Back in 2014, the world of automaking was left puzzled when Elon Musk made a shocking announcement. In a blog post titled “All Our Patents Belong to You,” Musk declared that Tesla would give away all its patents for free. Many thought it was a move of reckless generosity, possibly even a sign that he had gone off the rails. Yet, what appeared to be charity was actually one of the most cunning business manoeuvres in modern corporate history.
At that time, BMW was perfectly positioned to dominate the electric vehicle (EV) market in Europe. They had everything going for them: a respected brand, world-class engineering, and a well-thought-out strategy. BMW’s engineers and executives must have felt they had everything needed to surge ahead. But what they didn’t expect was how Musk’s unorthodox decision would transform the market and leave them—and others—scrambling to catch up.
This all began as BMW was making serious investments to lead the EV revolution. They were signing massive contracts to secure the batteries needed for future electric models, confident that they were ready to outshine their competitors. But while they focused on securing battery deals, Musk was working on something far more ambitious. He was gearing up for a future where battery supply would make or break the success of electric cars.
This vision materialised in the form of Tesla’s Gigafactory, announced as a $5 billion project. The Gigafactory was designed to produce more lithium-ion batteries per year than the entire world’s output in 2013. While other automakers were fighting for contracts to source batteries, Musk’s gamble was to build them in-house and on an unprecedented scale.
Then came Musk’s bombshell: opening Tesla’s patents to the public. The decision wasn’t impulsive but rather a masterstroke in expanding Tesla’s influence. At the time, the EV market was small, and Tesla lacked the resources to build enough charging stations to support widespread electric car adoption. Musk knew that Tesla couldn’t win this battle alone; the whole EV market had to grow.
So, by giving away Tesla’s patents, Musk invited other automakers to jump into the EV game, adopt Tesla’s technology, and, importantly, invest in EV infrastructure. This move turned out to be genius. With more companies building electric vehicles and the accompanying infrastructure, Tesla’s cars became increasingly practical for consumers. Charging stations expanded rapidly, and Tesla’s technology quickly became the industry standard.
While automakers like BMW were busy developing their EVs based on Tesla’s “gifted” technology, Musk and his team were tackling the true challenge: the cost of batteries. For EVs, batteries are the single most expensive component, and cutting down on that cost is the key to profitability and mass adoption. This is where the scale of the Gigafactory came into play. It wasn’t just a facility for producing batteries; it was a plan to dominate through cost efficiency.
BMW and others, who were thrilled to access Tesla’s patents, made a critical miscalculation. They assumed that competing with Tesla on EVs was just a matter of catching up technologically. But Tesla had a hidden advantage: the ability to produce batteries more cheaply than anyone else. As early as 2016, Tesla’s cost per kilowatt-hour was a staggering $187, compared to BMW’s $280. This wasn’t just a minor difference; it was a massive cost gap that grew wider as Tesla fine-tuned its production processes.
The true brilliance of Musk’s patent giveaway became clear as Tesla started producing batteries at costs competitors couldn’t match. By then, Tesla had built an almost insurmountable cost advantage, while others were still playing catch-up. The “gift” of Tesla’s patents had, in reality, been a strategic trap. Musk had successfully lured his competitors into validating and growing the EV market, all while Tesla quietly amassed a lead that was hard to beat.
Beyond cost and technology, the move signalled something deeper about Musk’s vision. He demonstrated that, in today’s world, openness can sometimes outflank secrecy. Companies that share technology strategically can build ecosystems, set industry standards, and benefit from network effects. By weaponising openness, Tesla inspired the development of a market that, in turn, fuelled its own growth.
Moreover, this wasn’t just a ploy to beat BMW or other traditional automakers. Musk was thinking bigger, recognising that real power in the digital age lies in creating platforms and standards. While Tesla shared patents and looked generous, it kept key competitive advantages: scale and operational efficiency. Other companies might have tried to compete, but Tesla had already moved on to perfecting what mattered most.
The lesson from this saga goes beyond the automotive industry. Musk proved that innovation today isn’t just about breakthroughs in labs; it’s about strategy, timing, and thinking on a grand scale. He demonstrated that true innovation can come from seeing how technology can create value through collaboration, not just from guarding every invention behind locked doors.
It’s a world where building ecosystems and leveraging strategic openness can lead to more lasting advantages than mere technological secrecy. And as Tesla continues to set the pace in electric vehicles and clean energy, the story of how Musk “gave away” Tesla’s patents remains a reminder of the power of playing the long game.