Chinese Automakers' reaction to Tesla open patents

[ck1116]

I have some updated news (or maybe rumour) from a friend working at one of the biggest automobile companies in China.

BYD almost confirmed they will not use any of Tesla's patents; their boss had said that in public that their own technology is more advanced. Certainly, I doubt what he said. May or may not be true, nevertheless, they couldn't deliver what they said so far.

Geely top managements are mostly very excited the possibility to use Tesla patents. (Geely's owner called Elon Must as "God Man" in his personal blog.) They are having some big meetings recently to discuss about this particular project, the major discussion in the meetings is about the initial cost, and their ability to use or copy or improve Tesla patents. Current result seems to agree to create a new product line and development team and focus on a mid-price EV car; suppose similar and to be targeted on Tesla Gen3. They believe the range and quality may not as good as Gen3, but price should be about 1/3 lower compare to Gen3. Some of the more aggressive and ambitious managers even suggest to devote 1/3 or half of the cooperation's resource in Tesla patent related EV development.

One special note, it seems most Chinese automobile makers aren't worry about the battery supply at all. Per their conclusion is that 18650 is widely available in China; quality varies, but really plenty of them. Many battery suppliers, large and small factories all can make plenty of them. "Because they are not trying to make EV car as perfect as, or better than, Model S. "

A few other automobile companies already bought Model S for research purpose or "copy". What I mean copy, is not 100% copy, but copy some big selling points of and success of Model S. Especially after Tesla open the patents, they have nothing need to worry about how to copy. I believe we may see some cars from Chinese makers, using very big LCD display running Google or Apple CarPlay, or have frunk. In fact, they may have some cars more practical then Model S; likely within 2015.

I love Tesla cars and all other EV cars; therefore, I will be very happy to see them pay big attention and resource in development of EV.

All in all, I believe Elon Musk's open patent strategies indeed working, at least at China, EV development is really speeding up with turbo. This single step is like equal to 5 years of effort of EV development in China.

 

[kenliles]

I have some updated news (or maybe rumour) from a friend working at one of the biggest automobile companies in China.

BYD almost confirmed they will not use any of Tesla's patents; their boss had said that in public that their own technology is more advanced. Certainly, I doubt what he said. May or may not be true, nevertheless, they couldn't deliver what they said so far.

Geely top managements are mostly very excited the possibility to use Tesla patents. (Geely's owner called Elon Must as "God Man" in his personal blog.) They are having some big meetings recently to discuss about this particular project, the major discussion in the meetings is about the initial cost, and their ability to use or copy or improve Tesla patents. Current result seems to agree to create a new product line and development team and focus on a mid-price EV car; suppose similar and to be targeted on Tesla Gen3. They believe the range and quality may not as good as Gen3, but price should be about 1/3 lower compare to Gen3. Some of the more aggressive and ambitious managers even suggest to devote 1/3 or half of the cooperation's resource in Tesla patent related EV development.

One special note, it seems most Chinese automobile makers aren't worry about the battery supply at all. Per their conclusion is that 18650 is widely available in China; quality varies, but really plenty of them. Many battery suppliers, large and small factories all can make plenty of them. "Because they are not trying to make EV car as perfect as, or better than, Model S. "

A few other automobile companies already bought Model S for research purpose or "copy". What I mean copy, is not 100% copy, but copy some big selling points of and success of Model S. Especially after Tesla open the patents, they have nothing need to worry about how to copy. I believe we may see some cars from Chinese makers, using very big LCD display running Google or Apple CarPlay, or have frunk. In fact, they may have some cars more practical then Model S; likely within 2015.

I love Tesla cars and all other EV cars; therefore, I will be very happy to see them pay big attention and resource in development of EV.

All in all, I believe Elon Musk's open patent strategies indeed working, at least at China, EV development is really speeding up with turbo. This single step is like equal to 5 years of effort of EV development in China.

Thanks for that perspective ck. very helpful. Sounds like it's working as planned. If it expands the market the pie grows for all and everybody benefits. I'm a proponent that TSLA benefits from the market moving to EV which takes all players. From my perspective this is good news. 'Copies' we're inevitable - when disruption of markets is required cooperative environments benefit the leader most , well done Elon

 

[DITB]

I have some updated news (or maybe rumour) from a friend working at one of the biggest automobile companies in China.

BYD almost confirmed they will not use any of Tesla's patents; their boss had said that in public that their own technology is more advanced. Certainly, I doubt what he said. May or may not be true, nevertheless, they couldn't deliver what they said so far.

...

Is there anything here about losing face? BYD is originally a battery expert, developing cars, so for them to have to learn or copy from others would seem a bit embarrassing. Is that the case?

I enjoy riding as a passenger in the BYD e6, rather than a Toyota bucket (as for taking a taxi in Hong Kong), and I do believe BYD has a reasonable car in that segment, for an electric car. Whether the car will hold up, what maintenance it will require, how long the batteries will last and so on - remains to be seen. The drivers I have talked to about it have no complains, including the time it takes to charge it. Chinese products often cut corners and in my experience are sometimes into production before they have been developed and tested properly - and people generally seem to accept a lot, as long as it's cheap. I do love it when people really put pride in making a good product, especially when it is user friendly and built to last, not built to break.

If BYD straight up admitted they appreciated Tesla opening up patents, what would that do to BYD e6 sales? It would have been the same as admitting your product is inferior, so instead they claim it is superior.

 

[ck1116]

Yes, I totally agree. Tesla has nothing to worry about "copies".

Just like many fake iPhone selling in China, some fake ones even has Apple's logo on it, but using modified Android; You can't tell the difference until you use it, the user experience and quality is different.

These "copies" do sell very well, but iPhone's sale isn't affected at all, they are for totally different markets, and they are actually helping promoting the brand.

The EV market will be so big and there are many different type of buyers, some prefer cheaper "fake EV", some prefer Tesla EV. As long as and once the person can afford a Tesla, they will buy it.

Thanks for that perspective ck. very helpful. Sounds like it's working as planned. If it expands the market the pie grows for all and everybody benefits. I'm a proponent that TSLA benefits from the market moving to EV which takes all players. From my perspective this is good news. 'Copies' we're inevitable - when disruption of markets is required cooperative environments benefit the leader most , well done Elon

 

[sleepyhead]

Never understimate the Chinese. I am fairly certain that they are going to blow away the US when it comes to solar deployment and bringing down costs of solar. And there is no excuse for this, since the US basically invented the solar industry and was one of the first countries to get started on this. Then China moved in about a decade ago and is already leaving everyone in the dust.

Batteries are plentiful in China and they are cheap too; way below $200/kWh. I agree that the Chinese can build a gen 3 "competitor" for a lot less, but with significantly lower quality and probably less range. It would still be more compelling than anything else on the market.

 

[DITB]

Never understimate the Chinese. I am fairly certain that they are going to blow away the US when it comes to solar deployment and bringing down costs of solar. And there is no excuse for this, since the US basically invented the solar industry and was one of the first countries to get started on this. Then China moved in about a decade ago and is already leaving everyone in the dust.

Batteries are plentiful in China and they are cheap too; way below $200/kWh. I agree that the Chinese can build a gen 3 "competitor" for a lot less, but with significantly lower quality and probably less range. It would still be more compelling than anything else on the market.

I don't think Tesla Motors ever wanted to dominate in terms of sales numbers. There are an almost endless demand for cars, so the TM Gen III would be an higher quality, yet budget car, while a Chinese one could possibly succeed as the mass market segment winner. TM releasing patents like that really means they don't care - there is enough for everyone.

Are those Chinese solar panels made in the same sustainable and environmental way they would be in, say, Germany and the USA? Sure you can make cheap panels if you don't have to care about the environment - which kind of defeats the purpose of solar. I am all for competition and lowering of prices to compete with fossil fuels - but it has to be kept in a safe and clean way from mining over production, installation until eventual recycling.

 

[RobStark]

Never understimate the Chinese. I am fairly certain that they are going to blow away the US when it comes to solar deployment and bringing down costs of solar. And there is no excuse for this, since the US basically invented the solar industry and was one of the first countries to get started on this. Then China moved in about a decade ago and is already leaving everyone in the dust.

Batteries are plentiful in China and they are cheap too; way below $200/kWh. I agree that the Chinese can build a gen 3 "competitor" for a lot less, but with significantly lower quality and probably less range. It would still be more compelling than anything else on the market.

The Chinese have dominated solar panels with massive subsidies from the Chinese national government. I am all for the Chinese government giving away solar panels to the world but that did not stop Chinese Suntech's Wuxi subisidiary, one of the world's largest solar panel producers, from going bankrupt.


http://money.cnn.com/2013/03/21/news/suntech-solar-bankruptcy/


Just like Chinese make copies of MB and Jeeps that are not very good so they will make Tesla copies that are not very good.

Chinese solar panels are not very efficient and Chinese versions of the Panasonic 18650 is also not very good.

I would not bet against Elon Musk and his/Solar City's new Buffalo NY solar panel factory.

 

[stopcrazypp]

I wouldn't worry about the impact on Tesla too much. Tesla is mainly targeting the higher end market (esp. in China) and I don't think Elon ever indicated he was that interested in going much lower than Gen 3 (in passing he basically said maybe, but didn't seem that interested in it). There's plenty of room in the lower end for other brands and Tesla is very far from saturating the higher end.