Elon Musk 2015 Detriot Auto Show Full Interview

yeah so I'll just make a few opening comments and say we're really the the main reason I'm I'm here is to talk about electric vehicles and to do what I can to encourage the other car makers to accelerate their electric vehicle programs I think the the need for sustainable transport is incredibly high I mean even in the face of massively declining oil prices I think it actually becomes more urgent that that the auto manufacturers transition to electric and put a put a huge amount of effort behind their electric vehicle programs as as you know we've Tesla we've open sourced our patents so we're trying to be as helpful as possible for the advent of electric vehicles we've also said that our supercharger network we're happy to have other car makers use that supercharger network and we're really doing doing everything we can to accelerate the advent of sustainable cars and so I think I'm hopeful that they were coming here maybe answering some questions I can explain why I think the opportunity for electric cars is tremendous and why I think that all transport with the ironic exception of rockets will go fully electric and and so it's the question of when it goes for the electric and if we can make it go electric sooner then that will be much better for the world and we do have a significant danger with fracking technology which is I think really still at a an early stage because I think fracking probably increases the accessible oil and gas in the world by perhaps a factor of 10 we won't really know what what the full extent of it is but it's probably something like an order of magnitude which which means the potential harm to the to the climate is is really much much greater than it was before and and we can't rely on scarcity to drive the price of oil I guess hi and you and have that be an adequate forcing function to move electric so we have to figure out how to make electric cars themselves compelling without without that economic forcing function of high gas prices thank you very good so Elon welcome to the Motor City and thanks for being here just a couple of Canadian boys talk in fast cars and rockets could be better if you were going to launch two businesses I'm guessing the natural place to start would probably not be rockets and cars yeah for sure if you were to rank order companies to start and say what is the what is likely to succeed and what you know what what has the best risk adjusted return pretty sure starting a car company or a company would be at the bottom of the list soon so why cars and why space well because in the case of cars it was very important for there to be an example of an electric car that that was great like there were no great electric cars so people thought electric cars were like a golf cart so they were slow and didn't believer well had low range or ugly didn't have much functionality and that's that's the picture that people had in their minds and we had to show people that an electric car could be fast sexy handle well long range and be a great car and that's what we do with the Tesla Roadster this was really important to sort of just break them all to break the mystery to address that misperception that one couldn't make a great like a car and and then energy so that if you made a great electric car with all those attributes that lots of people would buy it because even after we made the car you know then a lot of people said well yeah you've made this electric sports car but nobody's gonna buy it and then there's somewhere I'm sure yes there is demand for the same for the Model S and then with our model three down the road showing that it's possible to pull the compelling long-range mass-market electric car that's I think that's that's the the third it's part of the strategy that I outlined with my first blog post about Tesla now almost ten years ago so that meant you had a few people doubting you I mean when you go back to here just a few just a few people right every yeah here and there if we go back to 2008 you've had a couple of failed rocket launches you've got a lot of Tesla's sitting around in the garage it's it's there are some issues there in an instant you receive funding from NASA a huge contract from NASA for 1.5 billion dollars and then you also get funding for the car company but you were at the bottom correct I mean you were yeah I think this is important to to to emphasize because I feel look at say Tesla and SpaceX now and they think they sort of think well maybe it was always there were always in a healthy position but it wasn't no for the beginning we were in really dire straits no one would take us seriously at either the rocket company or the car company they just thought well he's sort of an eccentric rich guy he's gonna lose all his money you know they told me that several times to me that the most common joke I heard was you know how do you make a small portion in in the car car business or the rocket business and the punchline is you start with a large one right so I was like I'd heard that joke so many times I would just hit them with the punchline before they had a chance at the the yeah so and you nearly had a nervous breakdown around I mean this as well as a personal unpack that close there was right now okay the the but I didn't think to myself on the Sunday before Christmas in 2008 waking up with a Sunday morning and thinking I never thought I would have someone who's capable of having a nervous breakdown but this is about as close as I've ever come because things were really so dire again as you look to earlier that you off the first three rockets had failed up our Falcon one vehicle and I don't really allow for enough money for three flights so we had to desperately try to scrape together enough money for a fourth flight and the and then with Tesla with financing around fell apart in the summer of Hawaii because the whole financial markets were crashing and jamming try so they were going bankrupt and nobody wanted to give us much not an ideal time to start a car company definitely not I mean try to raise money for a startup company that's making electric cars to boot which is like like that sounded like stupidity squared the you know investors would be angry that we even asked them like that that we that we even asked them never be angry about that and and in fact the only real trace money to keep Tesla going was from is that that most of the existing investors agreed to to fund a company and I put all of all the money that I have remaining into Tesla so it wasn't it was it was you know amounted to about in total about 40 million dollars 20 of which came for me and then and then I was tapped out had to borrow money for rent after that and that tided us over into perhaps take about six months to May of 2009 when Daimler invested in in Tesla and that family investment was really fundamental to the survival of of Tesla affect lot of people think like somehow the government bailed us out or anything that is actually not not true it was the Daimler investment that saved Tesla not-not-not government funding first the first money we got from the government ever was in March of 2010 and I was after the crisis had passed and it wasn't your intention to even that this would be profitable I mean you thought it was actually gonna fail at some point right well when we're you were sure was gonna be that successful at this episode of Tesla when it was just me and a few guys I thought I thought we maybe had a 10% chance of success okay how do you feel now yeah well now I think we've got that now I think this is some degree of success is assured but it's a question of the magnitude so does Tesla just Tesla become sort of a a niche car maker making maybe a hundred thousand cars a year or something like that which was always super super tiny you know that that would be yeah I mean 0.1% of market share that's definition of a niche if you're point one percent you have to at least get past this one point to not be a nation so so with that that's one that's one of the physical huge one hundred thousand or yeah or your stated goals of five hundred thousand by 2020 yeah I think will probably aim to do more cause than than than that I'm not necessarily right by 2020 for the five hundred thousand but I think would probably continue past that you'll continue past the five hundred thousand yes okay within which time within what kind of timeframe let's say I don't know I think I think we should be able to get to probably at least a few million cars in ten years oh yeah so by 2030 will by 2025 oh by 2025 okay hopefully can public get to a few million cars a year we're just going to keep driving our volume as as high as we can because our mission is fundamentally to transition the world to electric cars so if we don't make a lot of electric cars then we're not doing as much as we can now I mean that being said I think most of the good that Tesla will accomplish is by sort of cutting a path through the jungle just to show what can be done with electric wires like so I think so you think that the industry as a whole will adopt a greater yes I think but the biggest impact that says we'll have will be the ridge which we induce or or cause other comics to accelerate their plans for electric vehicles mm-hmm do you feel they have that kind of passion right now it's it's a little bit not much you know it's clearly not like it's not front and center you know there were some vehicle shown at the Detroit show for example that are more in your segment than others yeah I think that's great I hope to see a lot more of that but but until we start seeing serious numbers of electric vehicles that it's hard to say that there's a ton of effort behind it yeah so I think we really why is that well I think for a lot of people in our industry it's not clear that the economics work for electric cars I mean it is a new new technology architecture and usually in the car industry things don't change that much technologically if they're I mean if the relative to say consumer electronics the replacement changes will to loose those so I think I think for love the karmic is they're not quite see they're uncertain about the demand for electric cars and you get sort of a chicken and egg problem like if you don't know whether they'll be high demand for electric cars then then you don't want to make the investment to build them at scale and so then you don't know that you never find out if what what the demand is I mean there's certainly some exceptions like Nissan and it's not what GM announced earlier so I mean that that all sounds good but compared to the hundred million your cosmic trucks made every year we're still talking very very tiny numbers so you're hoping if the industry really gets on board with the electrification plan and that within that sweep that Tesla then grows to these levels that that you've just said do the economics work for you currently yeah you can always do work for us yeah the maquette I can't speak to our quarterly results before the corner but you know we we have available to achieve a gross margin in the mid to high 20s so that that's a pretty good number and we are negative cash flow because we are investing a lot in automation in the Model X product line just basically scaling up our production building out to our sales and service infrastructure building out the supercharged Network and yeah developing you know doing the final tooling for the Model X doing some advanced work on the model 3 so we're spending a lot of money but if we were to just sort of scale back out growth and and just go for moderate increases and say the model has cut a customer base we would be profitable by any measure and I assume see I mean the criticism out there is that every OEM adheres to GAAP accounting we do two with a collar for some non-recurring items but you leave out some costs that are permanent requirements of gaps such as stock option expenses so under get her in there okay under GAAP do you make money then we don't make money under GAAP we could make money under GAAP if if we didn't we weren't growing at an investing huge amounts of money we certainly would be very profitable yeah why not just release it the way everybody else releases it well we do we are required to release GAAP financials okay we don't we do okay when it comes to that kind of scale when you mention those numbers in that and that sort of scale that's gonna require enormous infrastructure right I mean let's just look at you know the retail network as as one point you know the service side of things how do you get to those numbers with the current situation that you have now and is are you open to other retail possibilities there's been a lot of talk of perhaps partnering up or at least forming your own your own network that you'd consider adding franchise dealers here distribution network when the volume gets high enough how close would are you to that well I think what I've said is that there's no question we need to establish the initial foundation with our own stores so that's what we're gonna do in every part of the world and we have been doing every part of the world so we think it's it before considering taking on any any franchise dealers we first need to establish a solid base with our own stores and in it you know in any given region so once we've done that and and we're able to catch up with our production rates because I mean Tesla's just been production limited forward last you know full since so it's really the last since we came up with a model ass we've been production limited so most of our focus is actually on production growth as opposed to demand generation and we're more than in terms of our weekly rate we we doubled it year-over-year it's pretty hard for me action company with a complex supply chain to grow by you know what's our percent in annualized production so so I think it's some point you know we'd you know we'd consider a franchise dealers but but we want to first establish just a few stores of our own and never struck various deals and places like for example in New York City New York where we the Lord allows us to have up to five stores and and then beyond that we'd have to go to franchise dealers we're okay with the compromise of that nature in other states like Michigan for example right I think that's a pretty fair compromise and you know and then that then we feel secure at the stage of the company because I don't I'm not I don't have you complacent about Teslas success and it is hard to sell electric cars it's like it's a it's a lot more effort to sell it than I've been a gasoline karcsi a lot more education needed and and I just feel we very important to have our destiny in our hands at the early stage and then we can we can we can transition later we can find the right partner because obviously we want the we would only do this if we're sure that a customer would have a really good experience you know in there there's certainly lots of examples of companies that have a mixed company owned and franchise model from McDonald's being a key example right the auto industry a little different though in that in that way yeah right are there well I didn't in the US but right up in Europe there's a mixture of company owned sure sure but but in York that's obviously not the case yeah are there levels that you need to get to or what are the levels that you would need to get to in order to consider a partnership have you set those numbers in your mind it's hard to say exactly with them because we need to get our production rate to the point where we are demand limited in our production limited so what would that be I don't know if sort of depends on what the when we saturates a demand okay yeah we're not currently at a point where saturates meant but you know could be I don't know a few years or something but that's your estimation that would be a few years yeah before consider such thing and you want a partnership more than you would want I mean what would you prefer model B on the retail side well I don't know what the third model B fit but the big thing I'd be concerned about is making sure that customers have an awesome experience and that they have that the sort of sales experience and service experience is consistent and excellent so so they you know be that that that's what we have to feel comfortable about and and then obviously you know some of the car dealer groups have been you know fairly negative and attacking Tesla we're all still gonna work with them okay to be clear just to be clear right if you've been a jerk to us we're not gonna be like Center on try to do a partnership later rank that would be crazy on the factory storefront you you're still at an impasse in many states and new challenges are cropping up all the time and last year there were a string of compromises and actually court wins for Tesla do you need a national solution to allow direct sales I mean that's one of the possible outcomes it is the national solution are you pursuing anything we say yes or federal courts no we're not yet pursuing anything federally although there was a petition in a White House petition I don't know but after that a finishing petition to allow Tesla to sell direct nationally which got 120,000 signatures or something and we didn't create that also just like basically up sort of Tesla fan base so so right now we're really just having interaction out of state by state level I'll be in Texas we've called that I mean it's kind of the hardest nut for you to crack here right and Texas is a very important moderate market for us for sure and you lost in 13 yes what's going to be different this time well I think in 13 we didn't have enough time to really talk to the key legislators and we actually did we did pass in the house right but the bill never made it to the Senate right so I think that the I think it's just about getting people comfortable making sure there's a reasonable compromise here and and see what we can do I do think in the case of Texas particularly direct sales is fundamental to the Texas ethos I mean Dell Michael Dell who started Bell direct right in Texas okay so like clearly clearly Texas is proact and and and and so that the the prohibition against direct sales I think is antithetical to what Texas about it son Texas and and so I think we've got a decent chance of figuring out some compromise the legislation in Texas this year but you know feel feel fairly optimistic about that again we're not looking for you know wholesale a repeal of like the dealer laws we're just saying like let us have a few stores here and and then we'll talk later you want the same thing in Michigan obviously yeah right I don't think like anything we're asking for is like crazy or unreasonable or like can I take food from people's mouths or but we are a very tiny you know situation - right even if we got big with sylvie like it may be a few percent of the markets but if you get big in the direct sales method I mean if you go to an Apple store and there's a hot product there are lines that are out the door if you get hot in the Tesla market I don't think carcass car consumers want lines out the door correct so dessert right if you look come to expect that they can buy the car immediately and yeah I mean yes was there on what light lines up to the wall we don't have that many stores you know it's really a pretty small number let's get back to the business model do you need to start showing a profit well I think we we will at some point you need to start showing a profit when would that be Oh would that be I guess probably when the model 3 is in full production which is when 20 I mean we feel pretty comfortable saying 20 20 like that's a hot year so you know getting to that 1/2 million I think when we're doing half a million cars a year I think we should be possible at that point or like 2012 we are doing something wrong yeah then we start making some money yeah yeah okay I think we'll Soviet lover for investing in future technology but at that point we we should have at a reasonable scale where despite investing in new technology we're still profitable so just to be clear you're still on track for the 500,000 by 2020 yes okay how many Model S's did you sell last year I can't say that number because I preferred running the coding school so but you know we're pretty happy with the number of cars that we that we that were produced and ordered you know with Tesla they keep the metrics are a bit different because you know in an old car business sales and deliveries are the same that's the same thing like it you know because the cars go to the dealer lines and then they get sold but in the case of Tesla and so that's a that's a real understanding of the demand level in a case of Tesla since most of our cars are ordered in advance the the actual measure of demand is how many orders just has to have on the books because they're built to order right and his typical waiting time of anywhere from one to four months so so you would say you wanted to sell 35,000 last year that was that was the goal as our aspiration yeah did we come close what we'll say again no it's it's for having aspiration was to deliver right 35,000 we actually changed that to 33 yeah because it was getting too difficult to get deliveries done over the end of the you know over the Christmas break now right so so aspiration was to deliver 33,000 cars we sold in terms of orders for cars far more than that okay and then then this question of how many how he cost me manufactured then how many cars were to live it so it's like those are the metrics that really are important and we need to do a better job of educating media so they don't conflate gaps like sales meeting deliveries with actual demand because they'll think oh blueberries went down so that must mean people fewer people wanted you a car but actually the reason deliveries went down is just that I manufacturing ramp was slower than we expected but because you don't report monthly sales and delivery numbers that investors and media kind of guests out all kinds of crazy methods and put out all kinds of bad information so every every OEM reports sales by market why not release the number like any other car company I think we're probably will in the future but may think once every three months and once every month is not there's always huge difference I'm not sure how that actually helps really you know it helps if you're in the press and you could write three times as many articles instead of one see you're educating the press today so yeah so I'm sure okay that's I can see how that helps if you're if you're a writer but it's not like just luckily or hard solving Tesla and and I think Sun is difficult to interpret these numbers because we will make cars in in batches so we'll make cars like a year for three weeks we'll just make cars for Asia and then we'll switch to the parts for Europe a new switch across the US and then those will get delivered in waves and then so people see huge differences in deliveries for one month the next and assume that that somehow consumers had are going through these wild gyrations in their interest in the car it's actually got nothing to do with that it's just when the boat left okay so that's all so I think right now releasing things on a monthly basis would just get people really confused are your Us sales rising or are your orders for us cars rising yes by how much I feel like I can't give that detail all right I can ask but I mean I can't say that you know in over the course of last year we saw a significant increase in demand for North American it's a significant increase in North American demand and a significant entry increase in demand in Europe things were a little weaker in China but just because I think of some communications issues that rage fix most importantly around charging people have misperception that charging is difficult in China but actually at this point we feel we solve all of the charging issues but that we got to work to correct that misperception so so I'd say so you know North America and Europe excellent actually Europe's of surprisingly excellent and and then places like Hong Kong actually really good Australia good and but then China was was sort of unexpectedly weak in the fourth quarter it's all we had more than enough demand to make up for the reduced amount in China and we'll fix the China issues I think and I've been in pretty good shape for all the tours in the video the Model X is now over two years late what went wrong well I do have an issue with punctuality but my you're always a kid that was little yes late to class it's like yeah exactly I like it I guess you know I'm sort of inherently optimistic and I think sometimes that optimism leads to be thinking it get to get done sooner than a can so I try to recalibrate a little bit but at this point I'm confident that the Model X is really going to be a phenomenal car when is it coming out this summer okay so it'll for sure launched this summer yeah okay yeah for sure this summer and we do want to be cautious with the with with the Model X and make sure that we that we've done a lot of validation testing to make sure in particular that the falconwing door works perfectly in all circumstances so it's like rain slows slows sleet hail on a on a steep incline you know all sorts of crazy circumstances because the door is fundamentally different no one's ever done sort of double hinge going or what we call a bell tolling door falconwing nor and we think it's sort of a fundamental step changed in utility for an SUV it gifts an SUV more utility than a minivan and then because the because the center of mass is down low with the battery pack in the floor pan it has a better center of a lower CG than any there has like a CG of a sports car and the functionality of a minivan that's good this car is really good and III do not save these things lightly I mean I I'm very so critical of all of my stuff and I really think this is gonna be something special earlier this week at the Detroit Show surger marconi said that there needs to be more consolidation in the industry mainly to cut the cost of developing products the problem in the car business is just the cost to invest and how much it takes to invest in a platform as you well know yes you've got discussions with BMW did Mercedes talk to you before it's sold its Tesla stake yeah actually it's the comment on the BMW stuff but that was that was really sort of weird because the you know I had to be in Germany and I made an offhand comment to one of the German magazines because they asked me what I might work for it what was it what am i doing in Germany besides getting the golden steering wheel award and I said yeah well you know BMW invited me to stop by and we talked about various things then that got blown up into you know you almost you know you know illa must announce his giant partnership with BMW I was like look man I was just passing through okay Ian he was passing through it's just passing through and and then consider the media the media sort of built up this massive story like and then and then discover that it wasn't true and then said well he lied about that thing I was like ah no just stick to Twitter he'll be fine yeah exactly so are you are you I mean we're happy to discuss par ships with with mobile companies I was here done things with Daimler and with are you looking at more partnerships right now we're not actively seeking any partnerships because our focus is so heavily on as improving our production capability and and then completing the Model X so we're super focused on those two things and those are really hard because we're you know which we're trying to double our production capacity or gain year-over-year and get the Model X which is a complicated new car with some things that have never been done before to market and make sure it works well so really just heads down focus on those two things as well as doing some of the preliminary work on the model 3 mm-hmm and and in any case until the gigafactory is up and running it's just we just don't have enough cells to to do deals with other co makers but we're happy to have like preliminary talks that perhaps come to fruition in three years or something so the gigafactory I mean that's an enormous bet right yeah it is a huge bet but I don't know of any other way to do it but amount of batteries we need is so huge that somebody's gonna build this thing and if we don't contribute a bunch of money to building it I just don't see any other company doing that so unfortunately Panasonic is it's been an awesome partner and they're they're making a significant contribution but I mean just to get the whole thing full capacity is something on the order of five billion dollars right and with you know Tesla we're expecting to contribute probably a little over two billion Panasonic maybe a little under two billion and then various other social partners making the precursor elements for the anode cathode and separator perhaps contributes five or six hundred million this the state of Nevada contrary to news reports is actually only providing a very small amount of money in the beginning how much is that a few hundred million okay and that's in the form of land grants the they're all these against funny complain about something I did write a blog piece about this the the way it was portrayed by by sun media you know in terms of the tax abatements that Tesla got in Nevada was that we were getting like 1.3 billion dollars so they made it sound like the Sierra Nevada was like what wiring us to check for 1.3 billion dollars nothing like that remotely like that is good they're literally contributing less than 5% of the conflic the costs of creating that the gigafactory and then and then all of the other incentives are basically consists of not charging us like property and sales and use tax on the vast amount of equipment that were vying for the next sort of 10 to 20 years and and in the in the world most crazy situation where we will buy some enormous amount of equipment over the course of 10 20 years that sort of use tax amounts to about a billion dollars which is like 50 million a year right but that's for a factory that's outputting five to ten billion dollars per year so it's like 1% it's it's very tiny people should not be under the impression that Nevada is paying for the factory they're not what if the gigafactory doesn't drive down battery costs like you think it will it will guarantee you guarantee well I mean if it doesn't like I should definitely be fired and and yeah but so it's gonna make all this very scalable the way that you've described it won't earlier in the conversation about the the millions that you're going to get to yeah I mean I think I think the body that we have to pass on the gigafactory before the model 3 is a 30% reduction on the pack cost because if being a smaller car like the car needs to cost half as much but the cars is gonna be about 20% smaller anyway so so that means today gas cost half as much as as the model that is the model s ok yeah so stock price the Model S is 70 K is for twenty thirty five to thirty thousand right yeah so 35 K before any incentives and and and so we have to make to first approximation everything about half cost about half as much let's look at the pack itself because the cars let's say 20% lighter it's gonna require 20% smaller battery pack but we could we need that but in order to get to the 50 percent reduction we need another 30 points so that the gigafactory by virtue of economies of scale has to contribute that additional 30 points now there are we're not just doing economies of scale we're also improving the fundamental technology around the cell and the battery pack and I think that you just based it on acquaint economies of scale you know because we're talking about something that a factory that's that would make as much lithium-ion batteries as the rest of all the theme on factories in the world combined all times right so if you take a lithium-ion batteries made for cars laptops cell phones okay and you sum up all those factories that comes to a little over 30 gigawatt hours of production at the cell level we're talking about 35 bigger white house a production of the cell level and 50 gigawatt hours of production at the pack level so we'll still be bringing the cells in from other factories and I I would say it's I'm absolutely certain we're gonna save a 30% cost reduction okay I think it'll be over time better than 30% by again that 2020 timeframe or beyond yeah yeah your parts hike often of 30% by 2020 and with with continued reductions after that okay you've purchased your service model if you're talking about the scale that your bureau discussing here needs to clearly evolve right in order to meet all of this demand for parts and service what are you gonna do there well I guess we're gonna hire a lot of people in service and get lots of parts but you're gonna need more than a van going to you know fix somebody's car all right what more than more than three guys of that right more than three guys in the van yeah so what so what's the vision there well we have lots of service centers so we're adding them that's how biggest focus is at the service centers much more than stores so we're acquiring a lot of service centers and hiring a lot of people and building out the service infrastructure and I think that I think there's some ways that we can really innovate on service and do some really exciting things there which we'll talk about later this year that really takes service to like a different different level you've done with the quality of service not the quantity so much the quad or the quality and how fast it happens okay can you give us a hint well make it a so probably probably in a month or two but it's it's it's really I think it says the potential to revolutionize service you know with some really innovative things and you know I think service would feel like invisible love so it's just like the when your car gets serviced you don't even know that it was serviced like it's just invisible it just happened Wow and when it's done and you're cause back you love it you feel the industry has that right now no some say you know you represent yourself as an entrepreneur you you you get government yet you get government subsidies in various ways whether it's the battery plant or the solar plant or your rocket company some say that subsidy level would put into question the whole your whole nature of your businesses so are you just the best ever at getting government money no I think I think I'm quite terrible at getting but covered money actually so if you think if you look at Tesla and SpaceX and Solar City they've got no government money at all in the first sort of half decade of their existence nothing government wasn't doing anything and then I'll go three should each one in the case of Tesla as I mentioned the first government money regard was a March of 2010 seven years after the company was started and and that and that money was specifically for mud that Model S development and for powertrain factory development so we had four and sixty five million dollars fair and 65 which was for the Model S a hundred for calculate factory there could supply power trains to other companies but that was only paid you're like we'd have to spend the money show the receipts get it ordered by Price Waterhouse and then be reimbursed a few months later that didn't help us with the Roadster business it didn't help us with anything else and only paid for a small portion of what door Tesla needed the money it says elitism needed and has spent has by far been generated in the private sector so this point we've generated I think we've raised four or five billion dollars in total whereas the total where's whereas we had one government loan for four hundred and sixty five million dollars now this this compares to loans that were vastly greater to GM Ford and Chrysler faster greater like 100 times greater so you know in the grand scheme of things what's remarkable is that Tesla received so little government support not that it received a lot and do you see a day when the when it will not when Tesla will not will be able to sell cars without government dependence well we paid off our loan by the way we're the first to pay off a loan and just in terms of sales and centers well there's the there's the $7,500 tax credit which applies to everyone sure sure does and it's there for any manufacturer absolutely booked so that's what can you sell without that yes of course which we sell it we don't just sell the United States no yeah it was a us question yeah so here we sell in like I don't know 34 countries most of those countries have no incentives right so obviously we're still selling cars but what the incentive does is it's it's a slight catalyst so if our car costs you know including options and everything somewhere between eighty and a hundred thousand dollars and you get a $75 tax credit okay so you got like about an 8% reduction in the car that's helpful not a deciding factor but it's not a deciding factor it has a slightly side positive catalytic effect our sales would be slightly less if you know without that okay that's all and then that this there are the zero emission vehicle credits which those predate the whole co2 things I think people forget where there's air credits would would there there that applies to like about a third of the states in the country but particularly California the zero emission credits were put in place because air quality was so terrible in LA and the bay that people can breathe and we're getting you know that have like smog warnings and if you were getting what you're selling to Seema and lung disease or anything so but those their credits were because you have coldly all these toxic almost toxic gas coming out of gasoline cars in close proximity to each other and hurting people's health that's where the zero credits actually come from any manufacturer can acquire certain credits by making zero emission vehicles again it's a level playing field if we're able to sell zero emission credits it's simply because some other manufacturer doesn't want to make his very mission vehicles this is not some special handout for Tesla it this existed decades before Tesla if you know and to those companies I would say hey why don't you make the zero emission vehicles that's the way to not pay you know not have to buy zero mission crap you're in simple are you change the subject are you a good boss I tried me a good bus most the time not all the time yeah the you've lost a lot of talent in the last few years okay that's false so corrected there was a completely asinine Wall Street Journal article that was written yesterday you read that my piece okay it was an answer to this event in there yeah yeah I mean that the article consisted of entirely it was amazing that to see an article consisting of statements entirely of statements that are either obvious wrong or obviously wrong okay amazing how did you manage to write an entire article about a thousand on that category okay but on the but the use you have lost talent though right is there a company that exists that has not lost talent on earth anywhere well of course not right every company there's a trician at every company what matters is what's the longevity of of key executives and personnel that the company I do they stay there a long time or is there a lot of turnover do you feel your turnover it's in the right place our turnover is less than industry average not higher that's why the article is so ridiculous they use the example of like the Tesla general council where they said yet Tesla had like in the course of one year three General Counsel's that sounds like a lot except whenever an executive position changes in in a year you have to write so all that means is the guy in the middle didn't work out right all right okay I mean this isn't rock ok I'll take out so I'll take you know I'll take ok the guy in the middle didn't work out but Tesla's Tesla's been around for 12 years we've had three general councils that's an average of four years for general council which is the standard sort of tenure for a general council average average industry for our council is about four years and and SpaceX we've had a SpaceX is a year older who was 13 years old we've had one General Council the entire time so sue his tenure is not like 13 years so it would be like if I had a problem with General Counsel's you'd see that problem manifests itself at SpaceX as well as tense later but in fact the tenure at SpaceX is three times industry average and at Tesla it is exactly industry average you know if and I think with you know Communications was another things cited but the article wasn't even internally consistent because it's like well we had lots of turnover you know and people implying that maybe people don't like working for me in the communications role it's like well ricardo reyes just returned to tesla to run my medications I don't think somebody returns to a company if they hate it right doesn't make any sense okay your stock price it peaked at 289 a share in September announced about to 200 202 has that raised expectations for the company performance that may be difficult to me and and what do you think of the wild fluctuation of your stock price do you sometimes wish that it wasn't that had not risen so high yeah I think this is one of the downsides being a public company is that you have people that are that are constantly speculating on the stock speculating on the upside spec thing on the downside I mean you tweet and it moves 10% yeah not necessarily in a positive direction right so you know the other I should say like if I ever do do a tweet or a public announcement it's got nothing to do with the stock price it's yeah but what what concerns me is I don't want customers thinking something that's wrong okay sure for long-term investors in the can Tesla the short-term fluctuations are not important and you know we care to our actions and our announcements to the long-term investors in Tesla those are the ones we really care about the people that are in it just to speculate and then are out the next day you know we feel about them about the same way they feel about us we don't care which brings me to marketing right now you don't buy any advertising with the sales volume as you just mentioned earlier well since I our challenge is building production rates we're production we need to not be production constrained in order for us to afford to make sense for us to buy advertising all right otherwise we're just wasting money I never take the money we spent appetizing and just invested in a production capacity growth so I'm not I'm not like super against advertising I think at some point we will do advertising but we just need to get get get past this production limitation so that production limit I mean you've mentioned it a couple of times here it's obviously a an enormous leaky point in your mind the production constraints the limitations that you have when do you see that easing and how is it going to ease well working very hard to grow grow the rates and as I said our our weekly production rate year of Urich it has increased a hundred percent poor for for a manufacturer of a large complex object that is a huge percentage growth and we're gonna try to increase it again by a hundred percent year over year in terms of the weekly production rate beginning of the year to the end of year next year yeah so from beginning this year to the Edit make sure we want to try to double to double our production production rate I don't know exactly where the demand were where we started to have production exceed demand I don't think it's gonna be this year you know we've already sold out of all the model X's we could possibly make this year for 15 15 right so just in advance orders for Model X the order of Model X now it writes in 2016 so that's a long wait first yeah so do as many my Lexus as we can make this year we will sell so the challenge is not trying to generate more demand for the Model X like we're gonna do that at all our challenges we're just gonna bring into production make sure it's a super great car or reliable and everything works well and that and then and then ramp the production rate that's our challenge so I don't know conceivably advertiser would might make sense next year or you're there you're there after but I did when I offered for me to predict when when demand outdoor supplies so no Superbowl in two weeks okay yeah you've become quite a mainstream culture celebrity is that helped or is that a hindrance I think it's a it's a double-edged sword for sure it's gotten a lot harder for me to just like you know go have a drink in a while yeah it is it's good and like if I go to just like try to hang someplace with my friends then people will come up to me quite a lot and they're you know almost always really nice and everything but but it is that's probably not what you expected in December of oh wait no no I think sir awaits those when yeah I was being accused of being you know an a charlatan idiot and a charlatan like not even a good Charlotte soon and there were multiple libraries keeping the Tesla Deathwatch like the like they were on day five thousands of Deathwatch at this point so Tesla's gonna work since that's gonna work yeah just working I couldn't let you go without asking you about space only four entities have ever launched a space capsule into orbit successfully and brought it back the United States China Russia and musk well company yeah well yeah sorry SpaceX right are you what have you learned from the space industry that you can apply to cars well for Rockets math optimization is extremely important that use of advanced materials the math optimization is actually important if you think the the requital mass optimization say going from a car to a plane is an order of magnitude and then going for a plane to a rocket is another order of magnitude in the importance of mass optimization so that's why for example using aluminum in the body and chassis was a no brainer for me for the Model S even though people had certainly had some internal battles on that front to make that happen but for me it was very obvious choice you want to make the car lights and house will have amazing amazing crash rating everything and overcome the the challenge of a heavy battery pack you have to make the non packed portion of the car light so had to be aluminum I think in future we'll be investigating some at some advanced alloys that don't currently exist and as well as bring you over some of the interesting galleries we have in the rocket industry so I think in terms of material choice of advanced joining technologies and and setting up the geometry and constraints such that you can really create a mess off twice vehicle I think that's the most valuable thing are you gonna travel to Mars in your lifetime I hope so is that part of the plan which says on how long I live with and at what progress they you have like a 10 to 20 year horizon here where you want to I mean you want to go to Mars I want to space I want to enable large numbers of people and cargo to go to Mars so it's not sort of about me personally I want to take a journey back to Mars I mean that would be nice in a personal level but I do think it is important that we as a species of a civilization are on a path to become a true space but a true spacefaring civilization and a multi-planet species I think that's the future that's exciting and inspiring that's the bright future and the you know what we're trying to do with SpaceX is do what we can to help make that bright future true you've got five boys do they like cars yeah they're a little blase about the cars I try to like your cars yeah although I guess I get the critiques you know tell you one funny thing when when the Model S first came out I intentionally deleted the rear reading lights in the backseat because that's like yeah people just going to use you know Kindles and iPads and electronic readers they're like why do you need a light in the back and then one of my kids was trying to read his book in the back and said this is the stupidest car in the world I was like how could you do this it's like okay after that we put the lights in the back have you ever talked to Warren Buffett yeah we've had a few brief conversations he's always a great guy to talk to about the car retail business no we haven't talked about that I did read that he made an investment on that front I had a longer conversation actually was Charlie Munger before I was aware the BYD thing back in I don't think was probably 2008 or 2009 and I was having lunch with him and he was just I mean I'm a huge admirer of Charlie Munger of it but he was just telling me all the ways that else it was gonna fail and maybe quite sad actually so but but now apparently he thinks quite highly of Tesla and what we're doing what would you want to see out of the I mean you're you're in Detroit you're here during the biggest week of the year what would your message be to the traditional automotive industry I think the biggest message is just that I really would strongly recommend making significant investments of electric cars and I think people won't regret making those decisions even at $2 a gallon yes absolutely that doesn't hinder anything does it it does reduce the economic forcing function to some degree the economic forcing function being high gasoline prices I know so so there's there is some reduction of but you know 40 50 dollars a gallon slope you know fairly high a barrel is so physically high and and I think it will be increasing efforts by environmental groups and governments to place a price on carbon it wouldn't just affect the price Department for gasoline but also affected for electricity her name but but an electric car is so much more efficient that even even if old electricity was generated by hydrocarbons it's still better to in terms of co2 per mile to an electric car so I think there's going to be huge societal pressure towards electric cars I think they just sort of fundamentally better that's just it's just a fundamentally better architecture you can have very high torque the you know the efficiency of an electric motor can be upwards of over 90% compared to a gasoline engine at more like twenty percent so I think and I think that's what that's where the future is gonna go but it's only gonna go there if the big hog companies make risky decisions to do electric vehicles and I hope they do and I said we would try to be as helpful as we can be which is sort of counterintuitive cuz like why do we want all these competitors well that's that's the point and you've seen some competitors come out this week and it's it is counterintuitive but the way you describe it the more the merrier well the reason that I'm doing it and something a lot of people are tesla doing it is because we think it actually is gonna make a difference to the world if we transition to sustainable transport sooner rather than later we're not doing this because we thought it was like a way to get rich or anything like you like said I thought I thought maybe 10% chance of success the beginning I thought it just lose all I like it almost did so it's not like it was that was very close to losing everything and I think we're really gonna regret the amount of carbon that we're putting in the oceans atmosphere I mean we're really really gonna regret it great thank you very much for coming here today I appreciate it thank you so much Elon Musk

Channel: StateAlpha Investing

Views: 36,365

Rating: 4.7826085 out of 5

Keywords: Elon Musk (Organization Leader), Auto Show (Event), Automobile (TV Genre), Motor, car, ev, tesla, tesla motors, tsla stock, elon musk interview, elon musk interview 2015, elon musk spacex, spacex, tesla elon musk, tesla ford, tesla war, elon musk

Id: LTbQFdyizGQ

Length: 60min 23sec (3623 seconds)

Published: Wed Jan 14 2015

Reddit Comments

[u/WhiskeySauer]

Note how he's saying 10k/week Model 3 production rate by end of 2020. Musk didn't change guidance until after Model 3 unveiling showed huge demand. The company took on a lot more risk by making more aggressive production goals, but they didn't want to keep customers waiting.

So despite the risk/delay at meeting their revised and aggressive production goals (which is all media talks about now), Tesla is still well ahead of original guidance. This fact becomes more clear when you look back at older Bloomberg articles like this one and this one, where the authors act incredulous that Tesla could even build 500k cumulative cars, including S/X, by end of 2020 (a target they are already on track to beat 1.5 years early).

It will be especially interesting how the Anti-Tesla narrative changes if Q3 and Q4 both show profit, because then the company will be ahead of schedule and having less financial risk.

[u/beastpilot]

He also told us we'd have FSD features in 3-6 months. 21 months ago.

[u/run-the-joules]

If I tell you I'm going to bring over pizza next Friday, then tell you on Monday that I'm going to show up on Thursday, does it mean I'm ok to show up on Friday instead and we just pretend the thing about Thursday never happened?

[u/analyticaljoe]

Good thing he didn't set any expectations after that. Oh. Wait.

Well, at least he did not issue bonds that depended on that production rate. Oh. Wait.

[u/Cubicbill1]

He should have stuck with that number, or changed the model 3 production start on July 2018 instead of 2017. He shot himself in the foot by being too ambitious. In 2015 he seemed more in control and things were going good for Tesla as Model S sales surged as well as stock price. The stock has never been so volatile until this 6 months.

[u/EOMIS]

deleted ^{What is this?}

[u/RockyMoose]

We all know the guy over promises on timelines. At the same time, he eventually produces results in line (or exceeding) expectations.

Yeah, I get frustrated with Tesla Motors because they’re suffering growing pains and service often sucks.

But the cars are so freaking awesome.

[u/Decronym]

Acronyms, initialisms, abbreviations, contractions, and other phrases which expand to something larger, that I've seen in this thread:

Fewer Letters	More Letters
AP	AutoPilot (semi-autonomous vehicle control)
AP2	AutoPilot v2, "Enhanced Autopilot" full autonomy (in cars built after 2016-10-19) [in development]
BEV	Battery Electric Vehicle
CAN	Controller Area Network, communication between vehicle components
EAP	Enhanced Autopilot, see AP2
FSD	Fully Self/Autonomous Driving, see AP2
HW	Hardware
HW2	Vehicle hardware capable of supporting AutoPilot v2 (Enhanced AutoPilot)
HW3	Vehicle hardware capable of supporting AutoPilot v2 (Enhanced AutoPilot, full autonomy)
ICE	Internal Combustion Engine, or vehicle powered by same
M3	BMW performance sedan
MCU	Media Control Unit
SC	Supercharger (Tesla-proprietary fast-charge network)
	Service Center
	Solar City, Tesla subsidiary

---

^{13 acronyms in this thread; the most compressed thread commented on today has 7 acronyms.
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[u/navguy12]

The interviewers body English was sooooooo condescending.