Chapter 11: Intangible Assets and Goodwill

In an unprecedented move, Tesla announced in 2014 that it intended to share its significant number of patents with all other companies making electric cars. This is a radical departure from its previous strategy to apply for as many patents as possible considering its concern that the big car companies would copy Tesla’s technology. Tesla would be no match for these companies with their huge scale manufacturing facilities and their big budget sales and marketing. As it turned out, Tesla’s fears about the big car companies copying Tesla’s technology did not materialize because the electric vehicle market was not big enough to make the effort.

Since then, a new movement called “open source” has been gaining prominence in today’s business world. Since the focus of Tesla Motors was to accelerate the growth of sustainable transport—including electric cars—it follows that they would change their philosophy from holding patents to sharing their technology with other electric car companies. Moreover, the global vehicle market has now reached about two billion cars, increasing the carbon crises concern held by many. This environmental concern creates an opportunity for the electric car industry sector to take a bigger slice of the car market, especially if like-minded companies such as Tesla band together and share their technologies. This could result in the development of a common technology platform that would further the sustainable transport sector as a better environmental alternative compared to hydrocarbon-based transportation, currently the focus of most big car companies.

(Source: Musk, 2014)