Musk to release Tesla patents ‘to help saving earth’
Elon Musk announced on Thursday that all Tesla’s patents will be released for the public domain ‘to help saving the earth’. The CEO and co-founder claims Tesla was founded from the beginning to help accelerate durable transport. Critics are less impressed and think it’s rather one of Musk’s tricks to lay a smoke screen to hide less spectacular financial results.
On the company blog Musk posted: “Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.”
Accelerate sustainable transport
“Tesla Motors was created to accelerate the advent of sustainable transport”, the blog contines. “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.”
The flamboyant billionaire said he doesn’t like patents as they tend to slow down progress and allow companies to dig in on their positions while enriching lawyers with lawsuits.
Lottery ticket to a lawsuit
He recalls being happy about his first patents at his first company, Zip2, providing online city guide software to newspapers. But he soon realized he bought with this ‘a lottery ticket to a lawsuit’. He tried to avoid patents after that, except for Tesla.
“We felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn’t have been more wrong.”, Musk writes.
EVs 1% of total sales
The reality showed different as electric car sales of those big car companies is only 1% of total sales. Annually around 100 million new cars join the world’s two billion car fleet. “Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”, Musk says.
Musk end with pointing at the fact that history shows that patents are little protection against a really determined competitor. He says technology leadership is all about the ability of attracting the best engineers in the industry and bets the move to release the patents will contribute to that.
Shares took 9% plunge
As noble as Musk’s plea to save the earth might be, it didn’t seem to have stirred to tears investors at the stock exchange . Tesla shares took a 9% plunge after Tesla revealing its second profitable quarter end of 2018, but lower than analysts initially expected.
Net profit was 139 million dollar on a 7,2 billion dollar return, up from 3,2 billion in the previous quarter. For the whole of 2018 return rose from 11,9 billion to 21,3 billion dollar. Mostly fueled by growing production numbers for the Model 3. This production is to ramp up to 7.000 per week in Fremont and an additional 3.000 in the brand new factory in Shanghai (China).
400.000 cars a year
That would mean Tesla would produce between 370.000 and 400.000 cars in 2019. A growth of 45 to 65% compared to 2018. Musk calls 2019 ‘an exiting year to come’. He claims Tesla will be able to unveil an electric pick-up truck by summer and repeated the semi-truck and the next smaller SUV, Model Y, are on schedule for 2020. The latter was announced by Musk for 2019 initially.
Musk also said to be confident that even with a worldwide recession, Tesla would be able to push up production of its cars by 50%. But analysts learned in the past to look at Musk’s previsions with suspicion.
Cash to pay off loans
The company’s cash position is improved with almost 1,5 billion dollar. That’s enough money to pay off its loans, the company assures. Tesla has to pay off a 915 million dollar loan in March. Analysts believe one way to do that is by converting it partially into shares.
But the latter would reduce the profit per share for the existing shareholders. And to do that, share price should be at least 357 dollar. With investors ‘disappointed’ shares are somewhere at 306 dollar these days.
CFO leaves company
Another announcement, done casually at the very end of Musk’s press conference fanned the fire with the critics. Deepak Ahuja, CFO of Tesla is leaving the company. He isn’t the first of the top management to leave. And Musk earlier already announced that 3.000 people would be laid off to assure stable profitability the next year.
Meanwhile competition isn’t standing still neither, trying to catch up with Tesla and the Chinese in electrical cars. That should be a good sign for Elon Musk’s holy quest. But apparently those having their money put in Tesla, aren’t all cheering that idea.