Tesla: Can Giving Drive Success?
We’ve noticed that Tesla, a rapidly growing electric car company aiming to promote growth in the electric vehicle sector, has repurposed a business strategy pioneered by technology companies: Tesla recently announced that they will open-source their technology. Google opened up Android after spending millions to develop the software and since then, Android has surpassed iOS as the most used mobile phone operating system. We wonder if Tesla’s decision to open-source technology will help it to succeed in the same way.
Tesla’s decision to offer other automakers free use of their technology is not the first time that the company has made its technology available to others. Competitors have been paying Tesla for their technology for some time. Daimler and Toyota both own shares in Tesla. Daimler’s Smart City Car uses a Tesla battery, and the Mercedes B-class EV uses a Tesla power train. Toyota’s second generation RAV4EV uses a power train, battery, gearbox, and software supplied by Tesla. Tesla’s history of offering technology assistance to other automakers and decision to open-source its technology begs the question: is Tesla a car company or, at their core, a technology company?
Tesla’s announcement that it will share its technology to promote sector growth is not without risk. Although Tesla certainly stands to benefit from the network effects of EV sector expansion, this relatively undeveloped market is not without competition. GM has announced plans to release a markedly improved model of the Volt. The new Volt will have a 200 mile per charge capacity and cost about $30,000, slating the vehicle to target the same customer as the forthcoming Tesla Model 3. This new development will certainly test the feasibility of maintaining a competitive advantage while the lines between competition and collaboration become increasingly blurred. Could Tesla’s decision to open-source technology and share its patents reflect an emerging strategy in which industry growth trumps proprietary technology? We’re excited to see how this model of open sourcing technology will impact market development moving forward.