Tesla Shareholder Meeting 2018
Questions on ElonsFAQ asked in this interview (3)
Transcript
0:01Elon MuskAll right, I think we've got quite a lot of good news to talk about and look forward to sharing that with you and then taking questions from the audience.
0:10Elon MuskAnd yeah, I'm just really proud of the Tesla team for accomplishing so much against incredible headwinds. And I'd just like to express a note of appreciation for all of our customers who bought our cars.
0:24Elon MuskThanks for buying our product. We're doing everything we can to make it as good as possible as fast as possible. You know, I think, like, this is going to sound maybe a little cheesy, but at Tesla we build our cars with love.
0:42Elon MuskLike, we really care. I think a lot of other companies, they're built by like the marketing department and the finance department and there's no soul, you know, so, like, we're not perfect, but we pour our heart and soul into the product.
1:02Elon MuskWe really care.
1:14Elon MuskAnd the dedication of the Tesla team has been incredible. People have, they've really been working incredibly hard to make the car. It's very difficult to become a mass manufacturing car company.
1:33Elon MuskNo one has succeeded in doing this in a very long time in the United States. And even the ones that have, only Ford, Ford's the only one that hasn't gone bankrupt.
1:43Elon MuskSo it's super difficult. So in fact, yeah, in the history of the American auto industry, it's always worth bearing in mind that only two have not gone bankrupt and that's Ford and Tesla.
1:57Elon MuskSo it's,
2:03Elon MuskIt's insanely hard just staying alive. I just want to be clear, it's really difficult. And you know, we've had people at Tesla who've sort of worked like 60 days straight, like basically forced them to go home.
2:18Elon MuskLike, you've got to go home, man. You're going to keel over and then snuck back in to work. Like, damn it, we said go home. So. But the net result is, despite a lot of difficulties, all lines, all parts of the world reproduction system have demonstrated a 500 car per day capability or a 3500 car per week capability.
2:47Elon MuskSo, and then we just did a big set of upgrades and we're spooling up the production lines again. And I think it's, it's more, it's quite likely that we will achieve a 5,000 car week by the end of this month.
3:14Elon MuskLike, this is like, I'll tell you the most excruciating, hellish several months I've maybe ever had and a lot of other people at Tesla. But, but I think we're getting there.
3:30Elon MuskThe, we're doing well on market Share the blue line is the Tesla Model 3. We just became in May the best selling mid sized premiums than the United States of any kind.
3:50Elon MuskSo that's of any kind. So not just it's getting all internal combustion engine cars, not just battery or hybrid or anything like that. And that's despite the fact that we still offer only one version of the car.
4:09Elon MuskAll wheel drive is coming out next month and then we'll have the lower cost, the shorter range battery, low cost car at around the end of this year is when we're expecting to do it.
4:24Elon MuskSo we also made huge progress in the reliability of the car. So in the beginning it was a bit bumpy and now as deliveries have risen, the quality and reliability of the car has improved dramatically.
4:42Elon MuskSo it's improved by a factor of maybe four or five since starter production and we're working on making that even better.
4:55Elon MuskEmployee safety is a big deal for us. It's always tougher to achieve safety when you building a new manufacturing line. So if you've got a manufacturing line that's in steady state, then you've got an opportunity to iron out the processes and make it a lot easier to build the car.
5:17Elon MuskAs you're figuring things out, it takes a while to get there. So Thus far in 2018 average industries, our injuries per proposals are 6% below the industry average, which is great because last year we were a little bit above and now we're a little bit below and then and that trend is continuing downward.
5:39Elon MuskSo I think we've got a shot of being maybe half the injuries per person of the auto industry and you know, that's the goal we're striving for, is to be half in injuries per person.
5:58Elon MuskWhen you're building cars and you've got a huge number of people, it's impossible to be zero. We wish it could be zero, but we think being twice as good as the average in the water industry is a very achievable number and that's what we're working hard to achieve.
6:15Elon MuskIt's worth noting that when the injuries, the vast majority of the injuries are repetitive stress injuries. So like back strain or wrist strain, but by far the most common thing.
6:29Elon MuskSo. And the way to address that is with, with better tooling and fixtures and, and rotating people through different roles so they're not always doing the same action. And it's also boring to do the same action over and over again.
6:44Elon MuskSo. So we're making good progress on that. And it's also worth noting even our current injury rate is Half that of what it was when Toyota and GM were operating the plant.
6:58Elon MuskSo that is often lost in a lot of the media articles. So if we achieve our goal, we will be a quarter of the injuries of when it was near me.
7:08Elon MuskSo this is a very. What I really want to emphasize. This is a super important thing to me because we obviously owe a great debt to the people who are building a car.
7:19Elon MuskI really care about this issue. So.
7:31Elon MuskAnd Supercharger expansion is going, going really well. We're almost over 10,000 superchargers worldwide. And yeah, our goal is to be able to go almost anywhere on Earth using the Tesla Supercharger system.
7:49Elon MuskWe're very excited about the next generation Supercharger. That is it's mostly finished in design and will go into production hopefully around the end of this year. So Supercharger Generation 3 will be quite a dramatic improvement.
8:05Elon MuskBut we want to save that announcement for when, when it deploys, which is hopefully later this year. And then once we have that system in place, then we're going to accelerate the supercharger expansion even more.
8:25Elon MuskSo we've managed to do now a gigawatt hour of energy storage deployment worldwide. This is all the way through from the reign of Ramses II of Egypt through today, which is a very impressive period of time.
8:44Elon MuskAnd in less than a year from now we will do another gigawatt. So it's a pretty massive.
8:56Elon MuskSo the rate of stationary storage deployment is going to grow exponentially. It's really, I think for many years to come. Each incremental year will be about as much as all of the preceding years, which is a crazy, crazy growth rate.
9:17Elon MuskAnd it's also a sort of production limited thing. We would actually be able to do more if we could produce more. And we are producing a lot of batteries.
9:30Elon MuskSo in fact next quarter at the Gigafactory we expect to make more battery capacity than all other EVs combined, worldwide, including China. So.
9:48Elon MuskI mean this is a really crazy amount of batteries. This one factory is making will make more than all the other factories on Earth. Like really deserving the Gigafactory sort of title.
10:03Elon MuskIt's really, really nutty. We were trying to have like maybe where things got calmed down a bit, like have more tours available for Giga because it's like epic.
10:22Elon MuskYeah, it's like at least two hours to walk. Just to walk through all of the parts of Giga at this point. Just to walk through everything is. Takes two hours.
10:31Elon MuskLike if you don't pause a lot good exercise. So that's yeah, pretty well. We have our first really. We actually have a bunch of non Tesla employee solar roof customers.
10:50Elon MuskAnd the response has been very positive that that whole roof is solar and it just looks normal. In fact looks better than the roof that was there. So I have, and I have it on, on a house that I bought, the little house across the road that used to be owned by Gene Wilder.
11:09Elon MuskIt's sort of like a Willy Wonka house. And I was like trying to figure out how to have that go solo without kind of ruining the Gene Wilder aesthetic, which is I really like actually.
11:23Elon MuskBut I was able to put these on Gene Wilder's old house and it still looks like it still has the same character, which is great. And we're spending a lot of time just validating the solar roof because they need to last at least 30 years, ideally longer.
11:45Elon MuskAnd there's only so much accelerated life testing that you can do on a roof. So before we can deploy it to a large number of, of houses, we need to make sure that all elements of the roof are going to last for at least three decades, ideally sort of half a century or more.
12:07Elon MuskBut this is going to be a very big product and it's also going to grow exponentially. Yeah. And I think you kind of want to have a thing where if you look around the neighborhood, adding solar actually made the neighbor improved the aesthetics and feel of a neighborhood.
12:27Elon MuskI think that's a really big deal.
12:32Elon MuskWe are, we are not far from Q3 and I'm actually my CFO and general counsel. Like, you have to watch what words you use in these situations. But I think, you know, we, it's really looking like we are going to have positive GAAP net income next quarter and as well as positive cash flow in Q3 and Q4.
13:04Elon MuskAnd we, as I said before, do not expect to need to raise any incremental debt or equity.
13:26Elon MuskHere. We've got some exciting products in the works. The Model Y is really going to be something super special. We're aiming to unveil the Model Y approximately March next year and then go into production about maybe around two years from now.
13:47Elon MuskMaybe a little less than two years, but basically first half of 2020 for production, model Y, something similar for semi and Roadster. So these products are shaping up. I think Semi and Roadster are actually going to be even better than what was unveiled.
14:05Elon MuskWe've figured out ways to improve the range and overall functionality of the semi, in particular the Roadster. We what I unveiled with the Roadster was the base model performance.
14:28Elon MuskIt's going to have a SpaceX option package.
14:41Elon MuskIt's crazy. And I think it's important for us to show with the roadster that an electric vehicle can outperform a gasoline car in every way. So that, because gasoline cars still have sort of a halo effect, and I think if we can show an electric car can outperform gasoline car in every way, then we sort of get rid of that halo effect of gasoline cars.
15:06Elon MuskAnd I think that's quite a powerful thing, perceptually, for the, for the general public.
15:20Elon MuskSo these are just some questions that we got on Twitter. I guess we had some really insightful questions on Twitter, as well as some strange ones. But, yeah, so one of the first questions is for Model 3 production line, as I said before, we're really going to focus on manufacturing technology for Tesla.
15:46Elon MuskAnd we've made a lot of mistakes with Model 3 production, but we recognize those mistakes and we're confident we know how to address them. In fact, we are addressing them.
15:58Elon MuskAnd long term, I think the, the biggest competitive strength of Tesla is going to be manufacturing. This is. This is sort of counterintuitive, but it is, it is going to be quite dramatic.
16:13Elon MuskI think
16:16Tesla Executivethe
16:18Elon Muskapproach to automation that we've taken, I think in some cases has worked, in some cases not. But it's clear that there are some elements of production which are really well suited to people doing it, and some parts of production that are really well suited to robotics.
16:39Elon MuskAnd one of the biggest mistakes we made was trying to automate things that are super easy for a person to do, but super hard for a robot to do.
16:48Elon MuskAnd when you see it, it looks super dumb. You're like, wow, why do we do that? So, and then as you. So it sort of makes sense to have start off with an initial production line, which has a relative bias towards people, and then you automate the parts of the production system that are the most painful and difficult for people to do so, particularly ones that result in repetitive stress injuries or mechanically difficult.
17:21Elon MuskThat's really a much better approach. And that's what we're going to do for Dreadnought Factories one and two. It's a much more sensible way to do things. Let's see.
17:34Elon MuskWell, let me actually have some of the Tesla executive team come up. Guys, you want to come up and hang out?
18:00Elon MuskSo, jb, do you want to talk about the battery cost stuff?
18:04Tesla ExecutiveSure. So, you know, it's difficult for us to talk about specific cost numbers. That's always a difficult topic. But we're still very Confident that we have the best price and performance of anything out there in the world.
18:18Tesla ExecutiveIf there's something better, I don't know about it. And we've looked as hard as we possibly can and we try and talk to every single battery startup, every lab, every large manufacturer.
18:27Tesla ExecutiveWe get quotes from them, we test cells from them. So if there's something better, we're all ears. We'd love to find it, but we haven't found it yet. So generally, yeah, we're still pretty confident about that.
18:39Tesla ExecutiveSame direction.
18:42Elon MuskYeah, we think at the cell level, probably we can do better than $100 per kilowatt hour, maybe later this year. Depending upon what? On commodity prices. If commodity prices are roughly where they are today, then we'll probably do better than $100 kilowatt hour at the cell level.
19:02Elon MuskAnd then with further improvements to the cell chemistry and the production process and more vertical integration on the cell side, for example, integrating the production of cathode and anomalies at the gigafactory and then an approved design of the module and pack, we think long term we can get below $100 a kilowatt hour at the pack level, which is really the key figure of merit for a car.
19:34Elon MuskBut long term meaning definitely less than two years. But that says a long term anything. I mean, yeah, yeah, we think we've come up with some pretty cool breakthroughs on this front on the energy density and cost of the battery pack.
19:59Elon MuskAnd yeah, I think it's going to be pretty, pretty great as far as I can see. When will the gigapactory be completely built? I think we'll keep building on the gigafactory for at least four or five years.
20:19Elon MuskIt will be by far the biggest building in the world. It's not that far from being the biggest building in the world already. And based on the plans that we know, it might be twice as big as the next building in the world.
20:37Elon MuskHence the interesting tour. So it's. Yeah, yeah, it's about a third done right now. And yeah, so it's really, really, really enormous. And I think it's going quite well.
20:56Elon MuskThere will be more gigafactories in the future. We're close to announcing a combined vehicle and battery factory. So future gigafactories will include vehicle and battery pack and powertrain as a single integrated unit.
21:16Elon MuskAnd we're close to announcing something in China that I know. Roman, do you want to talk about that? I mean, we don't want to make an announcement exactly. Maybe just talk about, like, preamble or Something So Robin is head of worldwide sales for Tesla.
21:39Tesla ExecutiveThanks, Elon. I didn't expect to talk about this. So we're incredibly excited to build first Tesla Gigafactory outside of the US in China specifically it's going to be in Shanghai and we have been holding discussions with the government, various governments in China.
22:07Tesla ExecutiveReally great discussions, great partners. We really look forward to working with them in the years to come. This is going to be the next generation of Tesla factory. We're super excited.
22:23Tesla ExecutiveThe stuff that we're going to be putting there and the cars that we're going to be building in that factory is going to be incredible. So we going to announce something really all the details really, really soon.
22:38Tesla ExecutiveSo I won't tell more, but this is enough, thank you.
22:51Elon MuskParticularly as we try to make cars more and more affordable, it's going to be important to localize production to at least the continent. And so having gigafactory and vehicle factory in North America, one in China and then one in Europe will be.
23:07Elon MuskThat's sort of. Those are the obvious three places for vehicle and battery gigafactories. So probably, if things go according to plan, we'll probably be announcing details of the China Gigafactory as soon as next month and then Europe Gigafactory maybe end of this year, kind of depending on how the.
23:31Elon MuskWe need to figure out where to put it. Exactly. So but probably towards the end of this year for the Europe Gigafactory and ultimately we expect probably there's 10 or 12 worldwide.
23:48Elon MuskSo some questions on the Tesla semi. We are going to do another revision of the Tesla semi design because we've learned a lot and we think we can actually make it even better than what was unveiled and really have a range that is way beyond what people think or most people in the industry think is possible.
24:16Elon MuskAnd we want to. It's definitely going to be a semi that works in Europe and in North America and China and the rest of the world here. I convinced that that's one major factory in the works and then another one in the works later this year.
24:35Elon MuskYeah. Do you want to talk about cells?
24:39Tesla ExecutiveYeah, we've talked about this a few times. But Tesla will absolutely recycle and we do recycle all of our spent cells, modules and battery packs. So, you know, the discussion about, you know, this waste is sort of ending up in landfills is not correct.
24:54Tesla ExecutiveYou know, we would not do that. These are valuable materials in addition to. It's just the right thing to do. So we have current partner companies on Every major continent where we have, you know, cars operating that we work with to do this today.
25:08Tesla ExecutiveAnd in addition, we're developing internally more, you know, processes. We're doing R and D on how we can, you know, improve this recycling process to get more of the active materials back.
25:20Tesla ExecutiveAnd ultimately what we want is a closed loop right at the gigafactories that reuses the same recycled materials. This isn't impossible. We see a pathway to do it, but that's where we're headed with this.
25:31Tesla ExecutiveAnd today we're on the way to do that. It's definitely something that will be a huge benefit in the long term to cost as we're able to reprocess more materials instead of actually having to mine new materials.
25:53Elon MuskIn terms of repairability of Model 3, including insurance costs, we're working with insurance companies and on some internal activities, we're really confident of getting the cost of insurance for Model 3 to be at least 20 to 30% lower than say a BMW 3 Series or equivalent mid size sedans.
26:16Elon MuskSo the safety is definitely better. And then we're, we're working on the repair costs. We made a lot of progress in that front. But the bottom line is that the insurance cost, total cost of ownership of the Model 3 should be significantly better than any other mid priced premium sedan.
26:40Elon MuskSo.
26:46Elon MuskYes, there will be, we will definitely offer a $35,000 version of the Model 3. And I think probably at the end of this year is when we should be able to make the smaller battery pack and then get into kind of volume production of 35k version in Q1 next year.
27:09Elon MuskSo that's definitely, we will definitely honor that obligation and we would do so right now if it was physically possible. See, yeah, we're going to, in hopefully next month offer a free trial for people to try out Autopilot and see how well it works.
27:30Elon MuskWe're also making rapid progress, rapid progress on Autopilot technology. So there's a new version of Autopilot that's rolling out I think this week, which I think is quite a significant improvement.
27:45Elon MuskAnd I think what you'll see is that the reliability and capability of Autopilot will increase exponentially over the next six to 12 months. It's really, the improvements are very, very rapid.
28:06Elon MuskThe length of time to wait for a Model 3, if you're ordering one now, will vary quite a bit depending upon what part of the world you're in and what configuration.
28:14Elon MuskSo if for the existing configuration, if you were to order now in the US you probably would be Waiting, guessing about three or four months. If you. On the other hand, if you want the right hand drive version, you're probably waiting for over a year because we need to build the right hand drive version and ship it to other countries and homologate the car for other countries.
28:38Elon MuskSo the wait is anywhere from three to 15 months approximately. But for current configuration ordered now, it's maybe about three or four months. This is actually quite a complicated answer.
28:54Elon MuskThere are many lines to the Model 3. In some places there are several lines, in some places there's just one line and it kind of depends on what the capacity of that line is.
29:08Elon MuskSo for general assembly, which is like putting the parts together at the end, we currently have two lines and are constructing a third. The third line is I think dramatically better than lines one and two.
29:26Elon MuskWe started construction on that third line about two weeks ago and we're already putting the first car through that line. So it's really crazy fast. And that's part of what gives me confidence about the 5k per week for model 3.
29:45Elon MuskCurrently the biggest constraint on output is general assembly. And I think we can probably get to 5,000 a week with the current two general assembly lines. But with the third one, I'm highly confident that we can exceed 5,000 units per week.
30:05Elon MuskModel 3 test drives we should be able to offer Model 3 test drives starting the end of this month and I think we should have them in almost all stores in North America by the end of next month.
30:21Elon MuskWe're rapidly expanding service centers. I think by the end of kind of year over year probably see a doubling of service center capacity for Tesla and we're making major progress on the body shop front.
30:40Elon MuskWe're also, it was quite a big deal. We're creating Tesla body shop repair locations and we should have by the end of this month at least the top 10 metro areas in the US being able to be serviced by a Tesla body shop.
31:02Elon MuskThis will be a dramatic improvement in the cost and time of body repair. In fact, we think we might be able to do for a lot of them like same day body repair, which is, yeah,
31:19Elon MuskIt's definitely possible. So I think, I think we want to aim for at least some number of body repairs to be same day, whereas if we go to a third party's best case it's about a week.
31:29Elon MuskIn some cases it's several weeks. So this is pretty exciting actually. We're basically just taking our biggest service centers, adding in an annex for body repair and then pre stocking the parts.
31:46Elon MuskSo you don't have to wait for parts to come from the factory? Not yet, but yeah. March next year, I think we'll have something very exciting to show.