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Is Tesla Motors Inc (TSLA) Committing Suicide By Opening Its Patents to Chinese Rivals?

Yes, you read it right, Tesla Motors Inc (NASDAQ:TSLA) is allowing Chinese manufacturers of electric cars to use its patented technology free of cost, according to an article on Want China Times. Setting aside Elon Musk’s, Tesla’s CEO, commitment to advance technology at no matter what price tag it bears, there might not be a better example of corporate suicide, at least on the outset.

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However, we all know that even though Tesla Motors Inc (NASDAQ:TSLA) is not producing substantial car volumes every year as of yet, the company is far from giving up. To understand the rationale behind the company’s latest move, it is important to have an idea what Tesla is as a company. It is a luxury electric car manufacturer. It has a niche in the electric car industry which will only grow as the industry expands.

Electric cars still don’t have nearly as much traction as their gasoline counterparts. Tesla Motors Inc (NASDAQ:TSLA) on its own cannot change that. It needs the help of other companies to spur interest among people about the new technology. In this respect, according to the article, Tesla is letting other car manufacturers in China use its most important patent involving the revolutionary hybrid car battery which makes long travelling long distances on electric power possible.

Besides, helping the industry gaining popularity, there are a few other ways in which Tesla will benefit from its new open source philosophy. First and foremost, it will significantly speed up the development process for Tesla Motors Inc (NASDAQ:TSLA) as other people will develop on the company’s platform for it. Hence, Tesla could expend resources into going further from there.

Moreover, by removing the price tags from its patents entirely, Tesla also has the added advantage of diminishing the chances that a rival technology will be developed. Other electric car manufacturers will build on the same technology rather than venturing into something novel, since it is both time and cost efficient to do so. Hence, Tesla is set to come out victorious and more profitable from its apparent suicide.

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