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Tesla Motors opens door to electric vehicles’ technology secrets

Last updated: June 12, 2014 6:43 pm

Tesla Motors opens door to electric vehicles’ technology secrets

By Henry Foy, Motor Industry CorrespondentAuthor alerts

Electric carmaker Tesla Motors has taken the unprecedented step of opening its technology secrets to its rivals as chief executive Elon Musk attempts to boost interest in the low-emission vehicles.

Tesla, which has defied larger carmakers by making money out of its luxury electric vehicles, will allow competitors to use its patents in a gamble that it hopes will bring down industry costs and open new business opportunities.

“We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly evolving technology platform,” Mr Musk said. “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

The decision is characteristic of billionaire entrepreneur Mr Musk, who has a record of outlandish ideas and has stirred up the space industry with promises of reusable rockets and plans to colonise Mars.

Mr Musk has long stressed that his primary goal of widespread electric-car usage is more important to him than Tesla’s ultimate success. In offering its patents to rivals, he also hopes to create a larger market for electric cars, which would bring down the cost of the company’s charging infrastructure.

Tesla, which sold 22,500 cars last year, has seen its market capitalisation more than double over the past 12 months to $25bn, as investors bought into bullish growth predictions and high profit margins as volumes rise.

Tesla’s rise from technology start-up to car-industry darling has been rapid, but investors and industry experts reckon its long-term future depends on whether it can manufacture a successful low-priced, mass-market model.

Mr Musk has promised an electric car costing less than $35,000 within the next three years, a target that would require a sharp reduction in battery costs.

The company is also building a factory with the capacity to build 500,000 batteries a year, far more than it currently needs. Other groups using its technology could choose to source batteries from Tesla.

Tesla, based in Palo Alto, California, has worked with other carmakers in the past to help them develop electric cars, and has supplied batteries to Toyota and Mercedes-Benz’s owner Daimler. Both are shareholders in Mr Musk’s company.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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