Innovation and Product Development
Innovation and Product Development Blog Post
Innovation and Product development: IP and OSD compared
Our basic capitalist interests make us believe that in order to incentivize people to innovate, we must reward them with financial control over their inventions. However, major industrial and cultural innovations require many brilliant minds across the globe, not a few hundred engineers in a single lab. Open source technology has proven to be an invaluable tool for innovation and global market growth. In this blog post we will explore Tesla’s philosophy on open-source, market-driven economics and its impact on the electric vehicle market.
Elon Musk, the founder of Tesla, opened up many of their proprietary patents for ethical and commercial reasons. When Elon Musk first announced that he was going to make his patents open source, the Tesla stock dropped dramatically. [1] At first glance it seemed that this strategic move was merely for the benefit of Earth’s climate, not car owners, investors or stockholders. Many investors believe patents to be assets and thus relinquishing those assets to competitors would be bleeding value. And yet, Elon Musk’s decision was not a purely altruistic one; he believes that opening up Tesla’s patents will actually increase Tesla’s value. As the global production of vehicles approaches 100 million per year, electric vehicles only form less than 1% of that number. [2] By granting access to its battery and automotive technology, the company is hoping that more vehicle manufacturers will adopt the technology, thereby growing the market size, market awareness and infrastructure to support EV’s. Further, if other companies adopt the technology of Tesla’s supercharging network, Tesla will have managed to construct charging networks compatible with their technology for next to no costs. Finally, nearly all Americans can agree that competition incentivises excellent service and product. But before Tesla opened up its patents, it was in a race all by itself.
Tesla’s bold plan to make its patents open source has had an enormously positive impact on the company, the EV market and planet as a whole. This has given many different companies in the automotive space the technology to more rapidly advance their electric car infrastructure and accelerate the speed at which the electric car network develops. Ten years ago, it was difficult to justify taking an electric car on a road trip with less than 10,000 charging stations around the US. However, now there are more than 60,000 individual chargers, with nearly 13,000 of those contributed by Tesla. [3] The growth of this network is extremely beneficial to Tesla as well as the electric vehicle market as a whole. More charging stations encourage people to buy more electric cars, not to mention the free marketing that comes from having people drive by a charging stations full of Teslas or other EVs. Craig Buschmann from TechCrunch sums up Tesla’s philosophy well: “As the pie grows, everyone gets a larger slice.” [4] indicating that Tesla’s revenue will continue to grow as the entire market grows. Electric cars serve as a renewable energy alternative to traditional gas cars, which contribute significantly to Greenhouse gas emissions. In fact, Greenhouse gas (GHG) emissions from transportation account for about 29 percent of total U.S. greenhouse gas emissions, making it the largest contributor of U.S. GHG emissions. [5] If the entire transportation community can examine and improve Tesla’s electric technology, it gives the US the opportunity to eliminate a large portion of their emissions. In a matter as serious as this, it is in everyone’s best interest to try and help the environment. Thus, Tesla’s decision to make their patents open source has encouraged EV technology to develop rapidly and has helped our global climate crisis as well.

Tesla is an example of how open-source patents incentivise innovation in stagnating industries. And when it comes to Tesla, it is not just car owners that benefit but our entire planet. Their industry leadership allows them to assume a riskier strategy of making their patents open source. However, since there is so much room to explore in the EV market, Tesla’s decision will ultimately benefit them as their market share continues to increase and the overall network effect greatly benefits Tesla, other EV companies, and the environment. I hope that other companies will follow in Tesla’s footsteps and make their patents open source, recognizing that they can still earn profits while advancing the community as a whole.
1. TSLA Interactive Stock Chart | Tesla, Inc. Stock. (n.d.). Retrieved from https://finance.yahoo.com/chart/TSLA
2. Iea. (n.d.). Electric vehicles – Tracking Transport – Analysis. Retrieved from https://www.iea.org/reports/tracking-transport-2019/electric-vehicles
3. Plungis, J. (2019, November 12). How the Electric Car Charging Network Is Expanding. Retrieved February 17, 2020, from https://www.consumerreports.org/hybrids-evs/electric-car-charging-network-is-expanding/
4. Buschmann, C. (2016, May 27). Tesla’s patent strategy opens the road to sustainability for transport and for itself. Retrieved February 23, 2020, from https://techcrunch.com/2016/05/26/teslas-patent-strategy-opens-the-road-to-sustainability-for-transport-and-for-itself/
5. Carbon Pollution from Transportation. (2019, June 10). Retrieved February 23, 2020, from https://www.epa.gov/transportation-air-pollution-and-climate-change/carbon-pollution-transportation




