The encyclopedia · Strategy & Leadership · Strategic decision · 2014
Tesla released all its patents to grow the electric-car market, not to protect it.
Musk tore down Tesla's patent wall and pledged not to sue EV makers, betting shared tech would grow the EV market faster than exclusivity.
Tesla
the move
In 2014 electric cars were a sliver of auto sales, so Tesla's patents protected it from rivals and simultaneously told everyone else to stay away from the whole category.
The obvious move was to hoard the patents. Musk did the opposite in the June 12, 2014 blog post "All Our Patent Are Belong To You," pledging not to sue anyone building electric cars.
The reasoning was that patents had policed a market too small to be worth protecting, and that applying an open-source philosophy to patents would strengthen rather than weaken Tesla's position.
Because every EV maker that succeeded validated a category Tesla wanted to lead, sharing the technology was an investment in the market's size rather than a surrender of its edge.
why it works
- Patents were policing a market too small to be worth fighting over.
- Every carmaker that builds an electric car validates the category Tesla wants to own.
- A shared technology base invites suppliers and infrastructure to invest in the sector.
what transfers
When the real competitor is an incumbent technology, giving away a moat can be stronger than defending it, as long as you keep a different kind of advantage such as brand, scale or ecosystem.
what came after
The move made open patents a Silicon Valley trope and foreshadowed Tesla later opening its NACS fast-charging connector as a standard. Tesla's structural advantage shifted from secrecy to scale, brand and a proprietary charging network, and as EV adoption grew it became the most valuable automaker, which suggested the gamble paid. Critics argued its real moat was manufacturing scale all along.
references
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