Why Elon Musk is not Henry Ford


Tesla CEO Elon Musk waves during a rally at the Tesla factory in Fremont, California in 2012. (Paul Sakuma/AP)

On Thursday, Elon Musk, founder of Tesla, said the company won’t sue others that use its patents “in good faith.” That’s rare, if not unprecedented.

“Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers,” Musk wrote in the questionably-titled statement “All Our Patent Belong To You.” “We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.”

The move isn’t altruistic. Musk, who’s building a “gigafactory” to make batteries, may want to sell them to other manufacturers. And if the Tesla is ever to succeed, electric cars will have to become ubiquitous–and the field needs to be open to other companies.

The new battery plant could produce more batteries in one year than the industry made last year. (Reuters)

“Even if other competitors copy Tesla’s design, Tesla still gets to sell them batteries, and that’s pretty awesome,” Jacob Sherkow, patent law expert at the Center for Law and the Biosciences at Stanford Law School, told the Los Angeles Times. “Tesla’s decision isn’t entirely altruistic.”

Elon Musk, billionaire, co-founder and chief executive officer of Tesla Motors Inc., poses for a photograph inside the Tesla store at Westfield Stratford City retail complex in London, U.K., on Thursday, Oct. 24, 2013. Tesla, the electric-car maker led by Musk, had its first quarterly profits this year with a boost from selling California pollution credits. Photographer: Simon Dawson/Bloomberg *** Local Caption *** Elon Musk
Elon Musk. (Simon Dawson/Bloomberg)

It’s hard to imagine Henry Ford, the preeminent automaker of the past century, embracing such openness. This is a man who wanted to control everything about his cars — how they were made and who could buy them. He built schools for workers to learn English and a town in Brazil to source rubber. And though Ford’s been dead for almost 70 years, the 2015 Ford F150 has more patents than any previous model.

In trying to disrupt the auto industry, Musk isn’t borrowing much from the man who invented it. Consider:

Musk’s supply chain is limited.

Ford perfected 20th century vertical integration, going to great lengths to bring in-house every element of his cars’ manufacture. By foregoing patent lawsuits, Musk asks the marketplace to solve his supply chain problem for him. If more people drive electrical cars, they will be easier to make – and, right now, the wait for some models is three months.

“It doesn’t make sense for us to do things to amplify demand if we can’t meet that demand of production,” Musk said in 2013. “What we spent our time doing here as a management team is try to figure out how do we ramp up production faster and us to maintain the quality and keep improving the product.”

Musk’s cars aren’t for the common man.

Ford doubled workers’ salaries to $5 per day in 1914 ostensibly so they could afford the cars they were making — though that oft-told tale has been questioned. Teslas cost about $70,000, according to the Kelley Blue Book. Musk said in January that an affordable car is still three years away – and priced below $40,000. But $40,000 is still pretty expensive.

Ford never wanted his company to go public.

Ford stock wasn’t offered to the public until 1956 — nine years after its founder’s death. Musk had no such reservations.

“A lot of people were puzzled about why we were going public without profits,” he said when Tesla went public in 2010. “The reason we are not profitable today is because we are in the midst of expanding.”

Musk won’t tolerate unions.

Ford struggled against unions, but ultimately signed a contract with the United Auto Workers in 1941. Musk has met with the UAW, but in a 2009 Wired interview, didn’t seem to grasp the idea of organized labor.

“It’s not out of the question to have unions, but if there’s going to be a union, they’d better understand that they’re on the same side as the company,” he said. “I’m against having a two-class system where you’ve got the workers and then the managers, sort of like nobles and peasants.”

Justin Moyer is the deputy editor of the Morning Mix.
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