Musk says he’ll authorize other companies to use software and powertrain to “label” Tesla?

Do you know why, in so many car companies around the world, you only seem to know that Elon Musk is Tesla’s boss, and that the others have never heard of it? Because this person really loves to play social media so much, in Musk’s tweet, you can not only know what his newborn son is called (X-A-12 Musk), but also learn about the company’s various trends. It’s not hard to explain why media teachers brush Musk’s tweets more often every day than they brush friends and micro-blogging.

No, yesterday Musk dropped another “news bomb” on Twitter.

“Tesla will license other companies to use our software, including Autopilot, as well as supply powertrains and batteries,” he said. We just want to accelerate sustainable energy, not to crush competitors. “

Is Musk crazy?

Although Tesla sells less than one-and-a-half of the traditional car companies, it has a market capitalisation that is more than the giants put together, and while Tesla is often called “no technology, that is, a patchwork product,” professional research firms appreciate its “battery innovation, motor technology, electro-control technology, autonomous driving aids” and the car giant’s followers are in the same direction.

Morgan Stanley adjusted Tesla’s share price forecast after the company’s 2020 Q2 results, with “normal” expectations adjusted from $740 per share to $1,050 per share and “bull” expected to adjust from $2,070 to $2,500 per share.

Whether from the macro capital analysis, or from the micro expert analysis, is enough to illustrate Tesla’s leading position in electric vehicles. So doestesla now license other companies to use it, especially the proud autopilot system, without spilling into its own market? Even if sustainable energy is to be promoted, it doesn’t have to be at your own expense?

These doubts can’t be without making one wonder what Musk really wants.

On the face of it, logic seems to be like this, but it’s hard to remember that six years ago Musk announced that “share all Tesla patents with an open source mentality.” In general, car companies not only protect their patents, but may also “take” other people’s patents; Leading many people not only didn’t believe it, but thought Musk was “ulterior motives.”

Some “analysts” point out that Tesla, while talking about “open source sharing patents,” has some conditions. This means that if a company does something, Tesla reserves the right to sue.

If a company wants to use Tesla’s patents and avoid suing Tesla, then you can’t do these three things. Simply put: the Company cannot (or help other companies) claim or challenge (assert, challenge) any patent or intellectual property (which involves economic benefits or not involved) resulting in a disadvantage to Tesla;

(Tesla shares different types of ratios in patents, and now Tesla is still adding to the list, Figure/Electric Bang)

The so-called “open source” focuses on openness, acceptance, inclusion and development, seeking common ground while preserving differences, mutual benefit and win-win situation, which is the essence of “open source”. It seems that Musk’s so-called “patent open source” does nare not meet this standard, but rather adds a number of restrictions.

But if you are a programmer or familiar with open source software, should know that although the author of open source software is very much advocating the above set of spirit, and in fact many people “involved” in open source software, there is no such spirit, but is a little modification of the source code and packaging to obtain benefits, and even appear “noisy.” It’s not just the source code authors that do the damage, it’s the ecology of the entire “open source community” that’s so damaging to the long-term development perspective.

Musk’s goal of sharing all the patents is simple, so that more car companies can join the electric vehicle transformation and jointly promote the industry, Tesla challenges the traditional automotive industry, it is difficult to compete on their own. And the more people join the production of electric vehicles, then there will be more competitive cars in the market, there will be more charging piles, synchronous development of the supply chain will further reduce BOM costs, thus entering a virtuous circle. In a way, it’s a bit like when Google opened up Android to the size of today’s smartphone market and the Internet boom.

“The more people use patents, the higher the value of the market,” he said.

Zorina Khan, “Democratization of Invention”

In fact, many of the world’s top technology companies have been “patent open source”, such as IBM, Microsoft, ARM, Google and other giants, have opened countless patents free of charge. In 2017, Google launched a “PAX” patent cross-licensing program, in which manufacturers who join the program are free to use patents in their members, but also do not infringe on the interests of “friends” in patent or intellectual property rights. In that year, countless people questioned such abuses, but with a series of mobile phone hardware and software manufacturers between the “blood war” experience, and today’s mobile phone market situation, it is clear that the benefits outweigh the disadvantages.

It should be understood, however, that patents are an “exclusive right”, a tool that guarantees their own interests when a patent is infringed by someone else. In fact, it can not completely eliminate others “imitation”, the vast majority of patents after the application will be open, to “open for protection” logic, with the law to protect patents. Corresponding to it is also a kind of “trade secret”, that is, some technology is not easy to be reversed by others research and development, or is still in a large number of commercial, for the most comprehensive protection of their own interests, will not apply for a patent.

So for Tesla, the patents announced are just tools to help other companies “enlighten.” Although the list includes AP systems and car systems, but in fact, are the framework structure and software kernels (core drivers, etc.), users need to learn, modify, optimize on a secondary basis in order to really get something useful. Technology, which includes many Of Tesla’s vehicle hardware, is described in detail in terms of technical processes and problem solving logic, but still requires a considerable strength for the car companies to benefit and accelerate the electalysing process.

The true core software code, the core parameters of various technologies and materials, etc., exist as a Tesla trade secret. And that’s not free, it’s another “use” – being a supplier.

the meaning behind it.

More than a decade ago, the smartphone market was still in its infancy, also known as the savage growth stage. There are numerous mobile phone brands appear, slightly carefully the company’s own design motherboard, appearance, core components are through procurement, and eventually to the foundry production, and the vast majority are similar to the “label” products, from Taiwan MediaTek there to the overall procurement program, casually a shell, paste a logo on the market.

While the mobile phone industry is still significantly different from the automotive industry, one thing is common to the high reliance on the supply chain to provide “raw materials”. Mobile phone manufacturers can provide “materials” on the basis of innovation and design, improve the competitiveness of their products. Those who do not think ahead are gradually eliminated, and such as the OV plant, Huawei is different degrees of research and development innovation, and finally to this day.

The same is true of the automotive industry, where nearly 60% of the value of traditional car companies comes from the supply chain, and a significant proportion of patents and core technologies are in the hands of suppliers. In other words, in the past automotive industry development model, in a sense, car companies are also fast becoming “labeled” products.

Two years ago, a consulting firm did an industry study speculating that in the future it was possible that suppliers would join forces to steal the company’s own cars and take away a lot of surplus value.

But with the new energy vehicle “unstoppable”, electrification, intelligence and other core competitiveness, requiring car companies at the beginning of research and development to readjust the process, management structure, cooperation mode, the original power of Tier1 suppliers have been able to predict the “snubbed”, so companies like Bosch in the last two years hastened to recruit sages, in the original company structure outside the establishment of a new software development department, trying to catch up with this wind.

Tesla, the initiator of this trend, has gradually centralized the industry from its inception, with a high degree of vertical integration, even for components purchased from suppliers, which are Tesla’s own designs and requirements, and the final components are printed on Tesla’s own logo.

So in essence Tesla is already a supplier, OEM collection, and in fact Tesla is not now advertising will provide products to other companies, as early as a few years ago (Musk had talked to BMW) Tesla has repeatedly invited other car companies to join the overcharge network, one is to expand the construction and development of the super-charge network, and the other can be their own standards as industry standards, enhance their advantages. However, the traditional giants were not willing to “bow down”, but instead formed their own alliances, such as the IONITY alliance.

(Q3 2019 Musk said the same thing)

Tesla has two benefits: first, with its own mature hardware and software products, provided to other companies, can accelerate the generation of new electric vehicles, only the electric vehicle market is becoming more diverse, and people are not focusing on basic battery life, reliability and other issues, can further expand the overall market; Faster self-driving l4 or even L5-class, and profits are scaled up again with Robotaxi.

In addition, combined with Musk’s tweets and 2020Q2 earnings, it is possible to speculate on the message that, with the current blueprint for Tesla’s plan, batteries may no longer be a bottleneck.

(“The real bottleneck in Tesla’s sales growth is the low-cost mass production of batteries”)

There are two possible reasons behind this: one is that the production capacity of the Nevada Superfactory Nevada has been further increased, gradually approaching the original design of 54GWh in 2020, to be able to cope with the large number of batteries needed for energy storage (Megapack) and future Semi production, and the signing of a contract with China’s Ningde Times and LG to further resolve the battery production problem; And it’s likely that the so-called “battery supply” is Tesla’s new 1.6 million-kilometer-long battery, which it reported last year, and the company already has a new battery line at its Fremont plant, as well as loading and long-term testing and adjustments to the new batteries, to be unveiled at the Shareholders’ Meeting and battery powertrain conference in September.

For Tesla, further price reductions have been the goal, and Musk made it clear in Q2 that “the thing that bothers me the most is that our cars aren’t cheap enough and we need to improve.” “While Tesla has achieved good profit margins through a variety of other cost controls, battery as the largest cost of electric vehicles still needs to be further reduced.”

In today’s car companies on the road to the electro-electric process, the battery has been advancing the process of the constraints, before the volkswagen procurement of Guoxuan Gawker shares, after the major car companies joint lithium battery company to establish factories, are in preparation for the future electric vehicle production capacity. So from Musk’s tweet release, it’s not just an emphasis on Tesla’s future presence as a supplier, but also about its potential future advantages in battery technology, capacity, and more.

A new pattern?

In fact, the author feels that Musk “for everyone’s good”, in order to accelerate sustainable energy development and achieve the “win-win” win-win goal, are serious and sincere, but “everyone” may not be.

First, in 2009, Tesla was in trouble, negotiating with Daimler for $50 million to buy a 10 percent stake, resolving a one-time crisis, with Tesla and Daimler signing a contract to provide battery packs and charging technology for the Smart EV, as well as other technical support.

But the honeymoon ended in 2014, when Daimler sold all its shares for $780 million. On the one hand, the Smart EV itself did not generate much sales for Daimler (although only 1,000 units are expected to be produced), and on the other hand Daimler decided to make itself electric through the EQ series.

There may be other reasons, of course, not known, but in a 2018 Polish newspaper interview with then Daimler CEO Dieter Zeitz asked him if he regretted selling Tesla shares that year, he replied: “We don’t regret what we did, but that doesn’t mean there won’t be co-operation in the future.” Of course, we won’t buy shares again, preferring to face Tesla head-on. “

Toyota, another giant, also worked with Tesla back in 2010. Musk invited Mr. Toyoda to his home and gave him a taste of the Roadster, which led Toyota to buy 3 percent of Tesla’s stock for $50 million and sell the CALIFORNIA’s MUMMT plant , later the Fremont plant, to Tesla for $42 million;

The results, however, are strikingly similar to Daimler’s. The RAV4 also sold more than 2,000 cars, and the other two were at odds over the design, when Toyota was in the early stages of the TNGA architecture, completely different from Tesla’s new electrical and electronic architecture, and the two companies ended up in a split. Also in 2014, Tesla stopped supplying lithium batteries and technical services to Toyota, which sold some of its shares and stopped production of the RAV4 electric version, and by the end of 2016, Toyota would sell all of its shares.

For now, even Musk’s Iron Fernis( VOLKSWAGEN CEO) is not expected to rush to announce Tesla as a supplier. It is clear that, as a car giant, in this situation, a supply contract with Tesla is no different from “declaring a failure”. If so, even Mr. Toyoda would not dare to face the board.

So the only thing Tesla can choose to work with is new cars around the world, “novices” who only make electric cars, players who don’t have the baggage of history or the burden of the board.

(Bollinger Electric Vehicle)

And these companies, through Tesla to provide core hardware and software, shorten the research and development cycle, take advantage of the existing overcharge network and other advantages, quickly bring products to market. Through the electric vehicle market matured after diversification, personalized as a product point, as well as for different user groups, more or less can be divided a piece of the pie, in the gradual stability of the brand, and then a little bit of research and development innovation to create their own barriers, is not beautiful.

In addition to being a dreamer with big goals and a big mind, Musk is also a master-and-a-job mastermind. This trick “open source patent core, provide hardware and software core” combination of fist, not only proved their lofty ideals, but also cleverly use a large number of new forces want to squeeze into the automotive industry to jointly resist the power of traditional fuel vehicles, together to make a big cake, to achieve mutual benefit.

The end of the matter also downplayed a sentence:

“We want the big car companies to learn from Tesla, and I don’t understand why they’re taking so long (to develop electric cars).”

Elon Musk (2014).