Elon Musk’s Other Motivation

On June 12, 2014, Elon Musk posted a blog that has garnered a lot of attention:

“Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

Some have posited that by stimulating his competitors he is also invigorating and growing the entire industry, which is good for Tesla Motors, his shareholders, and ultimately all of us who like to breath clean air and want independence from foreign energy.

It clearly positions Musk and Tesla Motors as the good guys advancing gaming-changing innovation that will positively impact us all for generations to come.

But I’d like to propose a third possible motivation.  To save money!  And if not a direct motivation at least a brilliant tactic considering Tesla Motors IP position compared to its well-established competitors.

Tesla Motor’s patent portfolio, while growing, is tiny compared to their direct competitors like GM, Toyota, Ford and others.  Even in their own patenting sweet spot, they are dwarfed by almost all of the established automakers.

In a cross-licensing deal, Tesla Motors would likely be the net payee.  Therefore, why not paint the other companies as greedy corporations who are stymieing innovation, purposely driving up prices on electric vehicles, and by implication, defiling our planet when they attempt to be compensated for their innovation?

In the eyes of the public, Tesla and Musk will be heroes, and the major auto corporations will be the villains in the name of the corporate bottom line.

To test my hypothesis, I ran a patent matrix landscape comparing four key areas where Tesla currently owns the most US patents and pending applications.  I further divided the four main topics into subtopics.  To prevent biasing my analysis, I used a straight class code breakdown provided by the US Patent Classification Schedule.  I chose the US classification system since it uses a one-to-one relationship between patents and primary class codes.

Patent landscape of top companies in the electric vehicle market

Figure 1  The relative strength of Tesla Motor’s patent portfolio compared to the major automakers.


Head unit technologies by Tesla compared to competitors
Figure 2  Drilling into the “Navigation” class shows the top subtopics.

Tesla has only a fraction of the number of patents as Toyota, GM, Honda Nissan and Ford in vital battery technologies, which represent the bulk of Tesla’s own patent portfolio.

In Tesla’s two other largest patent classes, Navigation (which actually includes conditional control technology like breaking, steering, and seat positioning), and vehicle bodies and tops, Tesla is a relative afterthought.

The sparklines (small charts next to each cell) represent a twenty-year span by patent priority date.  Tesla’s patents are also newer than their major competitors meaning that Tesla may not possess some of the required fundamental technologies developed prior to their earliest patents, which have 2004 and 2005 priority dates.

What may be the most interesting is the relative dominance of patent holders who are NOT on the named list.  In the case of battery technologies, the major patent holders are high tech companies like Samsung, Panasonic, Sanyo, Sony and LG.  In the case of the “Navigation” node, the major patent holders are traditional automobile suppliers like Bosch, Denso, Jketk, and Mitsubishi among others.

What do you think?  Underdogs, from King David to T.E. Lawrence, knew better than to take on to take on larger foes on their terms.  Does this make Elon Musk and Tesla Motors immune to cross-licensing problems?  Would you think twice before attempting a cross-licensing deal with Tesla even though there is money on the table?  I bet you just might.

Tesla is still a comparatively small company so the revenue generated would be relatively small as well; as the market grows all boats will in fact rise; and it just could be a public relations nightmare for the asserting company.

I personally think this positions Tesla Motors very well, and is a classic example of the underdog fighting its battles on its own terms.  A brilliant move by Musk!

Matt Troyer

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