Tesla's Open-Source Gamble

Tesla Model S

Photo courtesy of Tesla Motors

Tesla's Open-Source Gamble

By R. Alan Clanton | published June 15, 2014 |
Thursday Review editor

Elon Musk, CEO of Space-X and Tesla, likes a challenge, and he is not normally afraid of litigation.

Space-X was forced to quibble with the U.S. Air Force, NASA, the U.S. Army and a variety of government agencies to gain access to the bidding process for his Space-X component.  But the escalating crisis in the Ukraine and a nasty war of words and sanctions between Russian President Vladimir Putin and U.S. President Barack Obama landed Space-X back on the top of the list when it comes to keeping American rockets aloft.  Now the Air Force and NASA love him again, sort of.

But Musk wasn’t necessarily after the affection of the Feds or its agencies. All he wanted was to be able to compete on a level playing field with the big boys like Boeing and Lockheed-Martin. Not afraid to be David to their Goliath, Musk took his complaint to court in April, saying that the working partnership between Lockheed-Martin and Boeing, and their cozy relationship with the U.S. government, amounted to a monopoly and a case of preferential treatment.

With the U.S. essentially locked out of the use of Russian heavy lifting, at least until cooler heads prevail in the Ukraine, dozens of government entities and scores of American companies are running behind on deadlines and timetables to place high tech gadgetry into Earth orbit. Space-X might be able to save the day, which is what Musk had been telling them all along.

But Musk may have bigger forces to contend with than the aerospace and high tech weapons cabal. Musk is more concerned with Detroit’s Big Three.

In a dramatic move to outflank (some would say to goad) Ford, GM and Chrysler, Musk announced that he was opening up the company’s safes and file cabinets and letting everyone—and anyone—have a crack at use of his patented processes and inventions. His goal is to get his Supercharger technology out there among engineers and developers, even among his competitors or would-be competitors. Musk is gambling that by sharing his patents, especially those closely related to his fuel-efficient and electric cars, the market will begin a paradigm shift toward the Tesla business model—that of a U.S. car market migrating away from fossil fuels and into battery-powered vehicles.

Early in the week, Musk and his representatives announced the release of patents related specifically to Tesla’s electric vehicles and their batteries and fuel cells. Later that same week, Musk essentially opened the door to all patented materials. Musk clearly hopes to co-opt reluctant markets by inviting other developers and entrepreneurs to adopt Tesla, Space-X and other technologies as the new standard for the future. Musk is careful to use the words “good-faith” in describing his decision to allow competitors access to Tesla technologies.

“We’re open-sourcing everything,” Musk said in online blogs and social media posts, citing the “spirit of the open-source movement for the advancement of electric vehicle technology.” Musk has advocated for several years the rapid deployment of electric vehicles, and suggests that old industry cultures and engineering resistance have hampered GM, Ford and Chrysler from moving more proactively into the EV marketplace. By sharing Tesla patents with other developers and engineers, Musk is betting that more competitors will enter the EV arena, and—with enough market pressure—spur the Big Three (and the Japanese and Korean car-makers) into bold, aggressive action.

Musk complains that the Big Three and the Japanese automakers produce only hybrid-type cars, or electric cars with limited ranges, or, in some cases, no electric vehicles at all.

Tesla is in the final stages of readying its second fully-electric vehicle for release to the public. The car, which is for now called simply Model X, uses an elaborate, high-tech system of battery cells to power its drive train. The batteries are packaged in a low, flat, box-like structure—framed in rigid aluminum—which is built into the chassis of the car. The low center of gravity adds to the car’s efficiency and greatly reduces roll-over risk.

Tesla’s Model S is already available, and charging stations are available in some locations along California roads, as well as roads in other states. Back in April, Tesla official christened its 100th Supercharging Station, this one at the shopping center in Hamilton, New Jersey. There are roughly 86 charging stations in the U.S. and a dozen in the United Kingdom. One perk Tesla offers its customers: charging a Tesla is free at a Tesla-owned facility. Tesla says that it plans to construct hundreds of additional charging stations in the U.S. between now and the end of 2015.

Tesla’s website describes the Model S as having “responsiveness and agility expected from the world’s best sports cars while providing the ride of a sedan.” The Model S has a maximum speed of 125 miles per hour. The car also gives potential buyers a choice of three different battery options, which can affect both the range of the car as well as its acceleration and power. For example, the more expensive 85 kWh option gives the Model S a top speed of 130 mph (if one wanted to drive that fast).

The Model S uses Tesla’s unique lithium-ion cells, also encased in a rigid, lightweight aluminum frame. Tesla’s website says that the batteries carry an eight year warranty, and the upper tier models also offer unlimited mileage coverage.

Musk’s strategy of open-sourcing his patents may seem counter-intuitive to some business thinkers, but it is not without precedent. In the ferocious wars between the videotape formats VHS and Betamax, Sony eventually lost—in part because of its resistance to share the technology with strict caveats and controlling factors imposed. Makers of VHS equipment, because the technology was readily available, eventually beat out Betamax on scale and volume (though Beta as a professional format remained a standard in TV production for decades). Travel back even further in time to the earliest days of electricity and you will discover Tesla’s namesake: Serbian inventor Nikola Tesla, who in 1907 shared his patented alternating-current with Westinghouse for a relatively small sum. The goal: outflank industry giant Thomas Edison who was promoting his preferred standard called direct-current, generally regarded as more wasteful and dangerous. Nikola Tesla’s move eventually changed the marketplace, and alternating-current became the standard.

“Technology leadership,” Musk said, “is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor…but rather by the ability of a company to attract and motivate the world’s most talented engineers.”

“We think the market is plenty big enough for everyone,” Musk said. “Tesla will not initiate patent lawsuits against anyone, who, in good faith, wants to use our technology.”

Tesla also intends to make available all patents and technology related to its charging stations. In this case Musk also hopes to spur friendly competition to the forefront of the EV market: with more companies constructing charging stations along highways and roads, there will come an inevitable embrace by more drivers to purchase EV technology.

Tesla cars can also be charged at home using adaptors for either 110 or 240 outlets in a garage or carport.

Related Thursday Review articles:

Hydrogen’s Promise, Hydrogen’s Hype; Earl Perkins; Thursday Review; December 30, 2013.