impact on auto manufacturers.  We’ve seen this from financial shocks, but the world economy faces an even bigger risk from unchecked climate change.  This is no longer an academic exercise - even Hank Paulson, Republican Treasury Secretary during the devastating 2008 crash, sees climate change, not another financial crisis, as the biggest risk to our economy.  As a recent duo of politically diverse reports lays out, a warming world means more risk of costly weather extremes, including flooding, droughts, and sea level rise.  Dealing with all this will only suck away from disposable income, which will not be terribly good for business.


    Even if they care only about hard profits, any corporation that needs an economically stable customer base would be wise to join Tesla in helping to head off climate change.  And for the increasing number of entrepreneurs who do want to do good for the world through business, Tesla should serve as proof that corporate and environmental sustainability can go hand-in-hand.



    * Yes, sustainability is complex, and the carbon reduction of electric cars depends on where they get their electricity, but in general, they're better.

    Comments

    Nury Vittachi
    I always applaud when science and business and doing good come together--the combination is sadly still quite rare. I hope Musk gets some credit for this. 
    When Google stood up to China and removed its service rather than be politically censored, most of the Western media said it was "bad business decision". It was hard to find a single report that said anything about what it really was, which was a brave moral decision. 

    Hope this works out well for Musk.
    Hank
    It was good PR, anyway. All he said was he would not defend them if they were used 'in good faith'. What does that even mean, legally? Basically, he did not release them at all but he is being treated like some sort of open source deity. Meanwhile, he took all this money from California taxpayers to get his car company started but when it came time to build a new factory, California wasn't even on the list because he said the business climate was too hostile and expensive.