Tesla 2012 Annual Shareholder Meeting (2012)
Questions on ElonsFAQ asked in this interview (2)
Transcript
0:00welcome to Tesla Motors 2012 annual meeting very much appreciate everyone joining us today I know some of you have travelled for a long distance we very much glad to have you here with us today I'm Eric Whitacre Tesla's general counsel and secretary I'd like to get started by calling the annual meeting to
0:16order and introduce our co-founder CEO and chief product architect Elon Musk we also have a number of executives with us in the audience Deepak Ahuja our chief financial officer Jeff Evanson our Head of Investor Relations David John who's
0:31head of technical IT we've got the members our board here today like Steve Jurvetson IRA Erin price I see Kimball musk and Antonio gracias coming in as well so thanks everyone for joining I also like to introduce Steve sellers of PricewaterhouseCoopers who's our lead
0:47auditor here with us today there are two parts to today's meeting first we will conduct the formal part of the meeting where we will cover the two items and stockholders have been asked to vote upon the Nealon will provide a brief overview of the company followed by a question and answer period before we
1:04turn to the formal agenda I'd like to announce that the polls are now open if you haven't voted or would like to change your vote please do so now please raise your hand and a ballot will be brought to you by computer share who's sitting over here while we collect those
1:19ballots I would that like to ask and everyone review the rules of the meeting that were provided at the entrance during the question answer session if you would like to ask a question please raise your hand and wait until you are recognized please identify yourself as a stockholder or as a representative of a
1:35stockholder then go ahead and ask your question thank you very much for your cooperation we appreciate it our meeting today will follow the agenda provided to you Tesla's Board of Directors has appointed Lisa Brenton of computershare Investor Services to serve
1:50as our inspector of election for this year's annual meeting and Lisa's handing out the balance right now lisa has taken and signed an oath as inspector of election this document will be filed with the minutes of today's meeting computershare Investor Services has certified the starting on April 13th
2:052012 the proxy materials or a notice of availability of the proximity riyals were mailed to all shareholders of record as of April 9 2012 copies these proxy materials and related certificates will be attached to the minutes of today's meeting I've also been advised by the
2:21inspector of Elections and we have a majority of the outstanding shares represented here at the meeting today so I declare that there is a quorum present and we may proceed with the business of the meeting we're conducting the meeting in accordance with the company's bylaws we have two items on the agenda they are
2:36first to elect the two class two directors Antonio gracias and Kimball musk to serve for a term of three years or until their respective successors are duly elected and qualified and second to ratify the appointment of
2:51PricewaterhouseCoopers LLP as tesla's independent registered public accounting firm for the fiscal year ended December 31st 2012 are there any proxies remaining in the audience that have not been submitted I know some of you asked for a ballot so we'd like to get those turned in
3:24all the ballots have been turned in are there any others one more here and over there
3:59they say you have them all great thank you very much the polls are now closed and all the measures have passed that concludes the official business of today's meeting I declare the formal part of today's meeting is hereby adjourned I now welcome you to stay for Elance presentation and during the course of
4:15this presentation we may discuss our business outlook and make forward-looking statements such statements are only predictions based on management's current expectations actual events or results could differ materially due to a number of risks and uncertainties including those mentioned in our most recent 10-q filed with the
4:31SEC such forward-looking statements represent our views only as of today and should not be relied upon after today we also disclaim any obligation to update these forward-looking statements and with that I give you what you all really been waiting for mr. Elon Musk
4:51thanks for coming and you know something I believe in doing at every shareholder meeting is saying thank you being a shareholder I really appreciate your faith in Tesla and yeah we will not
5:06disappoint you so we're really excited to announce that we've delivered the first two production cars one to the first to Steve Jurvetson he's sitting right there and those cars
5:21outside and and then my car on Saturday so Steve got his on Friday and I got my on Saturday and which essentially means we've satisfied all of the regulatory requirements and the car is completely able to be sold as a normal production
5:37car the reason the first two cars are going to Steve and myself is so that we can spend a few weeks just going through the cars in detail and and experiencing any tiny issues ourselves before regular
5:54customers experience them I think it's really important to thoroughly test your own product and be extremely tough on it before giving it to general customers so actually spent most of Saturday and Sunday just with the Tesla team going
6:11over every detail of the product going through the interior exterior everything and most of the issues there hundreds of issues identified but and most of these I think probably anyone would notice but
6:27but we want to have a product that even if you were a complete perfectionist and you were looking in all sorts of places that people never really look that it's it's right it's in those places too that there's there's not some little little corner or little tucked away place that
6:44that isn't right what every aspect that that car to be as perfect as possible so so things things have gone really well on achieving the benchmarks that we were looking for so in terms of safety our
6:59goal was to achieve a five-star crash rating which which we believe we've done in fact if there were a six star I think we would get a sixth star that it doesn't yeah we kind of saturated on the
7:14on the on the ratings and the reason for that is is if you if you break down crashes into different categories you have a front crash which is responsible for the supermajority of all fatal
7:32collisions are frontal impacts we have a real advantage because we don't have this huge steel engine block in the front as a result we have a much longer crumple zone so it's crumple zone that's two to three times longer than it would be in a normal sedan because sometimes
7:49people think oh I've got this big engine in front of me and that's protecting me well not really because in a really high speed impact you've got to have a certain compression and and it's and you've at some point that engine is gonna go through your chest said that's not good and so by having having that
8:08longer distance is really important for high-speed impacts and it's perhaps not not well appreciated but if it's really important it's like if you were to jump out of a five-story window do you want to jump into a shallow pool or a deep one but that's basically what it amounts to
8:24and foremost cause it's like jumping jumping into a kiddie pool but in our case what much zero and then with respect to the site impacts we've designed a really strong structure to go
8:40on the side it's this kind of expand extruded lattice structure and if you look at the sill the side sill of the Model S you'll see it's a little wider than a normal car and that's to resist that this the side impacts and so we
8:57have the lowest side side pole intrusion of any car and in any passenger car in the world and and and we didn't just test according to the regulation so the regulations will say for example that
9:13you have to if you do a side pole test it's got to be at this location but the problem is that that allows companies to gain the system and say okay we're going to strengthen it just at that location so we did those tests but then we said okay what is the weakest location and
9:28let's do the side pole the crash at that location and make sure that is good too so something really good on side by side pole and then for for rear collisions the because we have a third row seat I
9:45want to be really careful about that and our self I have my kids and they're my friends kids will be in there and the regulations around rear collisions are really quite low and for the caused with it with a third row situation they're typically designed to a full a full rear
10:03impact at around 30 to 35 miles an hour and we actually just are designing to an impact at over 50 miles an hour sort of highway speed on and being able to absorb that impact on only half of the
10:18car because you can imagine yourself if you've sort of stuck on the side of a highway or something and a car hits it's not going to be it's not going to be a full so I'm going to hit you full and it's gonna hit you on on half of the rear and you want to be able to resist that impact and drive into the crumple
10:34zone of the impact car to ensure that if there's anyone in the third row one second row that they are protected as much as possible and so we did all that all those tests effectively at a crash energy level about four or five times greater than
10:50what the regulations allow which is quite quite a tricky thing to do but we were able to get that done and and then the the the roll cage of the car is also designed to be able to handle about four
11:05times the mass of the car if you roll over so the car can really just tumble and and you don't get a collapse of the roof structure and there's a that really encompasses the Vista safety side of things applause if that was a little bit laborious but I thought it was worth
11:20making that explanation because you know if you look at one car to the next you can't really tell it's not super obvious that that one is better but this is really I think by far the safest car on the road and then in terms of
11:35reliability we were doing extensive testing where what we're before the significant customers how the car we've put millions of miles on the car effectively with accelerated life
11:50testing we've got what we call that the all these shake-and-bake systems where the car is literally being shaken heavily and then and it's in it's in a chamber that is being cycled to extremely low temperatures and high
12:05temperatures it's going through salt fog it's going through really everything to make sure that under any circumstances the worst situations you can imagine the car never lets you down which so if you're in the middle if it's midnight in
12:22a Norwegian winter or it's the hottest day in in Death Valley picnic Arsenal works and it worked well and then obviously we want it to be beautiful and that speaks for itself and we're gonna continue to tweak small elements of the
12:37aesthetics because although it's a great car everyone who wanted to be as perfect as possible so we're gonna continue to refine just little elements here and there and that's it's very economical so the that this is perhaps
12:52important because although we've set them all s to be at a price point which is comparable to other premium sedans that doesn't take into account the cost savings to be gained from using electricity versus gasoline so the Model S cost about a tenth as much to run as
13:10if you're broadcasting roughly roughly on that quarter anyway
13:29you
16:08but the the test track for the Model S so we actually test every car over a wide range of road conditions before it is it is given to customers so we don't do statistical testing we do literal
16:24testing where every car is tested our aspiration is is not to have a load defect rate it is to have no defect rate and so interest in the car has been good get particularly given that most of
16:42before very few people have actually test driven economy only a handful of people close within the company has driven the cars so that the orders so far without a test drive some people had an opportunity to ride in a Model S or instantly see it up close but the demand has been strong despite the
16:58unavailability of test drives and once people do experience the test driving the Model S I think it will exceed their expectations it's it's just not like other cars Steve getting his car that's
17:22the the tesla team handing over the first car and there's me so we're gonna hand out first hand over
17:38our first ten cars in three weeks and these will be our first sort of handover of a bunch of cars for people that are not Tesla insiders so we're gonna hand over ten cars into a big ride event on
17:54the - on the 22nd or 23rd I'm really excited about how our stores going we keep evolving the historic design and
18:10Technology so there's effectively like a new store version that keeps getting iterated and upgraded led by a George Blankenship I think he's doing a really great job on revolutionising the the order of buying
18:25and ownership experience because that's one of things we wanted to do at Tesla was if we're gonna create a new car company well let's let's try to fix all the things that are wrong with with the with buying and owning a car and one of
18:40the things was wrong with buying Internet car is that the experience of learning about a car and acquiring it and and owning it is usually not a positive one and it's rare that that
18:56buying a car ranks to somebody's top retail experience but we want that to be the case so and I think we're making great strides in that direction
19:11later this month or later later in the jaggis from june would you it so in about three in a few weeks we'll be opening our store on that in Santa Monica on the Third Street Promenade this will be the latest in-store technology and I think that's if you
19:29would like to go and see that June la that's we're seeing our Santana Row store also is very very close to that in inexperience and we plan to upgrade and expand that the the senate's I don't
19:44want to go store experience as well so see a continued evolution in our store technology if you will and it really is kind of store technology it's your the overarching goal for the stores is if you see a test of store in
20:01a mall you should be magnetically drawn to that store even if you don't own a car it should just be you want to go in and feel welcome and and really like being there and and our goal is may
20:19sound somewhat counterintuitive but it's it's really we never want to sell a car in the store it's it sounds like well why would you even no one do that well it's like if you're being sold something it's sort of it's like somebody's I don't to me it feels like somebody's pulling the wool out of your eyes you
20:35know it's of you want to learn about something you want to experience something but you don't want to be sold and and that's the best way to want to want to own a product and if if somebody
20:51knows that going to Tesla store they're not going to be hounded and you know it's gonna be a pleasant experience you're not gonna have any compunction about going in so that that's the goal there
21:07on Eevee powertrain side we're very proud of our relationship with the two partners Mercedes and Toyota we announced a little bit about a month or so ago that we'll be doing a full
21:24powertrain deal with Mercedes so we'll be doing a battery pack motor transmission inverter and everything for Mercedes and this is going to be at a at a reasonably high volume level so this is a sort of a real production program
21:40as opposed to prior programs which have been sort of more demonstration and proof of concept so this is really kind of expanding to more of a mainstream situation with the Mercedes deal and then Toyota with the rav4 that's just
21:56about to come out and this is still at the sort of proof of concept stage kind of seeing how things go so we're hoping in the future that that will transition to more of a mainstream high-volume
22:11situation on the rav4 side as well and I think if this goes well that's best what should occur so next we're gonna take one less throughout the world so we're
22:26starting off obviously in the US but if in about six months we'll be delivering Model S cars in Europe and and Japan and a number of other places in the world so we're finishing the what's needed to
22:42Amala gate or essentially certify the Model S for sale in these different markets we also expect to hopefully go to China next year it's not something that we're gonna deploy our supercharger
22:57network and I'm I'm not going to talk much about this we're being deliberately coy but when when we do the unveiling of the first supercharger and you and people see what what our supercharger network is going to look like and just how awesome it is it's gonna it's going
23:13to blow your mind it's gonna be like whole this is cool it's like yeah you know it's a you have to have all the pieces in place with a crystal to glow if that makes any that that reference makes any sense but that
23:31the lightbulb when people see with the supercharger system unveiled and what and everything we're gonna do there it'll finally make sense to a lot of people not just those who have been enthusiastic about electric vehicles for a long time but but it's going to make
23:47sense to the broader population I like okay now I finally get it and then we've got Model X because we're continuing developing a Model X and then we'll have out third generation vehicle development that'll fall upon legs and that'll be sort of a high volume thing at an order
24:03of magnitude greater production than the Model S world Model X so if you think of a Model S as being comparable to say a 5 Series BMW then the model then the third generation will be say comparable to a 3-series BMW and of course next year
24:18profitability and positive cash flow that'd be nice around the middle of next year's when we'll do the right-hand drive which will be important for certain markets like the UK and Japan or
24:35Japan you can sell left-hand drive as well as right-hand drive but it's mostly right-hand drive and we're going to continue expanding stores throughout the world so that with the Model X which were
24:51obviously unveiled earlier this year our goal was to really be as innovative as possible on the SUV and minivan addressing the SUV and many Manimal minivan market so I think the Model S
25:06it's the Model S has so much functionality has so much cargo space it has the ability to carry five adults and two kids that that in effect the Model S expands both the sedan market and part
25:22of the SUV market with the Model X it'll address the remainder of the SUV market and the minivan market so with those with those two products we're essentially going to cover three major segments and in fact the Model X will
25:37have more functionality than any minivan a bigger door opening more usable cargo space and all in a form factor that is about the same wheelbase but actually slightly shorter than an Audi q7 so it's
25:54not we haven't achieved that functionality just by making a super-huge car I think one of the one of the signs of good design of car is that it's bigger on the inside than it looks on the outside conversely a sign of bad
26:11design would be it's a huge car but it's utility on the inside is limited and it'll be the first dual motor all wheel drive where it's got a motor in the front and a motor in the back so it actually has incredible performance as a result of that and it can actually beat
26:26a Porsche 911 Carrera in zero to sixty it's 0-60 4.4 seconds versus a 0-60 or 4.6 seconds for Porsche 911 Carrera so I think it'll be if you ever a delight and listen guy with a Porsche he's thinking
26:42his stud we put a dent in his ego recipe and yeah so I really love the dual motive thing and it's also good as a result of being
26:57of having a murder in front motor the back we can dynamically adjust torque within milliseconds to effectively get the best road-holding of any all-wheel drive ever so it's the this is simply in a different league in terms of Road holding capability relative to other
27:13all-wheel drive vehicles which are simply mechanically connected and you don't you simply you don't have the reaction time well first of all it's just a dumb mechanical connection so it's not it's not smart like you know that this would be and you can't you can't do that that fast adjustment
27:29front-to-rear and and then just intrinsically an electric motor is much more precise than a gasoline engine because the reason like surgical instruments are not powered by a gasoline engine you know or a laser printer would seem odd if it was
27:46powered by a gasoline engine if you want higher precision you need an electric motor and there was a really great response from customers on this this
28:01just shows that the basic Tesla master plan which has been there which I put in place and pretty much day one which is to do a high price low volume vehicle which is the Roadster go to mid price mid volume which is the Model S model X
28:17and then the third step will be to go to high volume lower price which about the generation so this year we expect to do a little
28:34over 5,000 units obviously very tiny market share and next year about 20,000 units which is still a tiny market share I mean bearing in mind that the total number of new vehicles sold every year
28:50in the world is around well depending upon how you count it 80 - as much as 90 million units a year and and then in 2014 I will have the X out as well it's
29:05still and when those those percentages are just as a percentage of the premium market so still a small percentage a lot of room and a lot of opportunity for growth in the future and it should be noted that our factory
29:21in Fremont has a capacity of somewhere on the order of half a million vehicles year so we've got a lot of growth a lot of potential to use that bet that asset and with with very very good capital efficiency achieve high production
29:36levels and we remain confident of the 25 percent gross margin next year that's I my confidence level at this point I think I feel very very confident in committing to that number and then
29:52operating margin sort of been you know about half that all right so just any QA
30:1220 Meza pill 20 Meza pill a shareholder for our stock to achieve a somewhat normal price earning ratio we're gonna have to sell tens of thousands of units per year several tens of thousands units
30:29per year so I would like to ask you about a key component of the car that may or may not make that happen and that's the battery lots of government labs university labs lots of the companies are working on battery technology to make the battery cheaper
30:46charge faster right or store more and that's very good because that'll help our cars take market share from the gasoline cars what technologies as for us shareholders should we be watching do
31:02you know well I think we're so far Tesla standpoint you we do get exposed to a lot of the upcoming advancements in battery technology and I have to say
31:19that there are a few industries with more won't BS than the battery industry it's quite remarkable and the reason is because there are a lot of complicating factors with a battery there's the
31:38gravimetric and volumetric energy density there's the cost per kilowatt hour is the cycle life there's the calendar life there's safety and sometimes you'll see an announcement
31:55that that sounds really great and it's an improvement in one area but it really short changes the other areas and I forget to mention that in the article so that that's so so just sort of putting all that aside I think what
32:11we can what's what what's reasonable to expect in the future is roughly an eight to ten percent improvement per year in but the cost and energy density of the battery packs and most of the time it's not some
32:29hugely rip revolutionary change it's some it's an improvement in the anode cathode separator electrolytes but those are really the things that that drive it particularly the cathode side holder now we're seeing some improvement in the
32:44anode science and one of the things that's occurring is transitioning from a purely carbon anode to either a carbon silicon or silicon anode I mean I'm not
32:59sure how what the best way is to to say invest in opportunities like that because where we you know from a Tesla standpoint because we need such huge scale in terms of production we tend to talk to the the the cell producers and
33:18we have the scale to meet our needs and so and to sort of ask them what they're how they see things evolving and like if something looks good let's say at the lab level and it's and it's meeting all
33:33the requirements at the lab level it's at least five years before that gets the scale production so so we do have pretty good visibility but but it we don't necessarily we can't say oh you should
33:48invest in such as such a company because we think that's that's good but I can't say with confidence that we will see something on the order of a 10% improvement per year for the next several years at least yeah that that's not speculative that's known
34:09steve goldsmith i have two or three questions one for the buyer what support will they get in a home charger system and what connection to solar panel home
34:25production to really wipe out the cost in any connection to spacex so let's see the good a few questions embedded there
34:40i am a big fan of solar power obviously is a chairman of solar city and helped create the company and I think socities doing an awesome job I'm not sure most
34:56people aware of this but solicitors largest provider of solar power in in the country and to change the code a really good clip and I really believe that Solar will be the single biggest source of electricity production in the
35:12world in like but certainly by the mid point of the century and maybe even sooner and and I recommend at getting getting solar power installed in your house and in most cases installing solar
35:29power can be done with no money down and it will result in a reduction in your electricity costs so it's kind of a no-brainer it's like if you have a house that that could work for solar at all you should get solar and it'll cost you
35:44less and you'll be doing good for the environment the there's a super truck there's gonna be some interesting stuff with solar and the superchargers but I don't want to jump the gun on that but
35:59that's gonna be exciting to see because I think a solar really helps short-circuit this idea that electric cars are just gasoline cars with a long tail pipe you know that sure it's use
36:15electricity but isn't that electricity produced by coal and haven't we therefore not solved upon that moved somewhere else it's like no we have to solve sustainable power generation as well solar is the best way to do that in my opinion and so if we have sustainable
36:32power generation and sustainable power consumption then we really have solved the problem and that's something we want to make clear and I think the supercharger system will will help illustrate that
36:54Jew George crane anon a stockholder two-part question first part is are you going to strap a couple of Falcons together and send one
37:09of those to the space station and part two a recent op-ed piece in automotive news indicate you know held position that
37:25increasing cafe standards are discouraging mainline auto manufacturers from investing in electric power trains because the technology payback is in
37:41improving internal combustion from the customers point of view when cars get an average of 54 54 and a half miles per
37:56gallon is the urgency in the general public's mind for buying an electric car diminished are the EPA fuel standards cafe
38:11standards are going to discourage perhaps electric car sales I know I think improving that requirements that the average corporate average fuel
38:27economy for car makers actually does help send them in the direction of sustainable transport I think it's it's actually okay if what they do as a large part of that solution has improved the efficiency of the gasoline-powered cars
38:43but ultimately in order to meet the really high cafe standards that are that are scheduled to come into effect later this decade you think they will have to go to electric cars or at least plug-in hybrids or something like that so I think I think it's so real a good thing
38:59I'm not sure it's in fact I don't think it's the best way to achieve the goal I think the best way to achieve the goal of say reducing carbon emissions is to tax carbon emissions just as one to say cigarettes or alcohol if you know
39:16I really feel quite strongly that if we ordered its its instance the federal government needs to raise taxes it makes sense to wait those taxes on what likely is bad for us versus stuff that's good
39:31like it will be silly to here in food to have really high taxes on bread and none on on cigarettes that would be like you're like oh that would be dumb well that's how it is with with with fuel what we have really low taxes on the
39:47stuff that's bad for us which is like coal and oil and all that and then we've you know we've got you know but we have negative taxes on those issues I should point out the the level of subsidies and tax breaks that exist for for oil gas
40:03and coal are are enormous in fact just mind-bogglingly huge so it's not just that there's not tax in that there's a negative tax there's a subsidy effectively and and that makes it harder for the sustainable stuff to
40:19to compete and and there are there are some subsidies on on the sustainable stuff but it's nothing compared to that the gargantuan ones that are there for oil gas and coal and that have been there for a long time unfortunately so
40:36anyway I really think they were to be a tax according to that which is going to Hamas um and in fact I mean there really are a lot of parallels between smoking you know how smoking was perceived save 40 or 50 years ago where you actually
40:52have these ads where they're proclaiming that cigarettes were good for your health and like pregnant woman in ads and things like that and then there will scientists all these scientists were saying well we think there may be a link between lung cancer and smoking and and
41:07then there would be all these counter studies funded by the tobacco companies that curiously found that there was no link and then over time that evidence mounted more and more and eventually it became overwhelmingly obvious that smoking is bad for your health
41:23and yet what we're doing here with carbon emissions from from oil coal and gas is we're smoking the planet you know so it doesn't seem we've learnt our lesson there hi Doug McKenzie a
41:41shareholder and first just congratulations on the amazing things that you've done with Tesla and with SpaceX just amazing so thank you I think last year you mentioned how there was a swap out of the battery in the Model S and that could be done I've been telling people I think I read this in under a minute
41:56yeah tential e so could you comment about that and whether that looks like something that still has potential and when that might happen yeah so that in terms of the Model S I intentionally architect the Model S to
42:11have a battery pack in the floor pan that that can be swapped out in under a minute and I think we're going to show something interesting in that regard
42:26so you know to keep a few got a few keep a few clods you know and in the vest there but it will be something exciting to see in that regard sure okay Jeff's
42:48got the makeup in here oh sorry yeah yeah so first congratulations on getting the Model S out the door month early that's an incredible achievement I'm very excited to drive a Model S I'm I'm equally excited for the Model S to drive me what are your thoughts on a
43:05self-driving Tesla so I think I think the whole self-driving thing is pretty cool and I and and and and that is something that I'd like Tesla to
43:20implement and and we we have a fairly close relationship with a number people at Google and I think would be really really great to implement the first production self-driving car at Tesla or
43:37another way to think about it is a super smart active safety system so the car is always taken care of you and preventing an accident so it's yeah that that's that's another way to characterize it sometimes you say self-driving people
43:52like cars gonna go nuts but but actually a better way to think about it maybe is to say this is the best smartest active safety system you can have sure yeah you just talk I think that yeah
44:13Thanks
44:41you know focus is just on making cars so if you want to buy cars and do with them what you wish you're welcome to do that all right someone I should people have an right back here with the microphone just because we're webcasting so it's easier if everyone oh it's in here as
44:56well
45:11[Music] look at my crop hi Roy Philipose invested from Philadelphia I believe in what Tesla is doing division and what you're trying to achieve as a question I have here is
45:27basically as Tesla seems to be running out of money and you know if you remember the financial crisis we had difficulty raising funds in 2008 and as you know there's a lot of concern shareholders out there that we have a
45:42significant short position and as well as you know maybe they know something that we don't know we're basically regarding profitability it seems that Tesla can you assure Tesla was going to have a hundred behave a
45:57hundred percent sure you're gonna sell twenty thousand cars by next year because it seems like the evidence seems otherwise thank you I could not hear the question okay
46:13you know you know it's where we are where we are in cash and can we really achieve the 20,000 unit sales next year yeah I absolutely feel highly confident will achieve 20,000 units next year and they can access to that but what happens when it doesn't happen you know what
46:28maybe you only sell 10,000 then if you only sell I mean our break-even point is probably around 8,000 you'll be able to be cashflow positive with that number yeah right that yeah about 8,000
46:43probably something in that order yet okay thank you yeah and I mean obviously we've got over 10,000 orders so I think we're safe in that regard thank you work
47:00was working hello I'm Eric Decker oh no I'm a shareholder with your talk about rethinking the entire version of the car company I know that you said you're building the car to be of extreme high quality but eventually with cars and the
47:15life of the the car things do end up going wrong and I know that right now you're handling service on a very personal relationship basis you know with a team coming over and helping to fix the car but what happens with Gen 3 with past that when you have you know 50
47:31hundred thousand cars that I'll have all these different problems people are getting in accidents and stuff how do you plan on rethinking or scaling the service of the entire car company at that point so I push the service is that we want to have regional service centers
47:48that would cover a metropolitan area or in some case for a really big metropolitan area and like say the area we might have three or four service stations but the general approach is that the third service is I want it to
48:03be what call like invisible love so the best kind of service is first of all for your car not to be serviced I think that's our goal is to absolutely minimize the service needs of the car in the first place and in this I think we
48:21have an advantage both two traditional cars because that a lot of the dealers make most their money with servicing so that I think the cars tend to be a little over serviced and yeah so so our goal is to make a car
48:36that's that so reliable that it doesn't need to be serviced and of course we what all cars come with 4G connectivity so we can do over the over-the-air updates of software like you used to getting on a phone or a computer and we can also do remote diagnostics so if the
48:53car is reporting a problem then with the users permission if you give us permission we can look at the car and determine what's wrong and be able to pre position any spare parts so that I
49:08mean I said in the ideal scenario like if the car doesn't he doesn't need to be serviced what would be great is like let's say you took a car to work you tell us the car is going to be at work for the foot at your office for the following period of time we come pick up your car bring it to our service center
49:24where the parts are pre positioned to be replaced to replace them return the car before you need to go home for work so was invisible to you and you will love that that's how visible oh and but that's
49:40that's that's I think the good way to do it and that may sound well gee isn't that expensive I know no it's not if you look at say the way that enterprise rent-a-car operates it's a really efficient organization and yet they pick you up and drop you off for your rental car and that's a much better use of time
49:55to have someone valet the car then for you personally to pick up and drop off the car and then we can have a fewer number of service centers that are sort of located near major highway intersections and we can have economies of scale at the service center level so
50:11I think it's both more efficient and a better experience for the customer the mic is on right okay my name is Russ angolan I'm a yes please besides a shareholder of I'm Idol s is this mic working okay there we go
50:26all rights don't over my name is Russ Angle besides a shareholder I'm a Model S and Model X reservationist and my wife has been complaining about the time I spend on the Tesla Motors Club website since last summer when we reserved we happen to own a small business in Fremont California of all places my
50:42questions about leasing normally when we acquire vehicles we lease them because it is more tax advantageous for our business and you need to move 20,000 vehicles next year as you know your competitors lease a large percentage of their vehicles sure the question is what are your plans in regards to leasing in
50:58the United States I know you have it in Europe with a fine what are the plans for us leasing absolutely off the leasing it for US customers it'll probably be starting next year but I mean I may be able to get something done
51:14this year but it's not really necessary since we've got more than enough demand just from straight purchases to satisfy as many cars as we can make this year but starting next year we will offer leasing options absolutely yeah and I think actually leasing we may see an
51:30even greater proportion of our cars being leased than their normal gasoline cars because the the best way to really understand the operational cost advantage of an electric car is if you lease it because then you could see the least cost plus your electricity cost
51:45and your servicing cost and you're like wow your it cost so much less to to operate because electricity's so much more efficient and you're servicing is tiny you don't have any oil changes or tune ups or you know filter changes and then it's you can you can look at your
52:00monthly your total monthly cost of operating a car and then it's a much more obvious advantage relative to operating a gasoline car and you can see the economic difference is quite substantial so I actually think as with solar where's where most the vast
52:15majority of solar projects that we do are leases I think we may see a really high percentage of electric cars be leases because it's it so obviously illustrates the economic advantage Jeff we have time for two or three more questions John Woolman shareholder right
52:35here in town quick question on the charging interface about a month ago almost all auto makers came together and announced a new joint standard for ac/dc charging yeah I know you have your own and this
52:50might not be important for say the first 20,000 40,000 pick a number number of cars but over the longer run to drive mass market deployment might not be just a little bit awkward to be the only guy who was not onboard with but of all the
53:07ways in which you can differentiate this might not be the preferred item I bet the Model S will be able to charge anywhere it the onboard charging system is is as very intelligent highly
53:22adaptive so it'll it'll adapt to any input current and voltage you defeated and and the adapters for the various standards around the world because it's not quite consistent come with the car so when you buy the car you'll be able
53:37to try to charge that car anywhere you want for the actual connect like that that goes into the car we did design our own because the standard just isn't good enough so we're forced to either have a
53:53highly compromised connector in the car or have two one which is big and bulky and ugly or in addition to our one which is small and compact and beautiful I just couldn't do it on the big ugly one
54:10that sucks so it's gonna do it but we do have an adapter and so you build it sort of that you'll you'll and the adapter itself is a smaller and adapters can be made so you and you can just carry that
54:25in a trunk in and have access to charging up structure anywhere but and another key factor is just the power I wanted to have something that could have a huge amount of power something on the order of almost 100 kilowatts of input
54:42energy and that's far beyond what any standard exists that doesn't this there's no standard for a connector of that size and even the ones that are say 1/2 that's that that that capability are gigantic and and and bulky and
55:00uncomfortable so we have a connector that is dialed down to the limits of what physics can really achieve which is great and yeah so that we kind of needed
55:16to do that yeah I wish we could adhere to to the standard but but unfortunately the standard is not good and will not compromise the the the product to adhere to a standard that's
55:32not good mic guru shareholder the collapse of Solyndra was a big shock and we know a lot of that was competition from China but I'm more concerned do you see any pushback or pullback from the government
55:49on its support of green energy well I think I think Evans supporter of green
56:04energy is it's okay I mean I think it should be better I really think like I mean I think if we were to truly to think long term it should be much greater than what it is right now or another way I like the word sustainable
56:20energy because then it makes it really obvious it's like why are we why are we subsidizing non-renewable energy unsustainable energy at the expense of sustainable energy by definition
56:35unsustainable is going to run out and and then we run this dangerous experiment of seeing how much co2 can we put in the atmosphere before there's a massive catastrophic catastrophic disaster that the outcome of that
56:50experiment could be oh gee you can put a huge amount of co2 in the atmosphere and it's and it's okay that's one of the outcomes the other outcome is it's not okay I don't it just seems like a bad idea to run that experiment that people seem to want
57:05to run it so I I think what will what what's likely to occur is that as the evidence mounts that unsustainable energy is bad even a complete complete
57:22fool can't ignore it then that's when we will see quite a dramatic shift in favor of sustainable energy I just hope it's not too late
57:42hi when people think of this company they think of leading-edge electric cars but as you showed in the presentation briefly there's another part of it which is the manufacturing and I am so happy that the u.s. still
58:00can make something that is not only competitive but it's leading-edge and I really think that should be emphasized more as much as the cars itself because it's really important not just for the company but for the whole country I'd also like to get a tour of the factory
58:16too if that's possible we'll be having a bunch of factory tours I think on the 23rd and and actually at first points throughout the year will be offering opportunities to for customers to get
58:31test drives and tour the factory everyone for coming thank you Elon [Applause]