Which Energy Company is Masquerading as an Automaker?

“Tesla isn’t a car company; it’s a battery company” (Montenegro).

Last summer I blogged about Tesla’s ground-breaking decision to make all their Tesla automobile patents public domain (see Open Source Life). Tesla stated that open source patents were a means to accelerate the electric car movement and limit harmful emissions. While this may be true, many believed this was part of a bigger plan to accelerate the public need for portable/modular batteries.

At that time Tesla was shopping for a State in which to build their battery factory. That deal is now sealed and Tesla has begun construction of a $5 billion facility in Nevada. This factory will be used to develop modular batteries which can store large amounts of energy for personal or business use. Last week Tesla announced the launch of their Powerwall scalable battery. With this announcement, Tesla is showing us that their core business is portable energy, not automobiles.

As we review this fascinating case study, here are three lessons we can learn from.

  1. Form vs. function. An organizational adage reminds us to not confuse form with function. Form, how a company runs and operates, should always serve its function, why the company exists. At their heart, Tesla wants to enhance environmental sustainability. It began with electric automobiles and has now extended to our homes and businesses. Tesla’s move from automobiles to batteries is a great example of how function should drive form.
  2. Claiming our preferred future. A foundational premise of my work in strategic foresight is that we each have the ability to shape our future. However, this is not a passive process. We must both identify the future change we desire and then take the risk to change.  Musk teaches us a lot about what the vision of innovators and disruptors can do when we are willing to change our model (in this case, a reliance on fossil-fuels). He and his leadership cadre may become the ‘Renaissance Men/Women’ of our time due to their vision and risk-taking abilities.
  3. Disruptive technology. This term is bandied about regularly. But in the next decade you will watch a textbook example of how modularized power is going to disrupt the power industry. I believe that many electricity monopolies are taking their last breaths. As Powerwall gains acceptance, neighborhoods will begin assembling microgrids of shared power (think of Uber or AirBnB concepts used for sharing excess power). Citizens will break the monopolistic power of electricity companies when they begin to purchase cheaper power during non-peak hours, store it, and resell it at a higher cost (think of it as the new form of ‘currency’ trading). In time, modular power will highlight the sweeping effects of disruptive technology.

It’s time to start saving for a $3,500 Powerwall! I don’t know how to do it, but it is definitely my preferred future!


 

Jeff Head Shot 3.jpgJeff Suderman is a futurist, professor and consultant who works in the field of organizational development. He works with clients to improve leadership, teamwork, organizational alignment, strategy and organizational Future-Readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

References

Robert Monenegro. Tesla’s worst kept secret has become Power Companie’s Nightmare.

 

 

 

Open Source Life

In June 2014 the CEO of Tesla Motors, Elon Musk, made a surprising announcement, “…in the spirit of the open source movement, for the advancement of electric vehicle technology…Tesla patents have been removed”.[1] Most experts consider Tesla to be the global leader in the electric vehicle movement so giving away their patents is a very big deal.

As a futurist, I keep an eye on trends which are impacting our lives. The idea of ‘open source’ has been on my watch list for some time. Most of us are familiar with successful practice of open source via software development. Platforms like Firefox, Android and WordPress (which this blog is built upon), are all open source. However, Tesla’s move to release patents to their competitors is a significant move towards open source in the non-software environment. I suspect that it will be the first of many.

The decision to share patents is even more interesting when we consider it alongside another major trend, the increasingly complex world of copyright in the digital age. The information age makes it easier to access information, while at the same time, making it more difficult to copyright protect information. File sharing, music streaming and Wikipedia all exemplify how copyright is getting more difficult to enforce. In fact, some would state that copyright is already functionally dead. If you extend this copyright idea to the domain of patents, we see that Musk’s move may reinforce the concept of  the death of copyright.

I do not believe that copyright or patents will die. However, we may have reached a tipping point where the complexity of enforcing copyright can be more difficult and costly than being consistently innovative. In the words of Musk;

”When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.”[2]

In an era where patents and copyright are increasingly difficult to enforce, open source can be a strategic business choice. For Tesla, the stated advantage of this choice was humanitarian – slowing harmful carbon-based emissions. I suspect this choice will also bring Tesla long-term financial benefit (batteries are the most expensive component of electric cars and they plan to build a $5B battery factory. Ergo, more electric cars means more electric batteries). While the motive for open source will be complex, I believe that Tesla’s open source experiment will one day be viewed as a historical landmark in the open source movement.

 


 

[1] Musk, E. (June 12, 2014). All our patents are belong to you. Tesla Motors. Retrieved from http://www.teslamotors.com/blog/all-our-patent-are-belong-you

[2] Ibid.