Tesla Motors, Inc. (NASDAQ:TSLA) is a leader in electric vehicle design and manufacturing. It also owns the sales and services of these vehicles. In a recent announcement from Tesla Motors, Inc. (NASDAQ:TSLA) they are ready to open up hundreds of its patents to competitors. In CNBC’s Behind the Wheel show, discussion heated up on this announcement questioning the company’s move to open up patents and what would they benefit from it.
Discussion on the CNBC’s Behind the Wheel kicked off saying that Tesla Motors, Inc. (NASDAQ:TSLA) would ultimately benefit if more electric vehicles are developed and the demand for the electric vehicles goes up. These kinds of things happen in technology industries, but this is a first timer in the auto industry. Initially Tesla Motors, Inc. (NASDAQ:TSLA) would open up a few hundreds of patents, but eventually they would open up all their patents which may be several thousands.
Phil LeBeau, the host of the CNBC program, and other experts felt that there was an important phrase added to the announcement on Elon Musk’s (CEO of Tesla Motors, Inc. (NASDAQ:TSLA)) blog, which states “as long as others use these patents in good faith”. Experts felt that there is a catch to this phrase and similar to technological industry, companies would never do open sources and say run rough shot over us. Most on the show felt that Tesla Motors, Inc. (NASDAQ:TSLA) might actually be building its base in Electric vehicle segment and that it would only encourage companies to increase the popularity of the electric vehicles in the market. By doing this, the number of electric car charging stations would increase and this would increase the network for companies like Tesla Motors, Inc. (NASDAQ:TSLA).
None of them had a doubt in mind that Tesla Motors, Inc. (NASDAQ:TSLA) is not doing this as a charity and let the whole world benefit from it, they are business people and they would never do it. Conference call that was concluded before the discussion had Musk in it and for the question put to him on whether there was some opposition to this decision and what is his answer to them. Musk answered:
“As a company accelerating, you advent a new technology. That is what represents true competitiveness. It is not the static picture of oh, I have got this patent, then you’re just on a short clock until that patent expires and then it is game over. If somebody wants to, you know, shareholders want to vote against this, they can easily to do that, they can also vote to fire me if they like. There is no sort of protection against either of those things”
Musk admitted that there were wide eyed people when he first informed that patents could be opened up for all. But he actually feels that this move could spur the electric vehicle industry development and more electric vehicles could be sold. To take of electric vehicle sales over the next 10 – 20 some sort of big decision has to be made and Musk feels that he has done the right thing now.
LeBeau continued the discussion details on this stunning announcement from Tesla Motors, Inc. (NASDAQ:TSLA). he was pointing out that Tesla Motors, Inc. (NASDAQ:TSLA) had opened several hundreds of patents to competitors hoping that this would spur the electric vehicle industry LeBeau also stated the important phrase in Musk’s blog statement others would use it in good faith. He felt that this means if a start-up company makes a duplicate model with patents and they don’t give due rates to Tesla Motors, Inc. (NASDAQ:TSLA), things could get a lot different. When Musk was asked about the decision this is what he had to say.
“I thought things would be much further along than they are. I mean, you consider the fact we built the roadster seven years ago with a rough return of 50-mile range and it has been seven years and there is no other electric car in production with that range level. I mean that’s not great”
Phil pulled out some facts showing that in the last year of vehicle sales, less than 100k electric vehicles were sold, where as close to 15.5 million other vehicles were sold. Also the shares of Tesla Motors, Inc. (NASDAQ:TSLA) traded lower after the announcement was made. Phil feels that bottom line for this announcement is that for the electric vehicle sales to take off, the price of these vehicles has to go down. These patents could reduce the battery price and increase the capacity of batteries which in turn would spur the electric vehicle industry.