Following In Tesla's Footsteps, BMW Offers To Share Electric Car Technology

July 15, 2014

Well, this is interesting: according to Auto News, BMW wants to share its electric-car technology with other automakers.

Why is that interesting? Because Tesla Motors did something very similar last month. Was BMW inspired by Tesla CEO Elon Musk's (nominally) altruistic act? Or is BMW trying to play catch up by making its technology the standard in the electric car industry?


BMW's offer specifically relates to the technology underlying lithium-ion batteries that the automaker co-developed with Samsung SDI. BMW says that it would be "happy to find a way" to put those batteries in competitors' vehicles.

That's not quite as unselfish as it sounds.

Batteries are very expensive to develop and produce, gobbling up years of research and millions of dollars of materials. They are, without a doubt, the most costly single part of any electric vehicle.

But as we all remember from Econ 101, when production and supply increase, cost decreases. BMW is hoping that enough automakers will use its Samsung-branded batteries to bring down their cost -- and subsequently, the cost of BMW's electric vehicles. And once enough of those batteries find their way into vehicles, they become the standard, making it harder for automakers to shift to alternate options. (It's kind of -- but not entirely -- like Amazon selling Kindles at a loss because Jeff Bezos knows that consumers will use those devices to buy more Amazon products like books and apps, some of which work only with Kindle devices.)


When Elon Musk made his surprising announcement in June, BMW was the first automaker to take him up on his offer. According to numerous reports, BMW is very interested in using Tesla's quick-charging technology.

Did that conversation spark BMW's interest in sharing its battery technology? Maybe, though the two offers are somewhat different.

Tesla is open-sourcing all of its electric car technology. While Musk seemed most interested in sharing Tesla's charging system with the world, all cards are on the table: batteries, design, and many other elements are available for use by other automakers, free of charge, so long as they use them in good faith. (What would "bad faith" mean? Among other things, it could mean behaving like a patent troll: taking Tesla's patents, changing a few small details, resubmitting them to the Patent Office, then suing the pants off anyone who appeared to be using them. Like, say, Tesla.)

By open-sourcing Tesla's patented technology, Musk and Tesla essentially lose their ability to raise money from licensing that technology. The company's financial gain comes in the long term, by having its standards become universal and by having other automakers expand Tesla's network of superchargers, making electric cars like Tesla's more attractive to consumers.

BMW's offer, on the other hand, seems entirely limited to battery packs -- and it hasn't offered to open-source them, either. The company is simply willing to let other automakers use the batteries that it's spent so much time, effort, and money to develop. 

Will BMW earn revenue from licensing that technology? It's not entirely clear (though Samsung SDI will surely get paid). BMW's big win comes from boosting Samsung's production and making batteries cheaper so that it can price cars more competitively.

The line between selflessness and selfishness can be pretty gray sometimes.

For more on this story, be sure to check out our colleagues at Green Car Reports.


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