Tesla 2013 Annual Shareholder Meeting (2013)
Questions on ElonsFAQ asked in this interview (1)
Transcript
0:07good afternoon everyone and welcome to Tesla Motors 2013 annual meeting of shareholders we are very glad you could join us today we have a full house so thank you very much for coming my name is Phil Rothenberg associate general counsel of Tesla I'd like to first
0:23introduce Tesla's co-founder CEO and chairman Elon Musk [Applause]
0:41let me also introduce some other people from here from Tesla we have our board of directors sitting right up here as well as our CFO Deepak in addition Steve stalin's from PricewaterhouseCoopers is here today
0:56PricewaterhouseCoopers as you probably know is Tesla's independent auditor there are two parts of today's meeting first we'll do the formal part and then and we'll cover two items that shareholders have been asked to vote on following completion of this Elon will
1:12provide a brief overview of the company so let's get started by calling the meeting to order before we begin the formal agenda I'd like to announce that the polls are now open if you haven't voted by proxy or if you'd like to change your vote please do so now if
1:29you'd like a ballot please raise your hand and either Lisa or Yun will come by your seats and give you a ballot and allow you to vote please keep your hands raised while they come by while we're doing that I'd like to discuss with you
1:44a couple things first the rules of the meeting are on the agenda that was passed out today and we'll follow those Tesla Motors Board of Directors has appointed Lisa Brenton of computershare to serve as our inspector of election for this year's meeting Lisa has taken
2:02and signed an oath as an inspector of election this document will be filed today with the minutes of the meeting computershare has certified that starting on April 17th of this year the proxy materials or a notice of internet
2:17availability the proximity riyals was provided or mailed to shareholders as a record of April 10th 2013 copies of these proxy materials and related certificates will be attached to today's meeting at least I think there's some
2:33more people right in the center we have a majority of outstanding shares represented this meeting so I declare that a quorum is present and we may proceed with the business of the meeting we're conducting the meeting in accordance with the company's bylaws today we have two agenda two items on
2:50the agenda they are first to elect two class three directors Brad and Ira to serve for three-year terms or until the respective successors are duly elected and qualified and number two to
3:05ratify the appointment of PricewaterhouseCoopers as our independent registered public accounting forum for the year ended 1231 13 anybody else need a balance yawn I think there's
3:23one more gentleman in the center right there there's a person in the far back Lisa there's a person well actually two people in the far back so once you voted
3:40on your ballots if you need to if you could raise your hand again and Lisa or young will come by and pick up your ballots
4:28any additional ballots out there there's a couple on this side you could hold them up high we'll grab them quickly
5:12in additional ballots
5:30lissa do we have all the ballots thank you the polls are now closed all measures have passed that concludes the
5:46official business as a point of clarification going into the meeting today we had a 90 percents
6:02quorum that had already voted online but we do appreciate your attendance and voting thank you so that concludes the official business of the day I now declare that the formal part of today's
6:17meeting is hereby adjourned I'm now welcome to stay for Ellen's presentation we'll leave time at the end for questions and answers regarding Tesla if you do have a question or answer I ask that you line up behind one of these two stationary microphones and please note we do have a full house here
6:32so if you can keep your questions brief into the point we're gonna try to adjourn around 4 p.m. and there might be a lot of people with questions during the course of Elance presentation we may discuss our business outlook and make other forward-looking statements such
6:47statements or predictions based upon management's current expectations actual results or events could differ materially due to a number of risks and uncertainties including those disclosed in our most recent Form 10-q filed with the SEC such for looking statements
7:03represent our views as of today and should not be relied upon thereafter we also disclaimer allegation to update these forward-looking statements and with that please help me welcome mr.
7:13Elon Musk [Applause] alright alright well thanks everyone for coming and I'd like to thank you all for
7:30being shareholders in the company and for having the the sort of the faith to to invest in Tesla as as always I mean we try to work really hard to build shareholder value of a time and build a great company and and really deserve the
7:49faith that you've placed within in Tesla so this is there's been a great year you know think things have really gone gone pretty well and I mean obviously it's a
8:04testament to the hard work of a lot of people at Tesla who put in crazy hours to achieve that so you know I'd like to say just mention all of their efforts to get here because it was extremely
8:19difficult and also there are many people that thought that Tesla would fail many of them unwisely chose to short our stock I presume that those people are not here
8:34today [Laughter] so I yeah so I'll go right into the presentation bla bla bla bored looking this not now
8:52so yeah so it were the Model S is is really a great car we told people would be a great car and it is and that's been objectively confirmed by the by Motor Trend who declared it to be Car of the
9:08Year audibly automobile magazine and then a recently Consumer Reports that actually gave the Model S the highest grading they've ever given to any car of any kind like it like I said ever and it
9:24they did give a ninety nine once before to Alexis about six years ago but this is this is the the only other car to get get ninety nine in fact the only American car ever to get ninety nine and
9:40that's yeah [Applause] and it should further be noted that the way that Consumer Reports works is that
9:55they buy a car at random so that by cart random we don't know which card is and then they drive the car for four months and in every conceivable way and an amazingly that they never broke down once it's that they must have been very
10:11lucky so as as people probably were you know though there were some not every bit of press was positive there were there were a few things if you know a few articles there that weren't weren't
10:27positive but by and large it's been it's been very positive and you know so the the reason we didn't get a hundred I should not to quibble what was was
10:46because the Consumer Reports said there's a question around the availability of rapid charging and the ability to travel freely wherever you want in fact that was the so that was the reason we didn't get a hundred so
11:02I'm wondering if we if we address those issues whether that 100 is possible I actually don't know I've not asked them but but but we will try to address those issues so it's worth noting that we were
11:21the top-selling electric car in first quarter in fact if you add up all electric car revenue we actually sold our revenue at Tesla was greater than all electric cars sold in the United
11:37States so if you add up the yeah [Applause] now obviously I think what that means is we definitely need to try to bring a lower-cost car to market so hopefully in
11:54about three or four years we'll be able to do that but it was a good quarter and certainly I mean good you know but I think by any measure and I think we've got a good foundation for success in the
12:10future we've got we've developed a solid base of intellectual property and even though I'm not the biggest fan of patents we do have a lot of patents and I know we've been able to build up a significant brand so there's a lot of
12:26awareness of Tesla and that that awareness is somewhat polarized people tend to love us or hate us but they rarely are indifferent but we have a lot of mindshare and that I think is valuable we've got some great partners
12:42with Daimler Toyota and Panasonic in fact the diatom was here appreciate a timeless support over the years and and then we've got the potential for a lot
12:58of future growth on the Model S platform which because the Model X will be built on the Model S platform and then we potentially do you know some other products on that platform and then we'll develop in the longer term a lower-cost
13:14platform higher volume and and try to produce a car that's about half the cost of the Model S a little bit smaller and and that that really has been my goal since the start of Tesla and I'm really looking forward to bringing that to
13:30market eventually and then obviously got a great management team and we're in the I think in a solid position from a cash standpoint so with the last financing round we raised more money than we think we need because we wanted to give people
13:48a high level of confidence about Tesla so that if there's a short term supply interruption you know like let's say there was a big earthquake in California we sometimes have those yeah touchwood and you know
14:05there could be sort of some natural disaster some in some part of the world or a supplier that goes bankrupt or something like that it was Thor was really important to have sufficient cash to be able to last through some some difficulty like that and and not be sort of flying at treetop
14:22level I mean even if you our plane is it's working well flying at treetop level is a little dodgy so so I think that having that cash balance gives us a lot of risk assurance and we're seeing
14:40continued strong demand for the Model S with with demand in North America somewhere in the 15,000 unit range it's a little above 15,000 units here in North America and that's continuing into
14:55into q2 so you know we think we're gonna have a you know pretty good q2 that's comparable to q1 on a unit volume basis on the same we're gonna roughly the same
15:11and and then going into q3 will will have obviously some incremental demand from Europe because we'll start shipping cause they'll get on a boat in in late June start arriving in Europe in July and and so we obviously we think will
15:29have pretty pretty good demand in Europe as well and then in the fourth quarter we'll start shipping to Asia so if if things go you know really well assuming that they don't sort of take a turn for the bad then I mean it would be
15:45reasonable to extrapolate the US demand by roughly a factor of three so again this is speculative so I'm not saying it will be the case but you know which I
16:00think I think it's in my opinion likely that we'd see demand of at least say 40,000 units worldwide if the US demand demand is is 15 and maybe better than that and and then what we're seeing is that yeah so I say
16:16global actually it's gonna be more like 40 but we're saying 30 here anyway the what we're finding is that Tesla owners are really obvious sales people so when the cars get delivered in market
16:32they the owners will show other people a car and give test drive and that kind of thing and we often when I meet someone who are into more or less than one of the first things to tell me is how many other Model S's they've sold like that's
16:47that's really great and it means that there's this sort of kind of a viral growth component to to sales so the more cars that we've delivered in a particular area the better our sales tend to be so that's that's a good sign
17:04we've we're expanding our store and gallery of presents quite a bit so by the end of this year we'll have increased us our stores and galleries by 50% so going from roughly 34 to 250 and yes
17:24you can sort of see the map there so quite a significant expansion on the store and gallery front and then and and it's actually even bigger expansion on the service center side so what we're
17:41seeing is one of the biggest impediments to people purchasing the car is not actually whether there's a store or a gallery near them but they just want to know can a copy serviced I mean is there a service center in their city or if it's a large metropolitan area in their region of the
17:57metro metropolitan area so in places like the Bay Area or Sam or LA you need to have multiple service centers because sometimes it can take long get a drive for inside of LA to the other then it can be to fly to San Francisco yeah really need to do something about that four or five
18:15yeah so so we got to get the service centers out there and and so a service center well count will almost double by the end of the year and that's that that's a
18:31factor not just in being able to service existing customers but as a reason for new customers to buy and I should say something a little bit about the service center expansion yeah I think I think
18:48there's actually a lot of opportunity in the middle of the country and we're gonna see a lot of our service center expansion in that area and I think sometimes people underestimate the real demand in the middle of the country I
19:03think it's actually quite a bit higher than most people would think [Music]
19:21[Music] Tesla developed this supercharging
19:37technology which is the most advanced charging technology in the world this is something that allows you to make a brief stop at one of our Tesla supercharger stations charger caught very quickly and be on your way something that's unique about the supercharger is that it's free so not just free now it's free forever the
19:54number of Tesla super charging stations is increasing dramatically by the end of next month we will have triple the number of stations since the beginning of the year within six months we recovered most the major metro areas of North America a year from now we'll have covered 80 percent of the North American
20:09population and within two years over ninety eight percent so by buying a Tesla you essentially have free long-distance travel throughout the country forever and we're also improving the super charging technology itself to cut the charge time in half so
20:25previously people were spending upwards of forty forty five minutes with the super charging technology now at a stop will only take you about 20 to 22 minutes so Tesla supercharger system will allow you to do the ultimate road trip you can travel across the country and just pack some food stay with
20:41friends and leave your wallet at home [Music] yes so one of the things we're using the
20:58capital that we raised for a raise is to increase the expansion of the super charging stations so we're gonna have triple the super charging stations as I mentioned within about a month or two
21:13from from the beginning of the year and by the end of this year you'll be able to travel from LA to New York just using the super charging Network and in fact I'm planning to do a road trip with my kids from LA to New York at the end
21:31of the year which should be an adventure and you know it's I kind of like those Chevy Chase movies so it could it could
21:47prove challenging but but I think it'll be fun and when I about 20 years ago times getting on but when I was in college I actually drove my car with
22:03actually with my my brother and I drove from LA to Philadelphia but we did we kind of did a tour where we went from LA to or actually started from the barre and then they are a LA then Vegas and then Grant Canyon through the four
22:18corners of Wolves pass in Colorado and then up through what Wyoming South Dakota saw Mount Rushmore then drove across the Badlands to Chicago we're into the Sears Tower and then
22:35drove to Philadelphia you know ed saw the Liberty Bell and there was someone kind of drew do that again with with my kids at the end of the year make sure the supercharging system is working well
22:51and but but I think it's gonna be pretty cool to be able to do that and and I think this is a key answer to the whole question of can you drive for long distances with an electric car we're
23:06gonna show first hand that you can and and something that didn't get quite as much attention in the announcement good because most people of most media focused on the the geographic expansion of the supercharger network but the
23:22technology itself improved quite a bit so we went from a 90 kilowatt max charge rate to 120 kilowatts but we were able to improve the point at which the charge tape is off because with the lithium-ion battery pack you always have to be
23:38careful as you get towards a full state of charge you can't go at the same rate you have to slow things down kind of like filling a cup if you want to fill it up to the brim you've got to get sort of slow as you get to the and but we're able to improve the technology so the taper point is much
23:55later so compared to initial there's a road test that people will use the supercharger network it'll actually be about a halving of the charge time votes of to what people's prior experience was and yeah so I would expect the typical
24:14stuff time to be twenty to twenty five minutes maybe half an hour and also the super charging if you want to know where the next nearest supercharger is you can just tap the lightning bolt on the NAP screen of the Model S and it'll automatically right you'd see the
24:30nearest supercharger and that's updated dynamically in real time so as a new supercharger becomes available that that that's already that's updated immediately and and then with the improvements to the navigation software
24:46you'll be able to just input any destination in North America and the car will automatically route you to that destination in the best possible way using the superchargers so you don't have to think about it it'll just take you you know it'll figure out the
25:02optimal route for the speed of your journey and you can obviously adjust it accordingly but they'll say okay this is the best way to go to complete your journey in the shortest possible time so I think it should work we were distorted
25:19to be like you don't even need to think about it you literally just type it you know we just ate us verbally state where you're going or type it in and the car just figures out everything else
25:36so for for the year as mentioned in some in the quarterly earnings call we expect the total liveries to be a little over 21,000 this year and with with a gross
25:53margin excluding zev credits or zero emission vehicle credits of 25% and then Yassir T stores roughly a little little more service centers than that and then
26:13we're continuing to make progress on the Model X with the the Model X the the goal is to try to address the minivan market as well as the portion of the SUV market that is not addressed by the Model S and the Model S desert rest some
26:29of the SUV market because they can do five adults two kids seating and it's got the trunk in the front but so the Model S is a good for occasional sort of 7 person trips but for if you've if you've got more frequent trips in that
26:45or you want more room then the we want to sort of have a higher seating position and the Model X is is the path to go there and there are two significant innovations with the Model X one is the double hinged gullwing or what we call falconwing door which is
27:03able to to open it have very very big opening without the door arcing out far so because of that double hinge it can go up and over instead of arcing out and hitting the car next to you or hitting your garage roof and now there's we're
27:20taking a bit of a chance with this door because it's something that people haven't seen before and and what people will be comfortable with it it's hard to say I think it's gonna be pretty awesome and we're taking great care to ensure that it's safe for people so there's gonna be like a pinch strip so even if
27:36you stick your finger and or if your kid sticks a good six finger at the last second the door weren't squashed the finger because got a pinch trip and then the doors got proximity sensors so it won't hit anything it'll stop a few inches before hitting anything so you don't
27:51have to worry about hitting the roof of your garage or anything like that it just automatically senses proximity and stops and then that what that door enables is you can step directly to the third row so having direct the door access even if you've got child seats in
28:07the second row is very important you know normally you really can't get to that third row if you've got kids seats in the second row and then you can actually stand stand up in the second row so I can actually stand up in the second row so if you know if you're
28:23under about six foot three six foot four you can actually stand up in the in the second row which is great so if you want to say you've got you want to put your kid into a child seat instead of having to cantilever yourself in a sort of region like that you can actually just
28:39step into the car and put your kid down and that's that's a lot easier than you know trying to cantilever kit over into a baby seat or child seat and then the other key thing here is the
28:57world's first dual motor or wheel drive in a production car so there'll be a second motor in the front that will allow for intelligent all-wheel drive so it will dynamically shift torque front to rear and it's able to do that at the
29:14millisecond level so to the car and when you're if you're at the millisecond level the car looks almost stationary because it's like take that's a at every thousandth of a second it's readjusting the torque from front to rear and so you
29:29can like if you were to go over like an oil slick or some ice or something the car would instantly shift torque to whichever wheels can handle the torque and then ship them back as you move over that slippery patch as opposed to having
29:44a mechanical linkage which has a lot of inertia and latency effectively so the bottom line is it should should give the best all-wheel drive experience
29:59your servers feel like digital and analog and and then because the battery pack is in the flow pan you have a very low center of gravity which is unusual for an SUV class or an SUV type of vehicle so it should have the lowest
30:14center of gravity of any SUV and and as a result extremely good handling and so we want to try to have something which has got the handling of a sports car with that also looks great and has but
30:30has more functionality than a minivan that's what we're aiming for with the Model X and we're aiming to have the initial vehicles hit the market or which get in customers hands at the end of next year
30:47[Applause] so in terms of you have some general product elements here I've talked a lot about this but just in summary thus far
31:03this year we've introduced the 60 kilowatt hour version we've completed development of the European version which has the three three-phase charging capability and we're working on the asia-pacific version there's a Chinese
31:18specific one and and then one for for the rest of Asia and working a lot on the Model X on right-hand drive and on all wheel drive so and then in the 2016-17 or probably end of 2016 I would
31:35say is the third generation vehicle or the vehicle that's smaller in a lot of ways a smaller version of the Model S at about half the price all right so let's jump it to Q&A
31:52alright everyone if you could come and join us at the standing mics just queue up here and we'll take your questions please
32:13hello we live on a cul-de-sac and as the houses are turning over there are more and more young children are there any plans to add noise to the motor the there is this question of of
32:37adding making it having the Model S make make a noise obviously that the the challenge there is to avoid noise pollution at the same time we're in discussions with yeah definitely there's
32:53two schools of thought on this I think something that might I mean I think the the the sensible I think ideal thing long-term is that is to have proximity sensors that direct a pleasant sounding noise in the direction
33:09of of where somebody's walking so therefore it's the least amount of noise and it's not annoying and it's only going to where it needs to go that's what I think is the right long-term solution it'll take a bit of work to get
33:24there but I think that's hopefully what things will end up mr. must my name is Rick smoke I am a shareholder and I note that two members of the Board of Directors resigned last year didn't
33:39where they asked to resign or do you have any inclination as to why they resigned and there's person specific expertise is and whether they've been replaced or need to be replaced well actually one of them was simply Daimler
33:56changing their board membership and that was due to the retirement or the retirement of the responsibilities of the dialogue board member but then Daimler sort of named mr. Kroger over there he have a better explanation but but
34:14that's essentially was through the retirement of the diamond of water member within Daimler and and so Daimler then appointed somebody else and what you the other person is you're referring to dr. Kohler and Al are mocking Oh ed
34:30we uh oh yeah so that the Abu Dhabi actually sold their stake in in Tesla actually what what - what happened before that was the the Abu Dhabi
34:46ownership of Tesla and like maybe 7% of Tesla transitioned from the Abu Dhabi order and electricity authority to to Tucker which is their kind of their investment arm and so the the person
35:02that was representing Abu Dhabi water electricity Authority then resigned and there wasn't really and at some point after that taka separately decided to sell their Tesla stake I think at about
35:17thirty four dollars maybe not wise and I did urge them to not do that but that they decided they want to do that anyway so I think this you know the Ford's
35:33primary responsibility is to represent the interests of the shareholders and so since they're not no longer a shareholder it didn't make sense to have them have a board representation thank you hi my name is Rahul snot and I'm a
35:48shareholder and fantastic job and executing on all the milestones this year I wanted to get a quick update on one more kind of goal you mentioned that a South by earlier are you having fun yet haha
36:03I'm having a lot more fun these days the you know my year's resolution was actually to have more fun this year and although that the prior years were certainly ones of great achievement they that they are they're very enjoyable in
36:21recollection but we're extremely stressful at the time so at I it I do think there's a steady improvement on the enjoyment factor thank you for
36:37asking all right hi mr. musk I've got two questions one is regarding working capital management do you expect receivables inventory payables and customer deposits to be roughly the same
36:54percentage of revenues going forward as they were in the March quarter annualized enough what you do in a great job with your working capital man okay and like that's the only you know I'm worried about the whole cash flows and that worried and you guys are doing a great job is it is your net working capital gonna be real low relative to
37:10revenue just despite the no no I think well I think we in great shape from a cash standpoint and we have not that we want to you know be less cautious about cash management but we do have a lot of
37:25extra cash that we raise because the last financing round so that gives us the ability to you know even if we're even if we basically suck at cast manage cash management we'll do okay but we
37:40don't a suck where we even if we do well well we'll still be okay yeah the other question and then I don't mean to make this kind of comparison but portion is operating margin is about 18 percent and their capex as a percent of revenue is about three percent when the company becomes big do you see sort of metrics
37:57like that in those two categories well I think out capex is probably going to be higher because we're expanding more and you know as we build up more production capacity we have to spend more on capital expenditures and also doing
38:13things like the supercharger network and stuff so I would expect our cap expenditures to be a fair bit higher than Porsche for some time to come that that said there's on a separate metric of gross March and I I do I think we can probably get close to you know maybe
38:30exceed Porsches gross margin over time it kind of depends because I think for the Model S and Model X we can probably meet or exceed Porsches gross margin for the third-generation vehicle or which is which is primarily a cost optimization I
38:47think we may that the right move there maybe it it - actually it probably is in my opinion to aim for a smaller gross margin on that vehicle on the other hand we will have a much higher volume of which to divide fixed costs so I mean I
39:05think it's all gonna be net profitable but I would I would not try to I I think strategically I think the I would offer would care more I draw I'd rather sell a car for less in that case then the
39:20necessary try to get the highest gross margin yeah hi mister Maersk my name is Kevin Wang I'm a shareholder actually first of all was it is it your brother outside alright I think I saw him
39:36earlier when it was outside so I have three quick question first of all you talked about the Model S owner are the best sell people so is there a plan for you know incentive plan if not I have a
39:51suggestion actually I'd like to hear a suggestion but there currently isn't isn't an incentive plan although arguably there should be but yeah so
40:06what what is just I always suggest that for every car that Unown a sell give one year free service okay first thing idea all right all right all right okay
40:22second question and yeah I'm gonna get my Model S than on the 18th okay okay so I'm gonna sell as hell thank you so my second question is that you tweet about you on the Twitter you tweet about
40:38that actually make take less time to charge moto s than feeling a full tank of gas so is the recent announcement that is 28 minute charge that's it or is there even more that's it I would that
40:54is not it I would say you should the that I mentioned that there will be an announcement on June 20 it's in fact not an announcement but a demonstration Wow okay now it's third question live demonstration okay so question I could
41:10referral have my Moto X reservation and so about the full the falcon wing have you considered like you know if there's snow and rain and you know the ski on the roof things yeah the the dole will
41:29actually she'll to you from snow and rain so it you'll be actually be okay on that front and we do have water channels for the water to flow off the door and around the the entrance now obviously if you've got a lot of windy rain and that
41:45kind of thing you're gonna get a little bit of rain in the car but it shouldn't be too bad I mean it's also true that if you open a conventional car door you're going to get some amount of wind and snow and if it's if it's blowing hard for skis we
42:03have I think some innovative solutions for for carrying skis and and it's so you it certainly is it's gonna be important to be able to carry skis because that's a car that people would often use to go to ski country so we do
42:19need to have a good solution on that front okay thanks a lot Thanks hi mr. musk mark Olson very happy shareholder and I appreciate you building such a fantastic car on so many
42:35levels well thanks a by one and four I didn't buy one oh not yet oh okay we should but I appreciate you being a visionary too and trying to improve the world I live in San Francisco and a lot of us are
42:52very the ecology minded sure but a lot of urban dwellers like me we we do not have garages so will there be a future supercharging option in cities maybe by
43:08the time Gen 3 comes around which would be more of a city sized car or parking on the street will there be options for our demographic or will we be out well I think we've got to figure out some kind
43:24of good solution for that so it's either gonna have to be some kind of super charging station or I mean hopefully the city's probably you know put an infrastructure for street-level charging
43:40because I think that's that's the ideal thing because if you can just Park where you'd normally Park and plug it in that's really convenient but even if you have to go to a supercharger and say wait 20 minutes or whatever the case may be that's that's a little way that's
43:56convenient than just parking the car where you would normally Park it and plugging it in in fact this is something that people when they drive Model S frequently you notice it when you switched back to a gasoline car that is
44:11really annoying going to gas stations and you realize just how much gas stations suck they're really horrible so but it's it's kind of hard to convince people until they have that
44:28experience of trying a car and then finding that they have to do this annoying thing or just to go to a gas station just how valuable it is to charge your car where you normally park it so I think we want to definitely get
44:44the the ability to charge the car that get that infrastructure in in cities and to agree that that isn't there provide some kind of super charging solution that that allows people to own the car in places like San Francisco or Manhattan or London you know that it's a
44:59relatively small percentage of total customers but it's none less we do need to address the long-term thank you hi my name is Josh Merrill and I'm a very proud shareholder I wish one day last
45:18year I asked you about self-driving cars this year my questions a little more practical cars in the the category of Model S you know tend to have kind of this six year refresh cycle sales tend to peak around you know year and a half
45:33two years in now the Model S is a very different car what's its life cycle what's the life cycle of the Model S and you know where could sales peak well in our case because we don't have a an existing
45:49service and sales infrastructure I think the peak sales the Model S will probably be in year three or four because it's going to take us a while to fully build out sales and service in North America
46:07Asia and Europe and as well as get the Model S to South America South that you know got a lot of complaints about the car not being in South Africa for example so we want to make sure that the car is
46:24available kind of worldwide where people want it and that's gonna take us you know at least three or four years to get that so I'd expect probably four years from now would be like the peak sales the Model S and and then in terms of
46:43when there would be a significant redesign of the Model S its it is probably at the sixth or seventh year and and as is typical we would do sort of a mild refresh at the three or four
47:00year point so typically in the halfway through the cycle you know people would cut that manufacturers will do kind of a modest refresh and I think would do something something similar thank you hello mr. musk it's Lee Kinsella
47:15shareholder my question relates to the Mercedes b-class and all future possible Tesla powered cars that don't worry the tesla badge it releases the supercharger network I was wondering if it's opened up to those vehicles as a way of getting
47:30consumers to demand that if they are going to buy any V it will be a Tesla powered thank you sure yeah so Tesla were really open to other manufacturers wanting to use the supercharger network you know we'd have to ask for some
47:48compensation because effectively the cost of the supercharger network is built into the price of the car so that have to be some some cost sharing on that basis and I really wanted to always to be the case that the supercharger is
48:03free once you've bought the car so it wouldn't happen we don't have this sort of pay every time you you're you're arriving I think it's just so much easier if you just build it into the class and you arrive and you just never have to deal with anything so as long as
48:19you know the manufacturers willing to take that same approach it tells that we're more than happy to share the network it's not you know I've seen some articles like oh you know is it has this intention to create sort of a walled garden or something like that and that is not at all the case this is not
48:35some nefarious marketing ploy it is is simply that we need to have high speed charging in order to have convenient long distance travel and if we were to wait around for everyone to agree on the right approach it would never happen so
48:50we have to just go out there and do it and then you know people can other marriages can join us or they could copy us or they could maybe think of something better yeah all right good afternoon my
49:07name is George crane and I am a satisfied stockholder the National Automobile Dealers Association and several state dealer associations have basically declared war on Tesla and they
49:24are fighting in state legislatures and in the courts you have try to hamstring our sales model it's really terrible your projections that you showed us
49:39earlier for the growth of galleries and showrooms and service centers was that there are those projections tempered by the opposition from Na da and the like or right well well it is it is a you
49:58know the order dealer Association is is definitely creating some problems for us making it harder to get things done I mean the the fundamental problem is is in order to do those Association I mean
50:13the order just keep saying oh we should grant them a franchise but then I ask okay can you give me some examples of companies that have granted a franchise like startup companies where that's turned out to be successful it's like didn't work for Fisker didn't work for Kota well let's see I mean in
50:30the last 90 years when did it work and there's no real good examples and so I feel like we have to do this directly and also our philosophy with respect to
50:46service is not to make a profit on service I think that it's terrible to make a profit on service and
51:01unfortunately the way that the order deal Association is set up is that they make most of their profit on service so this obviously would not be a good outcome now the challenge we face of course is that the border dealers have a
51:18very strong have very influential at the state level among the legislators and I should point out very often this is not just it's not like some small mom-and-pop operation it's the giant order dealers that are the big national
51:35order dealers that are the biggest challenge here sometimes people think oh we're fighting some set of small order dealers in the state no we're afraid we're fighting the giant ones that have the big money to spend not little ones and you know so that you know but if you
51:55look at the opinion Paul if you look at the opinion polls in any state or nationwide or anywhere any point in any it's any opinion poll of anywhere in any context as to whether people want direct
52:11sales the answer is overwhelmingly yes so in North Carolina Texas obviously in California or nationwide the percentage of people in favor of allowing Tesla to do direct sales varies from a low of 86%
52:28to 99 and in the case of the 86 there was a concerted attempt by the order dealers to get everyone they could to possibly vote against it and install was
52:43eighty percent eighty six percent in favor so so clearly if democracy was working properly and and the legislators were implementing the will of the people something else would be happening and
52:59and there would not be legislation trying to artificially restrict direct sales you know right now the auto dealers association is is I mean they're
53:14crowing about the fact that they were able to defeat us in Texas and that they're you know they're getting they're making so much progress in North Carolina and stopping us in in Virginia and it's like you know I think it's
53:29outrageous that they would that they would crow about a perversion of democracy that's just wrong so I think yeah I think I think they're making a big mistake yeah and I think what's what's actually
53:45gonna happen is I think I think customers are going to lead a revolt on this front because I mean if I was in a customer's position ever like at some
54:00organization was was so happy about being able to spend lots of money in democracy in a bad direction I would fight really hard to sell that company's product and I think that is what's going to happen
54:21I'm on Jake Randall and I'm a proud shareholder when you make the 55th generation of the tester that will cost around $30,000 well you still will it still be the same body shape as the Tesla s so with the third-generation
54:40vehicle we expect it to be in family with the Model S so you'll see like a sort of strong family resemblance so the this the short answer is yes and so but but with that third generation we
54:56want to try to think of some interesting things we can do that go beyond simply scaling down the Model S and scaling up volume we haven't thought of anything really big right now
55:12I mean it's we get lucky maybe we can incorporate some of the autopilot or self-driving elements into that vehicle but I don't know if we'll if that what if we'll be able to do that in time but you know that it could be something like that yeah
55:30but yeah thank you hi mr. Rusk my name is Dorian Leger I'm a small shareholder and a big fan my question is about super charging stations you mentioned that
55:45super charging technology is expected to advance is there any concern that with the rapid expansion of super charging stations across North America we might be marrying Tesla and consumers to infrastructure that will need to change in the near future yeah actually the
56:03we're gonna upgrade the super charging technology over time so I mean even we were relatively small deployment superchargers right now but we're upgrading them from 90 kilowatt capability to 120 kilowatt and then
56:20something I mentioned kind of as a side comment in the supercharger announcement is that we're also starting to do stationary storage so we have stationary battery packs at the super charging station and when you combine that with solar you can actually charge the battery packs
56:36during the day with whistle power went through the week and kind of build up energy in the stationary battery pack and then the cars can use that at will and that that unlocks even more power
56:52potential you know in the future we could potentially go above 120 kilowatts and yeah and with with without necessarily having to lose the investment in the hardware
57:07infrastructure that that's there so it's more additive than replace replacing stuff and and the long term goal as I mentioned the supercharger announcement was you know that even if there's like a
57:22zombie apocalypse or something very very popular in movies and TV shows that you know even if like civilization crumbled or something like that the that the Tesla super charging stations would still be functional
57:38thank you all right I'm mr. Mosca we sent the superior motorist owner and I bought my shares after buying the car because the car citrate so my question is that clearly you've done a fantastic job at going through the startup phase and surpassing all the initial risks and
57:55what do you see as the main risks for Tesla and for your stated goal of electrifying transportation between now and achieving that goal sorry electrifying transport sorry yes my question was what do you see as the the
58:11greatest risks ahead of you okay between your where you are and where you would really achieve your goal of electrifying transportation for all of us sure well I think the the biggest single challenge for electric vehicles is affordability
58:28amid say hypothetically one could build the Model S for half the price that it's currently costs I think we would see extremely widespread adoption of the Model S and then the other thing that has to be solved is long distance travel so if those two things can be solved
58:43I think it's that's it you know that's that's what's needed for there to be a huge tipping point in the direction of electric cars so we're trying to advance that as fast as we can and it does this require a lot of engineering effort to
58:59design things to fall for manufacturing and you know that's why I like the the first cell phones were so expensive and had quite a limited capability but with successive generations that kept getting better and we're trying to make that happen in a much shorter period of time
59:14than it occurred with cell phones and I think it's been more of a challenging problem so it takes an enormous amount of engineering effort but but that's that engineering effort is is really primarily aimed at improving the manufacturability and the affordability
59:29of the electric car and addressing the long distance travel problem I mean I'm hopeful that we'll be there in 3 or 4 years and if that turns out to be the case and I think that would be a really really great thing thank you
59:45hi my name is Simon I'm a happy shareholder I wish I would have bought more shares yeah thanks my share so my question is for the third gen I've heard the battery is one of the most expensive components and own enough new technology
1:00:01has to come out in order to get it to the 30 to $40,000 price range or something else to get it down there yeah this is definitely this a significant improvement in technology needed to have a compelling affordable electric car so
1:00:19I think in order for it to be compelling it has to have a useful range of at least 200 miles to be comparable to gasoline cars and so we're working with companies like Panasonic and others on
1:00:36new cell electrochemistry that's really optimized for automotive use and I'm gonna say I feel pretty optimistic that we can get there without any miracles
1:00:52occurring and the potential is there for breakthrough breakthroughs in energy storage technology that go beyond what I'm highly confident will occur in
1:01:09particular we could see a breakthrough in an area which which I have some familiarity which is ultracapacitors or splits entually a capacitor based architecture there's nothing that exists today that has the
1:01:24energy density that's in production so sometimes you'll see things that are announced like there was a fast charging of like a cell phone or something and you can do very fast charging with a capacitor but the the range that you'll get the energy density is still still
1:01:40far too low but but I I'm increasingly optimistic that there would be a breakthrough on the energy density front but it's not anything that people are publicly aware of thank you
1:01:56good afternoon mr. musk my name is Marjorie Zimmerman I'm delighted shareholder and hopefully soon a car owner too I would like to ask about the power content of the supercharger
1:02:11stations how the power will be generated for those will that be the same throughout or will it be vary by location I'm also wondering about how the company will cover the cost of the network long term and another little
1:02:26side question I will confess I currently drive a Prius which has a solar panel on the roof which I love and I wondered if there's any projected in our future intent to include solar integrated into
1:02:44the car itself absolutely thanks the the plan is for almost all super charging stations to have solar power so to have essentially create a solar carport over all of the parking
1:03:01bays where the super charging occurs and sometimes I've seen people do kind of back to the envelope math where they say oh you can't generate the amount of power that you need from that service area but the thing that they're not taking into account is that for most of
1:03:18the time those Bay's or most of the week those Bay's were actually empty or most of mostly empty that the super charging Bay's really fill up on kind of like a Friday afternoon and evening and on a Sunday because that's when people tend to do long-distance travel so we actually try to size the super charging
1:03:34the number of super charging Bay's the number of connectors and super charging hardware for for peak usage which occurs quite quite rarely or certainly isn't intended to occur occur quite rarely if
1:03:49there are a few super charging stations where we we need to really improve the number of Bay's very quickly like the one in Gilroy I would advise you to avoid Gilroy right now for at least during during peak times but we
1:04:06were working to expand that as fast as possible so the intent is to generate more energy from solar power than the cars use in the course of the year so your net positive in in solar power generation at this eddy super charging
1:04:22station and now there are some super charging stations which are which will be very far north like will happen we have some in Norway that'll be like right on the Arctic Circle so obviously the it's not gonna be a lot of Sun you
1:04:39know they're in winter particularly start all the time so what do we want to do there for in terms it is to to buy sustainable power so front buy it like say hydropower or something like that or
1:04:54geothermal so we want to have the whole supercharger network be completely sustainably powered one way or another so that's we're going to make that happen and then for the car itself oh and then the ongoing cost of the
1:05:09supercharger network it's it's relatively it's not super expensive to keep it going because there's that initial capital cost to establish something like super solar power then if you're generating positive net power
1:05:24through the year then you the power both from the utility is negligible because you're only connecting basically for backup power you know for kind of a trickle charge power so it's quite a low connection charge from the utility and we we we pay either zero rent or very
1:05:43tiny rent because we're essentially just creating a solar carport over existing parking spaces at highway rest stops so we're not building any new parking structure is just we're kind of give we're getting priority so Model S's get
1:06:00priority but but it really isn't any infringement on the highway on the highway rest stop operator in fact it's a it's a magnet for high-end customers so if you want more customers that you're higher risk top and this is a good thing
1:06:15so so aha I've hire you such as lo our rent is very low to zero then it's mostly a question of ongoing maintenance which is it's a it's a cost but it's also not about super high so our ongoing
1:06:30costs for maintaining supercharger network it is what way lower than any estimate that I've seen people seem to be way over estimating that the ongoing maintenance cost it's mostly a capital cost of getting it established in the first place and then for the solar power
1:06:47on the car it almost always makes sense in fact I'd say yeah yeah but verging on always makes sense to actually have the solar panel on your house or business
1:07:03because then it's always generating power it's at the right angle you know where's if it's on a car some of that car can be parked into in a parking garage or something like that it's still cool I think to have a solar panel in the car but that the cost per watt of
1:07:20that solar panel is a fair bit higher than if it was in a stationary application so that's why we haven't really pushed that as as an option in the near term but I think it would be cool to happen look in the long term so
1:07:35I think well maybe try to have that in the long term all right thank you thanks a lot or about twenty minutes over time I don't know how you're holding up if I look at the queues here we could go another hour so okay let's feel like maybe another 10 15 minutes
1:07:50and then let me oh got a meeting at 5:00 all right what's time now yeah oh I need to depart at 4:35 meeting at 5:00 so as long as I depart at 4:30 that's cool
1:08:07hello mr. musk I'm noises Kasab I'm a very big fan and a very happy shareholder and I was wondering if there's any plans to have more presence in emerging markets like Mexico once gen3 rolls out and if you're gonna be keeping the direct consumer model since
1:08:23many companies like Apple that have very successful director consumer are not selling directed consumers in countries like Mexico well we definitely want to sell Tesla cars in Mexico in other countries so what you should
1:08:39expect that will do that I think the the most likely outcome is we would go direct I can't speak to what Apple's doing you know but generally like when it's not as though I'm actually helped and so I'm going direct but whenever
1:08:54people have proposed it just you know propose that we give them an exclusive distributorship they they don't they generally don't agree that that should come with some sales commitment which seems a bit silly so like okay why would
1:09:11we do that you know we'd only agreed to an exclusive distributorship if there was a commitment to a certain sales volume otherwise we've potentially cut ourselves off from the ability to sell cars in that region well I think we'll
1:09:32probably expand beyond North America the EU and China and Japan sometime next year probably middle middle of next year
1:09:48or something like that Thanks thank you mister mr. Mosca my name is Eric grosse I'd like to thank you on behalf of today's shareholders like myself and also for potential leaving a much better planet for future
1:10:03generations two quick questions might there be any recoupment of revenue from Zev credits or something like that in moving into Europe and Asia that would
1:10:19replace those credits that you apparently believe we're going to be being phased out of through the remainder of this year and then the second question I had was might there be anything in the works to partner up with corporate entities in the hospitality
1:10:36industry whereby we might put the solar station at those places that would make great overnight places to stop and charge your your Tesla and it would be a win for them and win for for Tesla sure so we
1:10:54actually have worked with a few hotels to provide high-powered wall connectors because they really need a supercharger if it's gonna be overnight you can just do with like a 240 volts kind of 40 amp connection or even a 20 amp connection
1:11:11is fine for for overnight charging so we only need to expand that that program but we do do that to some degree and so it was the first party question there's a V absolutely so Z V since we would
1:11:28expect ya probably two-thirds of our volume to be delivered outside the US which is not does not have the nosy accredits outside the US and only about half the volume in the u.s. is set of
1:11:44credits that means only about roughly one-sixth of our cars would have save credits unfortunately there's no program that we're aware of that is similar to the reserved credit mandates and in fact
1:11:59the zip code MANET is is mostly about was really instituted for for local air quality reasons as opposed to sort of the co2 global warming type of stuff it was it's really because to improve the quality of air that people breathe in LA
1:12:16and San Francisco and New York because people you know sometimes forget that like whenever you have a gasoline or diesel car it's it's emitting really toxic gases in fact if you were to run I mean you if you were to breathe too much of that you die so it's like you
1:12:34can't like turn the car on and be in your garage for you know for very long so and and obviously if while that effect is diluted in in a kind of an
1:12:49open setting it still actually negatively affects people's health and that's actually the Ruiz and that deserve credits were were instituted quite some time ago but unfortunately it's only about half the u.s. population will have this it's I think 14 or 16 states or something like
1:13:05that covering about half the u.s. population that's and I don't see that getting replaced in any way right my name is Prateek Manik I'm a shareholder and a sign of a very jubilant car owner great thanks he
1:13:22spends about an hour after work on the screen with that in mind in the next as the licensing deals go through how do you propose and five to seven years from now continuing to maintain and build the Tesla brand image in order to keep sales
1:13:40up over time you know I'm actually not the hugest believer in brand or in marketing for that matter and like there was some recent article about how I'm such a great marketer and like I say the
1:13:55stupidest things that can't possibly be true my issue is that I don't have a filter not that I have too much of a filter so so I think the real way that
1:14:10brand happens is if you make good products and and then people look at that product and say well ok if the company can make that product then maybe other things that that company makes will also be good and that's what brand is it's real simple so we have pizza
1:14:30where people will look at the Model S if they'd like that then they'll say ok well maybe the Model X will be also be a good good car and so we'll buy that to Mister that's brand really no any more complicated than that I think
1:14:48I'm mr. mosque my mr. mcclaren burger I would like to ask you whether you already mentioned super capacitors they would like to ask you whether you plan to combine batteries and super capacitors in order to combine energy and power density in modules yeah that's
1:15:06a good question actually there was you know in the beginning with with Tesla when we were designing the architecture of the energy storage architecture I kept pushing for just exactly that to say you know shouldn't we have an
1:15:22ultracapacitor combined with a battery battery pack but what we found was that if you have the a big enough battery pack you are not power limited and your capacitors are sort of good for power battery is good for energy but and so
1:15:39even though you have a relatively poor powered energy ratio with a battery pack when it's big enough battery pack doesn't really matter so that's the toll we found hi I'm Lance ton I'm a
1:15:54shareholder I'm a roadster owner and a future Model X owner see our brand right there my question is how much does it cost to build one of these super charging stations and why isn't it compatible for
1:16:10roadster owners okay yeah next question my next question is I put down 40 thousand for the Model X instead of the five thousand and at that time if I would have invested in Tesla stock
1:16:26I missed out on about $100,000 right okay so is there any way you can offer us shares to compensate for that time my forty thousand still gonna be forty thousand yeah that's a tricky one
1:16:44so that before the super charging stations that the the reason that they don't support the Roadster is is because the the in order to charge at a really high rate what we built into the Model S
1:17:00was the ability to have a high voltage DC bypass direct to the pack and the now that involves some some complicated electronics and some very big junction boxes and and relays because it's so
1:17:16much power that's moving moving through there so that through the same charge port the car can actually either send AC power through the on board charges to the battery back or send DC power direct to
1:17:31to the battery pack with with the Roadster we do not have a high power DC bypass it's both all current goes through the onboard charger and so it can only take AC and then the Rhodes
1:17:48does not really intended as a long-distance vehicle it's it's a I love the Roadster but three hours Andrew neurospheres a long time so and then the
1:18:03I think I think it matches the cost of the super charging stations is about 150 thousand without solar or maybe 300 with solar on average some of them are more than some of them little bit less yeah thank you thank you we only want a
1:18:18thousand shares it was like a good deal good afternoon mr. musk my name is Cassius Jones and I'm a shareholder my question relates more broadly to the electric vehicle market it's currently in a pretty nascent stage as it matures
1:18:33how do you see the competitive dynamics changing and I'm specifically interested in how you might balance your personal goal to see electric vehicle transportation flourish while also you know doing your duties as the Tesla CEO
1:18:49and maximizing shareholder value yeah that's a Stricker one I mean I think I actually think that the goals are reasonably well aligned to bring electric cars on mass to the public and
1:19:05building shareholder value or at least I think they're aligned in the long term they're maybe not aligned in the short-term maybe but I think that the reason they're aligned is because in order for Tesla to make lots of electric
1:19:23cars and come out with new products we have to generate more cash than we spend and and generate enough more cash that we can afford to do future product developments so that that means that we you know we are going to have to be
1:19:40profitable essentially and and certainly generate a lot of additional cash flow from existing products in order to pay for the development of future products so I think it's reasonably well aligned like said at least in terms of long term
1:19:56shareholder value maximization there are obviously things we could do which would have a short-term effect on on the stock price but I think those would ultimately be disadvantageous in the long term okay
1:20:12I think we're gonna have to have just this be the last services yeah those waiting in line please see me afterwards to try to help you out and so go ahead please my name is Alex Nam Assad and I am a shareholder if I can't quit my job in October and thanks
1:20:28to Tesla I'm still employed happily okay I'm able to do what I want so thank you first I'm here to represent Nashville Tennessee and like you said I think middle of the country has a lot of customers I'm particularly from Franklin which has a lot of it you know affluent customers who are environmentally
1:20:44conscious yeah I looked at road map there's not any time soon to bring service center so here I'm just to plead that please bring a service center and a store as soon as possible I think would be a really great for Tesla yeah I actually totally agree with that the the the the service center rollout was
1:21:01really just vanish mentioned it was actually only like applying to the next six months so next year we're going to have a lot more service centers and I said I really agree with I actually think there's a lot of potential in the
1:21:17middle of the country for Tesla sales much greater than people think if they just looked at like Mercedes sale so or in value or Audi or something like that and so so we're definitely gonna take a
1:21:33rapid action effort and that's what we we haven't published the service center kind of opening schedule but that's something that's gonna change on the website we'll publish when we expect service centers to open so people have
1:21:48some sense if they were to order a car for delivery in that certain timeframe that Dolby a service centre available by that time just by the way my main question well first if you need somebody to help I'd love to help open a service center their van house so my main
1:22:04question is I'm a motorcyclist and a lot motorcycles yet I don't like the noise pollution that associated a lot of it a lot of course so my question to you is Tesla planning to bring motorcycles I think an electric motorcycle being great but also regardless of the answer to
1:22:20that is and this is really insane but I've seen you interview where you said you went to Netscape once - yeah and they're building just to get a job someone to say everyone was not successful by the way I know but just
1:22:37really want to work with you and sharing chance okay five minutes of your time to explain I have some ideas so motorcycle and other products they but also a question I plan to bring a motorcycle Tesla right now well I think it's very important for a company to focus so right now we're we're focused on the Model S and then after that the Model X
1:22:56there is a company called Brammo that I think makes electric motorcycles and I think some other other companies as well that are doing electric motorcycles so so they are electric motorcycles for sale just not from from Tesla and yeah
1:23:13so and as far as were working at Tesla I would certainly recommend applying through the website but I mean I do sports sort of hiring you know counterintuitive if people who don't necessarily from the car business or
1:23:29something like that so yeah go figure out how to do this and thank you yeah what we obviously
1:23:46would name again sir Alex Alex not Mossad okay and I'm software engineer by specialty okay I've been ten years in south to engineering but I do I've done project management and other things and just some beer I'm gonna use that all right I got it all right well submit your photo to the
1:24:04website and I'll ask human resources to take a take a close look [Applause] [Music]
1:24:38you