Tesla Annual Shareholder Meeting 2023
Questions on ElonsFAQ asked in this interview (4)
Transcript
0:17Martin Viecha (IR)Good afternoon, everyone. Good afternoon everyone, and welcome to Tesla's 2023 annual shareholder meeting in Austin, Texas.
0:31Martin Viecha (IR)My name is Martin Vieja, I'm vice President of Investor relations and I will be the chair of today's meeting. First of all, I really wanted to thank everyone who continues to do this trip on annual basis and shows up every time.
0:43Martin Viecha (IR)It's really quite something that we have a following as dedicated as this, so thank you very much for that.
0:53Martin Viecha (IR)I also wanted to thank our first time visitors. I know that many of you won a lottery to come for the first time to a festival shareholder meeting.
1:07Martin Viecha (IR)You'll probably notice that unlike many other shareholder meetings of other companies, this one tends to be a bit more fun. So hope you enjoy that. But the last thing I really wanted to say is that just thank you so much for all your support over the years.
1:21Martin Viecha (IR)We really feel like you're part of our mission, you know, part of our, you know, story, and it's something we truly, truly value. So thank you so much for that.
1:35Martin Viecha (IR)There will be two parts of today's meeting. First, the formal part of the meeting where we will cover items that stockholders have been asked to vote on, as well as any other matters that are properly presented.
1:48Martin Viecha (IR)And after the voting, I will introduce Tesla's co founder and CEO and technoking Elon Musk, who will give a presentation about Tesla's year in review. But at this time, I'd like to thank the members of the Tesla team and the board who are here with us here today.
2:07Martin Viecha (IR)Representative from PricewaterhouseCoopers, Tesla's independent auditor, present with us as well. But before we begin, I'd like to introduce you to Tesla's chair, Robin Denholm, who would like to say a few words.
2:27Robyn Denholm (Board Chair)I'm a little bit shorter, so. Hello everyone. On behalf of the board, I am really honored to welcome you all here today to the 2023 Annual Shareholder Meeting. It's wonderful for me to see everyone in the room today and also the many investors that have joined us today via the virtual livestream.
2:52Robyn Denholm (Board Chair)It's our third straight year of having the annual meeting here in Austin. At the first meeting, the factory was still in the early stages of development, with equipment being installed and commissioned.
3:06Robyn Denholm (Board Chair)During the 2022 meeting, production had started to ramp as we produced about 1600 vehicles that week. And now, less than a year later, we have more than tripled the amount, having achieved production of 5,000 cars in a single week.
3:30Robyn Denholm (Board Chair)A huge concept. Congratulations to the Texas team. And on top of that, we are getting ready to Roll out our first cybertrucks.
3:45Robyn Denholm (Board Chair)This exponential trajectory of the gigafactory here in Texas is a reflection of Tesla as a whole. In 2022 was another record breaking year for us with deliveries and growing by 40% year over year.
4:03Robyn Denholm (Board Chair)And that trend has continued in the first quarter of 2023. We would not be able to achieve this growth without the dedication of our amazing employees. I've been fortunate enough over the years to actually travel to many of our locations, all of the gigafactories around the world.
4:24Robyn Denholm (Board Chair)And, and I can tell you that I've witnessed firsthand how our exceptional employees in our global talent across the world has together achieved our mission or furthered our mission of accelerating the world's transition to sustainable energy.
4:43Robyn Denholm (Board Chair)Huge round of applause please. This year here in Texas, we also had our very first investor day where we introduced our company leaders from design to engineering, to supply chain, manufacturing, energy and charging.
5:03Robyn Denholm (Board Chair)And they each spoke about the role of their teams in making our mission come to life. And I was thrilled that investors were able to hear directly from this outstanding leadership team that Elon has been able to put together over many, many years.
5:21Robyn Denholm (Board Chair)It is on the strength of their leadership and the hard work of our dedicated employees around the world that I believe we are not only weather the macroeconomic environment that we've seen this year, but also continue to be in the strongest position ever to advance Tesla's mission.
5:42Robyn Denholm (Board Chair)As a startup. Tesla proved that electric vehicles could be fun with the Roadster. They could even be better than gas powered vehicles in every single way with the S and X and could be all of these things as well as affordable with the Model 3 and Model Y which last quarter became the best selling vehicle of any kind in Europe and the best selling non pickup vehicle in the United States.
6:18Robyn Denholm (Board Chair)And today, as one of the world's largest global companies, we plan to change the paradigm again by forging the path to achieving a global sustainable energy economy as set out at our investor day in our master plan.
6:36Shareholder3.
6:38Robyn Denholm (Board Chair)As Tesla grows, so do our customers positive impact on carbon emissions. When I stood here last year, I proudly announced that in 2021, our customers avoided emitting 8.4 million metric tons of greenhouse gas emissions, the equivalent of over 20 billion miles driven by internal combustion engine vehicles.
7:04Robyn Denholm (Board Chair)Today I can tell you that in 2022, our customers avoided releasing over 13.4 million metric tonnes of greenhouse gases into the atmosphere. The equivalent of over 33 billion miles of driving of internal combustion vehicles.
7:27Robyn Denholm (Board Chair)That that's an almost 60% increase in total emission savings year over year. Putting more of our products in customers hands helps grow that number and our goals of making our products greener over time and further decarbonizing the electric grid will help multiply that effect.
7:51Robyn Denholm (Board Chair)As part of that goal, I am delighted to say that as described in our recent impact report, our global supercharging Network was again 100% renewable in 2022. We've been able to achieve all of this while maintaining.
8:10Robyn Denholm (Board Chair)Sorry, maintaining industry margins, industry leading margins and generating strong cash flows over the last several years. Going forward, we will continue our focus on capital investment plans to support our future growth with investments in batteries, in vehicle production, including the next generation platform, in the building of our lithium refinery that we recently broke ground on, in the energy storage factories, in our sales and service footprint and in our charging network, among other things.
8:48Robyn Denholm (Board Chair)Before I hand it back to Martin, I would also like to thank Hiro Mizuno for his dedicated service to the Tesla shareholders and the Board these past three years.
9:00Robyn Denholm (Board Chair)I would also like to express our enthusiasm on behalf of my fellow directors at the prospect of JB Straubal joining our Board.
9:17Robyn Denholm (Board Chair)I don't have to tell you that his passion for Tesla and green tech will make him an important asset in our mission to accelerate the world's transition to sustainable energy.
9:28Robyn Denholm (Board Chair)So again, on behalf of our full Board, thank you for your tremendous support and welcome to your 2023 shareholder meeting. And with that, I'll hand it back to Mart.
9:50Martin Viecha (IR)Thank you Robin. I will now call the meeting to order. Please refer to the meeting agenda that has been provided to you and post it on the virtual meeting site.
10:01Martin Viecha (IR)The time is now 3:10pm Central Time and I declare the polls are now open. We have already received over the last few weeks voting proxies from stockholders, meaning that almost all the votes that will be counted were already submitted before today.
10:19Martin Viecha (IR)However, if you wish to vote your shares or change your prior vote, you may do so through the virtual meeting site. For those who are in person here today, ballots and ballot boxes were available to you at the check in Tesla's Board of Directors has appointed Computer Share Trust Company to serve to serve as Inspector of Elections.
10:40Martin Viecha (IR)Computershare has taken and signed an oath as Inspector and has certified that starting on April 6, 2023, the proxy materials or a notice of Internet availability of proxy materials were mailed or provided to all Tesla Stockholders of record.
10:59Martin Viecha (IR)March 20, 2023. We have majority of outstanding chairs represented at the meeting, so I declare that there's a quorum present at the meeting and we may proceed with the meeting.
11:13Martin Viecha (IR)The items on the agenda are as follows. Number one. The election of Class 1 directors Elon Musk, Robin Denholm and JB Straubel to serve for a term of three years or until the respective successors are duly elected and qualified.
11:31Martin Viecha (IR)Number two. To approve executive compensation on a non binding advisory basis. Number three. To approve the frequency of future votes on executive compensation on a non binding advisory basis.
11:47Martin Viecha (IR)Number four. To ratify the appointment of PricewaterhouseCoopers LLP as Tesla's independent public registered accounting firm for the 2023 fiscal year. Number five. To vote on a stockholder proposal included in our proxy statement which relates to the reporting of key person risk.
12:08Martin Viecha (IR)Number six. To vote on a stockholder proposal which the stockholders did not seek to have included in our proxy statement. Tesla's board has recommended that our stockholders vote for each of the director nominees for the approval by non binding advisory board of executive compensation and the ratification of appointment of PwC as an independent registered public accounting firm for fiscal year 2023 and every three years for non binding advisory vote for the frequency of future votes on executive compensation with respect to stockholder proposal included in our proxy statement which relates to the reporting on the key man risk.
12:55Martin Viecha (IR)Karen Roberts Doughertier on behalf of Sumtris, is here to present this proposal. Ms. Roberts Doughertier, can you please identify yourself? I would like to invite you to speak. You will have three minutes.
13:17ShareholderHello. Thank you for having me here today. Under discussion is a shareholder proposal concerning key person risk at Tesla requiring Tesla's board to draft a report covering the steps taken to ameliorate the potential impacts of loss of key persons in the company.
13:35ShareholderHowever, before I begin, I would first like to say thank you to Mr. Musk. For so many of us, you stepped into fields where we had so desperately wanted to see change.
13:44ShareholderAnd through bringing in a talented team willing to put in long hours, you dragged reluctant industries kicking and screaming into a better future. And for that, thank you. Building up this juggernaut around us which, as you largely put it, runs itself these days.
14:01ShareholderThank you for that. And yet now, here we are today, at a time when Tesla's technological leadership should be on display the investment community largely sees as adrift with management focused on all the matters, not Tesla.
14:15ShareholderWatching as Tesla's brand favorability dropped by 15 points last year. Something that costs us margins. We have such a spectacular product pipeline and a team that knows how to execute at scale with low cost of goods sold.
14:30ShareholderSomething that we are not being properly Recognized for it should go without saying, but apparently bears repeating, that if you cannot produce with low cogs, you have no future.
14:38ShareholderWhen I look around the auto industry these days, I see a lot of companies that have no future. And that's a success on behalf of an incredible team here at Tesla that deserves recognition.
14:50ShareholderWhen people look at this company, that's not what they see. They see the company as a synonym for its CEO, and then the discussion turns to everything except for where it should be focused.
15:00ShareholderIt's my sincere hope that by introducing this proposal, we can not only accelerate the development of management at Tesla, but also increase its visibility. The fact that this company is so much more than its key persons is something that the public and the investment community should see.
15:17ShareholderA founder often finds their greatest success in ensuring the future of the company and the development of the management talent who can come after them. Think Tim Cook at Apple, Steve Ballmer at Microsoft and so forth.
15:30ShareholderPeople who are ready from day one to execute without controversy, without distraction, and build a future for the company. I encourage the board should embrace this opportunity in the most public manner possible, to showcase the future being built right here, here, so that the discussion among the public and the investment committee resolves revolves around that and not around every public statement on every other topic made by the leadership.
15:59ShareholderI strongly encourage the board, the shareholders, to support this proposal and for the board to embrace it. Thank you very much.
16:07Martin Viecha (IR)Thank you. Ms. Roberts Law. The board is recommended that our stockholders vote against this proposal for the reasons set forth in our statement of opposition in our proxy statement.
16:19Martin Viecha (IR)Finally, as you saw, and investor advocates for social justice would like to raise a proposal from the floor. The proponents did not seek to have their proposal included in the proxy statement.
16:32Martin Viecha (IR)The board recommends that our stockholders, who are entitled to vote on this proposal, vote against it. As a reminder, as is disclosed in a proxy statement, I've been advised by the proxy holders that they intend to vote all shares of stock over which they have discretionary authority against this proposal.
16:52Martin Viecha (IR)Only shareholders who are shareholders of record or have obtained a legal proxy made vote for this proposal after it is presented. Courtney Wicks, representing Investor Advocates for Support Social justice, is here to present the proposal.
17:09Martin Viecha (IR)Ms. Wicks, I would like you to speak. You will have three minutes.
17:12ShareholderThank you. Good afternoon, Tesla board members, management, employees and shareholders. My name is Courtney Wicks and I am the Executive director for Investor Advocates for Social justice and I'm here on behalf of as you sew and the Sisters of the Good shepherd who have filed shareholder proposals in the past on child labor and and human rights abuses in Tesla's supply chain.
17:35ShareholderI stand here today to call on shareholders to vote yes on requesting Tesla to conduct a third party report detailing the company's efforts to eradicate child enforced labor in its supply chain.
17:48ShareholderThe human rights risks that permeate throughout Tesla's value chain, when not adequately addressed, harm shareholder value and undermine Tesla's ability to lead the chance just transition. Growing attention and concern have been placed on child labor in cobalt mining in the Democratic Republic of the Congo as well as on forced labor in China's Xinjiang region.
18:11Shareholder70% of the world's cobalt needed for EV batteries are sourced in the DRC. Over 40,000 children work in artisanal and small scale mining, often without protective equipment and in dangerous spaces that frequently collapse.
18:29ShareholderMany children are seriously injured or killed in the mining process. In Tesla's latest sustainability report, it claims to have audited 80% of the miners and refiners in their cobalt supply chain against responsible production standards.
18:44ShareholderHowever, there are many industry backed standards, some of which are weak and it isn't clear what percentage of audits were conducted by which initiatives. It is also unclear how the company's due diligence ensures cobalt sourced from child labor is not intermingled in the industrial cobalt supply chain.
19:00ShareholderSubsequently, an estimated 1.8 million people have been subject to states imposed genocide, detention and internment camps and forced labor in the Xinjiang Uyghur region. A recent study concluded that automakers cannot conduct meaningful audits in this region.
19:20ShareholderThe recent Uyghur Forced Labor Prevention act in the United States Senate inquiry into Tesla's supply chain highlights the regulatory risk Tesla faces. We believe a third party audit would provide greater transparency into how Tesla plans to eradicate child and forced labor from its supply chain.
19:39ShareholderOne of Tesla's competitive advantages is its sustainable leadership. Tesla, its board of directors and management team have a moral obligation to pursue ethical sourcing practices that do not rely on the lives of children or enslaved people.
19:56ShareholderTesla can continue to make a true leadership difference that forges a sustainable economic future that is anchored by innovation, empathy, human development and shareholder value. Thank you.
20:08Martin Viecha (IR)Thank you, Ms. Wicks. We will now accept votes for, against or to abstain for this proposal, but again, only for record holders or legal proxy holders.
20:22Martin Viecha (IR)Please note, this is the final opportunity to submit proxies in order for them to be counted.
20:36Martin Viecha (IR)I declare the polls are now closed. Based on proxies we have previously received, I'd like to announce on preliminary basis that our stockholders have approved the recommendations of the Tesla Board on all agenda items except that shareholders have recommended one year for non binding advisory vote on the frequency of future votes on executive compensation.
21:02Martin Viecha (IR)This means that I would like to officially announce our new addition to the Tesla board, Chevy Strabel.
21:22Martin Viecha (IR)After the final tabulation is completed, we will announce specific Votales filing in the filing form 8K within four business days of this meeting. That concludes the official business of today's shareholder meeting which is now adjourned.
21:49Martin Viecha (IR)During the course of the following session we may discuss our business outlook and make forward looking statements. Statements Such statements are predictions based on current expectations actual events could result could differ materially due to a number of risks and uncertainties including those disclosed in our Most recent Form 10K and 10Q filings with the SECs.
22:11Martin Viecha (IR)Such forward looking statements represent our views as of today should not be relied on thereafter and we disclaim from any obligation to update them as after today. And with that please welcome Elon Musk.
22:53Elon MuskI just want to say I love you guys.
22:58Elon MuskWell, we've got a lot of great news to talk about today. The Tesla team has done an incredible job of executing over the past year and we have many exciting years ahead of us.
23:11Elon MuskSo yeah,
23:18Elon MuskSo with the Tesla Master Plan part three, which admittedly was quite technical, we wanted to go into a lot of technical depth. So you know, it was clear that what we were saying was not just were not merely assertions but that they were backed up with physics and with real data that it's realistic.
23:42Elon MuskAnd with the Master Plan Part 3 We want to basically the goal is to give people hope, realistic hope and maybe hope is even the wrong word. But simply to say that there is a path to a fully sustainable global economy, that we are on that path, that we are accelerating that path and that so long as we don't get complacent about it, it will happen.
24:17Elon MuskSo I'll just, I'll kind of rush through a recap of the MassPlan part 3 but the, you know, some of the salient points are that it will actually take less energy to go sustainable, not more energy.
24:34Elon MuskIt's actually more and some of these things may sound very obvious, but it's more energy efficient to go sustainable, not less. And there's less mining that is required for a sustainable energy economy, not more.
24:51Elon MuskAlso very important. And I heard a question raised about, about cobalt mining and you know what? We will do a third party audit.
25:16Elon MuskIn fact we'll put a webcam on the mine and if anybody sees any children, please let us know.
25:40Elon MuskI Mean, I don't want to go off on a tangent too much on that front, but it's very important to appreciate that most of our battery packs are iron based.
25:51Elon MuskA majority of our battery packs are iron based, not cobalt. And there are other battery packs on nickel based and not cobalt. The nickel batteries use a little bit of cobalt as a binder, but only a tiny amount.
26:06Elon MuskIn contrast, your phones all use 100% cobalt. I recommend complaining to the phone manufacturers,
26:25Elon MuskBut even for the small amount of cobalt that we do use, we will make sure six ways to Sunday that no child labor is being exploited. Obviously we are a company that cares a lot about doing the right thing and we don't want to delude ourselves or delude anyone else.
26:39Elon MuskSo. Yeah.
26:48Elon MuskSo again, just recapping Master plan part three. It's, it's really the point is to say that it is very, very doable. It is happening. We need a, a threefold increase in solar and wind.
27:05Elon MuskWe need to admittedly somebody's 29 fold increase in vehicle stationary and thermal battery production. Actually, in a nutshell, the way to think about sustainability is the faster we can make battery packs, the faster we can move to a sustainable energy economy.
27:23Elon MuskThat's the fundamental limiting factor. So let's grab some water here.
27:38Elon MuskSo, yeah, I can't emphasize that point, that point enough. The rate of lithium ion battery production fundamentally decides the rate at which the world transitions to sustainability because the batteries are needed for all forms of transport and for stationary storage, given the intimate nature of solar and wind power.
28:13Elon MuskSo the, and we do invite people to critique our analysis because you know, any given analysis is going to be to some degree wrong. So we, that's why we put it out there looking for critical feedback to say, well, perhaps we're to going that some things wrong, perhaps some things need to be adjusted.
28:33Elon MuskBut generally the feedback we've gotten is that actually our analysis is quite accurate and we've not seen any rebuttals thus far that would cause us to change our assumptions.
28:48Elon MuskSo it means roughly 240 terawatt hours of battery pack or 240,000 gigawatt hours of battery need to be produced. But it'll only take 0.2% of land area for solar and wind.
29:01Elon MuskSo it's a very, it's not like we need to carpet the earth with solar and wind. It's just literally a fraction of a percent, roughly a $10 trillion manufacturing investment, which relative to the global economy is actually a small, A small Number, yes.
29:21Elon MuskRoughly 10% of the world economy, I think, obviously, I think 10% of the world economy is a small price to pay for a sustainable energy future.
29:36Elon MuskIt's also true that even when factoring in the cost or the emissions required to produce an electric vehicle, which for now are a little higher than gasoline vehicles, which when you look at the emissions over time, electric vehicles absolutely win by a long shot.
29:53Elon MuskAnd as we're seeing, the cost and the emissions required to produce an electric vehicle are dropping rapidly over time. And we're going to get to the point where an electric vehicle is cheaper than a gasoline vehicle.
30:18Elon MuskSo in 2022 we avoided releasing about 13 million tons of CO2, reduced manufacturing GHG per vehicle by 30% and reduced water usage by by 15% despite massive increases in output.
30:36Elon MuskSo we also made our factory safer, which is really important. So we track the injuries per person and we believe at this point we are best in industry or have the lowest injuries per person.
30:59Elon MuskWe're now actually quite a big company from a headcount standpoint. This is our direction employment number. So this does not count contractors. And for every manufacturing job, depending on how you count it there, there are at least five, sometimes up to 10 jobs created because you got to look at the total supply chain as well as the all of the support functions.
31:26Elon MuskSo you know, when you create a factory like this, you actually create jobs for teachers, lawyers, carpenters, electricians and restaurants and everything that's required to support a person at a factory.
31:40Elon MuskAnd this is why countries and states are so interested in having manufacturing facilities in their location. So anyways, it's a lot of people gainfully employed doing very useful things.
31:58Elon MuskWe received just 3.6 million job applications last year, so.
32:13Elon MuskAnd once Again the top two most desired companies for engineers on Earth were SpaceX and Tesla.
32:36Elon MuskYou know, at the end of the day, the competitiveness of any given company is a function of what where are the most talented people interested in working? That is the team that's going to win.
32:47Elon MuskIn fact, I say this as general. Generally the case, if you look at any given company and say where are the most smartest, most driven people going to work?
32:57Elon MuskThat company is going to win. So whether it's Tesla or any other company, we're also excited to announce our next gen drive unit which is a big reduction in silicon carbide.
33:12Elon MuskIt's half the factory space. Notably there are zero rare earth elements required. So.
33:26Elon MuskAnd we're also changing to a 40 volt, 48 volt low voltage architecture in the, in the car. So for the, yeah, this is A big deal actually.
33:43Elon MuskSo the cars have been operating with 12 volt batteries for basically about a century. So for the first time in I think over 100 years, we're actually going to change from 12 volt voltage outside of the drivetrain to a 48 volt architecture.
34:06Elon MuskAnd to first approximation that means we need only about a quarter as much copper in the car as would be needed for a 12 volt battery. So that's a big deal because people often worried about is there enough copper?
34:21Elon MuskYes, there is. So.
34:32Elon MuskAnd FSD Beta is growing hyper exponentially, so that chart is going to look like a wall basically. And just a question for those in the room. How many people have tried out FSD Beta?
34:49Elon MuskOkay, great. So what do you think of the latest build?
35:00Elon MuskSo it's really getting to the point where it's, at least for me when I drive around, it's several days between interventions and I think we're getting to the point where there's really just one last piece of the system that needs to be a neural net, which is the planning and control function.
35:24Elon MuskAnd so we expect to have that last piece become neural net. So it'll be end to end, from video into control, out as a neural net. And yeah, so the thing to appreciate is it's not that full self driving will be as good as a person.
35:43Elon MuskIt will be much, much better, like a lot, like over time, 10 times more, 10 times safer than a person. It's not even going to be a contest frankly.
35:56Elon MuskSo this is, this is a really big deal and I think some people realize, I think you guys probably realize it, but being able to do a software update and have several million cars suddenly go from manual driving to autonomous, I think will be the single biggest asset value increase in history.
36:20Elon MuskSo.
36:29Elon MuskThe normal usage of a passenger car is roughly 10 to 12 hours per week, call it maybe an hour and a half per day. And when you drive around you see lots of cars just parked in parking lots because, because out of the 168 hours in a week they're using less than 10%, maybe 7% of the hours of the week a car is in use.
36:52Elon MuskBut once it is autonomous, it can be used probably, I don't know, 50 hours a week, maybe more. So it is effectively a five fold increase in the value of a car overnight.
37:10Elon MuskI'm actually surprised that so few people realize this, or maybe they just don't believe it's real, but it is. So this is really an insanely big deal. We're also the largest EV maker in the world.
37:38Elon MuskYeah. And I think that will continue. And while at the same time being the highest margin of any car maker in the world.
37:58Elon MuskNow making electric vehicles profitably is, is hard as illustrated by the difficulty of our competitors. A number, a number of our competitors are making EVs at a significant loss.
38:11Elon MuskSo but we are not, we are actually making EVs profitably and almost no one else is. This is hard. So,
38:26Elon MuskAnd I'd say for this it's a massive credit to the Tesla team for I can't tell you how hard manufacturing is. Like probably heard me say that prototypes are easy, manufacturing is hard.
38:38Elon MuskAnd then manufacturing at scale with positive cash flow is excruciating. It's mega pain. But the Tesla team has done it. So.
38:58Elon MuskAnd as you can see, our free cash flow per year has been increasing steadily. So you know, we're making good progress. I mean it should be said that, and I've made some of these comments that, that interest rates make a very big, have a very big effect on the affordability of cars.
39:24Elon MuskSo the vast majority of people buy cars based on the monthly payment. So it's like how much money, how much is the monthly payment? And it's not a question of value for money, it's just do they actually have enough money?
39:40Elon MuskCan they afford it? So for the vast majority of people it's just can they afford to pay the payment as the interest rates increase and credit tightens? Like, it's safe to say that these various banks that have died are probably somewhat distracted from handing out auto loans.
40:06Elon MuskIt's like if they're on the way to, to the cemetery, increasing their auto loan portfolio is not the first thing on their mind. So this is going to be a challenging, I'd say a challenging 12 months.
40:18Elon MuskI want to be sort of realistic about it. Tesla is not immune to the global economic environment. I expect things to be just at a macroeconomic level, difficult for at least the next 12 months.
40:39Elon MuskLike Tesla will get through it and we'll do well and I think we'll see a lot of companies actually go bankrupt. So I want to make sure that this is not just the good news parade.
40:49Elon MuskIt's important to understand that no company is immune to the macroeconomic environment. But that said, the it won't be darkness forever. I expect probably a year of difficulty globally for everyone.
41:08Elon MuskAnd then my best guess is that the global economy turns around in roughly 12 months and, and then Tesla will be in an extremely good position. So anyone who is a long term investor I think will do extremely well.
41:36Elon MuskAnd here I want to give a big shout out to the Tesla internal software team. This is,
41:52Elon MuskIt's actually a really big deal that Tesla has such a powerful internal software team. I mean that software team is responsible for handling the entire customer experience from buying the car, delivering the car, operating the factories, service and support.
42:13Elon MuskWe internally wrote all of the insurance and and financial software. The it's the supply chain and logistics stuff, the data centers and infrastructure and the analytics insight. This is all internally written Tesla software.
42:30Elon MuskI think there's almost no companies in the world can do this because they do not have a very talented internal software team. So they're generally reliant on third party enterprise resource planning software.
42:46Elon MuskSo but Tesla is not, this is a hidden strength of the company that often doesn't get a lot of attention but is incredibly powerful. So once again I'd like to thank them for their work.
43:06Elon MuskAnd as predicted, we are highly confident that Model Y will be the number one best selling car on earth this year.
43:22Elon MuskAnd in fact in Europe the best selling car of any kind. Yeah, whatsoever. It's already was that in Q1 I should say it's not like will be it was that in Q1 and China, the best selling SUV and the United States, the best selling non pickup vehicle in the United States in Q1.
43:41Elon MuskSo you know, it's going well.
43:49Elon MuskI don't know if this is like the optimal picture but the.
43:57Elon MuskTesla cars are actually the safest cars in the world. We put immense effort into vehicle safety and we keep updating the safety. So we keep improving the automatic emergency braking system just with a software update and we keep improving the airbag deployment with software updates.
44:18Elon MuskSo we close the feedback loop on like when we see an accident, we analyze the accident, we say what can we do from a software standpoint? Because there's actually quite a lot you can do to first of all avoid the accident because the best accident is no accident.
44:32Elon MuskAnd then if the accident occurs, how do we deploy the airbags and the sort of the seat belt pretensioners to minimize the probability of injury. And so even for cars that people have owned for many years, we are behind the scene scenes continuously improving the safety of your car.
44:55Elon MuskAnd there are even some things that I think a lot of people aren't aware of, that we actually have automatic cabin overheat protection. So never in the history of the company has a child or a pet died in a Tesla.
45:22Elon MuskSo it's, it's one of those like little known features. But because we have a large Battery and we're monitoring things all the time. We can make sure that the cabin temperature never gets to lethal levels.
45:34Elon MuskAnd I think that that's, that's, you know, big deal. So. Oh yeah, so and then while lots of cars will say they've got like, you know, five stars or whatever, there's, there's nuance to that.
45:50Elon MuskWhen we do did the European NCAP sort of active safety tests, we, we got the highest scores that they've ever seen. So yeah,
46:07Elon MuskSo we got a 98% score on the active safety system, which obviously isn't good enough. And we will. But we have got a game plan for getting rid of the last 2%.
46:29Elon MuskAnd then it's worth noting things like the total cost of ownership of a Model 3 is now comparable to that of a Toyota Corolla. So.
46:46Elon MuskSuperchargers, we're making good progress. So our supercharger uptime is now 99.95%. So yeah,
47:00Elon MuskAnd we have superchargers practically everywhere at this point point. Going to Mega pack, because this is stationary storage is an important part of solving the sustainable energy problem. And the mega, the, the Tesla Mega Pack is now more competitive than a natural gas peer plant.
47:20Elon MuskSo we have very strong demand for the Tesla Mega Pack and we're going to make a lot of them. So I, yeah.
47:35Elon MuskAnd a while back I predicted that the Tesla stationary battery pack business would actually grow faster than the automotive side of things. And that's exactly what has happened. You can see it's, it's an, it's an exponential curve growing at a rate that, that is even, even faster than our vehicle sales.
47:54Elon MuskSo yeah, sorry, we're expanding Gigafactory Nevada for the Tesla semi production line and for the 4680 in house cell production and yeah, some mega factory stuff.
48:25Elon MuskSo this is. So we're aiming for 40 gigawatt hours a year both in California and in China. But I think long, long term this will be much, much greater than this.
48:38Elon MuskI mean I would say I wouldn't be surprised if long term the stationary battery pack activity went well in excess of 500 gigawatt hours per year. So the demand is like quasi infinite here.
48:55Elon MuskSo.
49:03Elon MuskAs we look ahead to tackle the, what we see as the choke points in the supply chain, one of them is lithium refining. And I think there've been a few times on Tesla earnings calls where I've said can someone please just do lithium refining because there's a shortage of it.
49:27Elon MuskBut we really see very little activity outside of China. For lithium refining. So it's not that we wish to take on extra problems, but since nobody else was doing it, we felt we had to do this.
49:42Elon MuskAnd so we've just broken ground on a lithium refinery and Corpus Christi, which will be do more lithium refining than I think probably everything outside of China. So.
50:02Elon MuskAnd we signed a deal for our next gigafactory and Mexico. Giga Mexico. And I think that's going to be a fantastic factory. So you know, we're, we're, we're laying the groundwork for ultimately getting to 20 million vehicles a year.
50:39Elon MuskSo Cybertruck is a hard car to make because it's such a radically new design. It actually, you can't just use conventional methods of manufacturing. We had to invent a whole new set of manufacturing techniques in order to build an exoskeleton based car instead of an endoskeleton based car.
51:02Elon MuskSo it's, it's extremely non trivial to, to build the Cybertruck. But we're making good progress on that. We have. So yes, that's the thing. I, when I in the factory I tour the Cybertruck line, see how we're doing there and sorry for the delay but we're finally going to start delivering production Cybertrucks later this year and I think the product, if anything is better than expectations.
51:46Elon MuskCybertruck is the, is the car I will be driving on a day to day basis. So. And you know, people always want to know what our next product is,
52:00Elon MuskBut this is not the time to. We obviously need to have a, you know, a proper dedicated product launch. I just want to emphasize that we are actually building a new product.
52:15Elon MuskWe are actually designing a new product product. We're not sitting in our hands here. So there are two new products that I think you will be very excited about.
52:31Elon MuskAnd both the design of the products and the manufacturing techniques are head and shoulders above anything else that is present in industry. So yeah, anyways,
52:52Elon MuskIf I were to guess, I would say of these two new products, just these two new products alone, I would say there's, we will probably make. Obviously this is just you know, Elon's guess so, you know, don't sue me.
53:13Elon MuskBut you know, Elon's guess is that we'll probably make in excess of 5 million units a year of these two models combined.
53:53Elon MuskThese are all real by the way.
53:59ShareholderIt.
54:43Elon MuskI think the thing perhaps most notable is if you look at the difference between the last time we showed Optimus and this is a video that was taken basically yesterday and the Optimus team was up all night making this video.
54:58Elon MuskThe Optimus team has done an incredible job. So just. Yeah,
55:08Elon MuskAnd it's the motors, the controllers, the electronics and everything you see in the Optimus robot is a Tesla designed system. So this is. We actually tried to find drive actuators and whatnot that were off the shelf.
55:29Elon MuskWe found that there weren't any. In order to make an effective humanoid robot, you actually have to design the motors and gearboxes and the electronics from scratch because it's a very different application from anything else that exists.
55:47Elon MuskSo we took our world class motor and power electronics team and said, okay, we need to design several actuators that are, that don't exist in the world. And they did.
56:02Elon MuskSo Optimus is working quite well. And then for full self driving, as full self driving gets closer and closer to generalized real world AI, that same software is transferable to a humanoid robot.
56:22Elon MuskJust like, you know, we, you know, humans can obviously walk around with their arms and legs, but, but we can drive a car, fly a plane, steer a boat, ride a horse.
56:36Elon MuskIf you have a generalized understanding or if you have generalized real world AI, which is what we are developing for full self driving, it can be transferred to basically anything.
56:50Elon MuskAnd so Optimus will use the same FSE computer as the car. And the Optimus stuff is I think somewhat, somewhat extremely underrated because people just cannot comprehend the consequences.
57:13Elon MuskNow obviously we need to make sure that we don't have a Terminator scenario. That's very important. It's all fun and games until Terminator shows up. But if you say like if you have had a generalized humanoid robot, what would be the effective ratio of humanoid robots to humans?
57:39Elon MuskBecause I think basically everyone would want one and maybe people would want more than one, which means the actual demand for something like Optimus, if it really works, which it will, is, I don't know, I mean, 10 billion units, it's some crazy number.
58:05Elon MuskIt might be 20 billion units if the ratio is say 2 to 1 on people. You know, humanoid robots versus people. It might actually be, it's some very big number is what I'm saying.
58:17Elon MuskAnd a number vastly in excess of the number of cars. So my prediction is that Tesla's long term value will be a majority of long term value will be Optimus.
58:34Elon MuskAnd that prediction I'm very confident of. So anyway,
58:48Martin Viecha (IR)See.
58:48Elon MuskSo I think with that we can do questions perhaps. Oh, what is it? Oh yeah. We also want to make sure retail investors please, please vote. Normally retail investors for most companies don't vote, but we really care about your vote of small investors, not just large investors.
59:09Elon MuskSo please do register to vote. Your vote is very important. And. Yeah, I think that's. Yeah, that's it. So.
59:30Elon MuskSo with that, we can go to ad hoc questions from the audience.
59:42Robyn Denholm (Board Chair)Okay.
59:43Elon MuskDefinitely the person in the optimist outfit with the red cowboy hat.
59:53Elon MuskGreat outfit.
59:59Elon MuskSure. We'll try to get through as many questions as possible. And, you know, you hit me with your toughest questions. Fine.
1:00:15Elon MuskOkay.
1:00:16Martin Viecha (IR)It is.
1:00:17Elon MuskHey, dad, it's your son, Optimus.
1:00:23Elon MuskDo you see it more likely that you guys will have an RV first or a cyber camper? Well, we. We don't have any plans to build an RV quite yet, although I can certainly see how cybertruck could be converted into an rv.
1:00:42Elon MuskAnd we are adding a lot of sort of attach points to Cybertruck so others can build things. You know, somebody could have a startup or other companies can build things that are attachments that enhance cybertruck and turn it into a camper, essentially.
1:00:59Elon MuskBecause I think it'd be really cool to have all these, like, third party things available for Cybertruck.
1:01:05ShareholderThank you.
1:01:05Elon MuskAll right. I mean, you could also probably just. You're that close. You could just say it or something. I don't know.
1:01:15ShareholderActually, we'd like you guys to queue up behind us.
1:01:17Elon MuskOkay. All right. Yes.
1:01:24Elon MuskAnd try to make the question short so we can get through a lot of questions. So maybe. Oh, you mean just like. Just like a Tesla team doing a podcast about Optimus?
1:01:46Elon MuskOh, yeah, yeah, sure.
1:01:51ShareholderYeah.
1:01:52Elon MuskYou know, I wonder if maybe we could have a sort of like an addendum after the earnings call, which is like a, you know, 30 minutes podcast on Optimus or something, like, for those who are interested.
1:02:08Elon MuskOkay, I think we'll do that. So. All right, Elon, thanks for doing this today. It's an awesome event.
1:02:16Martin Viecha (IR)Thank you.
1:02:17Elon MuskWelcome. Thanks for coming. Hope you guys are having a good time. Yeah, having a great time. I'm pretty confident we have the funnest shareholders meeting by a long shot.
1:02:28Martin Viecha (IR)Undoubtedly.
1:02:29Elon MuskYeah, it's amazing.
1:02:31Martin Viecha (IR)So I'm really excited about a lot
1:02:33Elon Muskof things with Tesla.
1:02:33Martin Viecha (IR)It's hard to pick a good question
1:02:35Elon Muskthat is going to cover everything, but
1:02:37Martin Viecha (IR)with the energy side of the business,
1:02:38Elon MuskI think it's hugely underrated. I mean, we got tons of problems with, I mean, California with rolling blackouts. How do you think you can incentivize people, you know, more for solar battery backup?
1:02:49Elon MuskAnd we've got the referral program has
1:02:51Martin Viecha (IR)been beefed up as well.
1:02:52Elon MuskSo you Know, what are your thoughts there?
1:02:54Martin Viecha (IR)How we can get people on board?
1:02:56Elon MuskYeah, actually one of the challenges in California and a few other places is that in order to have the power wall be, be like an uninterruptible power supply for the house, we have to actually have a switch that disconnects you from the utility.
1:03:14Elon MuskOtherwise you just, you know, send energy into the grid and it doesn't do anything. And that's actually been quite difficult with utilities. But I'd like to thank PG&E for recently helping us get approval for installing the backup switch for powerwall in California so that people can have uninterrupted power in California.
1:03:37Elon MuskAnd we're working on that in every jurisdiction. So I'm confident that's going to be a great long term situation. And then as I mentioned, Megapack is growing very rapidly and yeah, so things are, I mean, things are really growing like ridiculously fast on the, the energy storage front.
1:04:03Elon MuskSo, yeah, I feel, I feel good about that situation. All right, next question or.
1:04:11Elon MuskHello? Hey Elon. A lot of people have just kind
1:04:14Martin Viecha (IR)of been wondering, how are you doing?
1:04:15Elon MuskSo just wondering what's up? How you doing? How you feeling?
1:04:18Martin Viecha (IR)We saw you were partying in Cabo
1:04:20Elon Muskrecently, so just what. Must have been someone else.
1:04:24Martin Viecha (IR)So how are you doing?
1:04:26Elon MuskJust human to human. How you doing? Well, I have to say it's been a, you know, roller coaster situation and you know, like, it's actually pretty rare for me to be at a party.
1:04:43Elon MuskSo that's like the, you know, first party I've been at in a while and actually wasn't even going to go to it. Then my brother talked me into it, so.
1:04:54Elon MuskThanks, Kimal. So yeah, I have to say, like, sometimes the work pain level is quite excruciating. And then on top of that I get dumped on in the press.
1:05:07Elon MuskSo it's like, you know, it's not exactly super fun. But there was a short term distraction because I had to do like some major open heart surgery on Twitter to ensure the company's survival.
1:05:23Elon MuskBut that I think Twitter is now in a stable place and obviously very excited to have Linda Yakirino join. And so I think Linda's going to do a great job running Twitter and I'll provide obviously guidance on, you know, technology development.
1:05:44Elon MuskBut as you can see, I think Twitter at this point has released more new features in the last six months than it has in the last six years. So, you know, obviously this is not a Twitter meeting, but the larger point is that I feel at this point I don't need to devote incremental time.
1:06:04Elon MuskThe amount of time that Twitter will take going forward is relatively small compared to, compared to the last six months. So yeah, you know, apart from like, there's like some macroeconomic things that we can't do anything about.
1:06:20Elon MuskOverall, I feel very good about the health of the companies and I'm increasingly optimistic about the future. Thanks for asking. It's kind of your ask.
1:06:35Elon MuskHave you guys considered stretching out the financing terms on your auto business you talked about earlier? Consumers don't necessarily look at the sticker price they're paying. All they're concerned about is monthly payment.
1:06:47Elon MuskAnd one of the fundamental advantages of an EV is that it's substantially more durable. And so would you guys ever consider stretching terms out to 10 years? Especially in this rate environment, getting the, the shape of the yield curve, you know, extending the terms out that farther, you'd actually be capturing a lower cost of funds.
1:07:05Elon MuskYeah, I mean, the important thing to appreciate is that like that the vast majority of the financing is from banks. So it's kind of whatever the banks are prepared to do.
1:07:18Elon MuskI mean, this year I guess we'll do on the order of $100 billion of sales and we don't have $100 billion in, in cash to finance that. So the vast majority of it has got to come from banks.
1:07:32Elon MuskSo it's really the bank's choice of what they're willing to do. And it has been tricky with banks recently because as I mentioned earlier, if you're a bank and you're not sure whether you're going to be alive or not, it's a pretty big distraction.
1:07:51Elon MuskAnd increasing your auto loan portfolio is very much a secondary priority. So it's just important to appreciate it's not up to Tesla, it's up to the banks. And there's not, there's not some easy solution where you can say have so called a captive financing arm, et cetera, because you have to securitize those loans and the market for securitizing them is, is, is weak.
1:08:13Elon MuskThere is no, I wish there was an easy path, but, but there isn't. So, you know, I think it's important to remember that the economy moves in cycles and we've had a very long period of upcycle.
1:08:30Elon MuskThe next 12 months will be, I think, difficult for everyone. And I think, you know, when Berkshire Hathaway had their annual meeting, Warren Charlie actually said like, hey, this, this year the Berkshire companies are going to make less money.
1:08:49Elon MuskAnd so, and you know, they're, they're Very well run organizations. And I think that's just generally true for the economy. So, you know, but, but if, but, but, but it's also important to remember that, you know, there, there are good times and, and there are dark times, but then the good times follow the dark times.
1:09:09Elon MuskSo my advice would be don't look at the markets for the next 12 months. If there's a dip, buy the dip. And I think you will not be sorry because, you know, there's just generally sort of a, there's an economic cycle to things, but things come back up.
1:09:33Elon MuskSo my guess is tough times for a year. Like I said, just my guess. But then Tesla will emerge stronger than ever and the long term, if you say like, net present value of future cash flows will be incredible, in my opinion.
1:10:01Elon MuskHey, Elon, meet Kevin here. Hey, how's it going? Good, thanks. So Tesla is the largest position in my ETF ticker pp and that's for pricing power. Right. And I'm curious, I really think that some of the features that you highlighted here, like the over the air airbag deployments of improving features, the safety features, are great things that we could be advertising for.
1:10:25Elon MuskI know you've heard this many before. I know you have. No, no, sorry. Go ahead, go ahead. Yeah. 525 bucks off every car this year is half a Netflix's advertising budget.
1:10:37Elon MuskThousand bucks is the entire Netflix advertising budget. And I see their ads everywhere. Why not advertise these things that you told us here? I feel like nobody else knows about this.
1:10:46Elon MuskI just talked to Gordo, the Tesla
1:10:48Shareholderbear, and he's still talking about 2016
1:10:51Elon MuskNew York Times pieces. These people are in the past, man. That's like seven years ago at this point. Yeah, that's what I'm saying. Yeah. It's actually I talk to a lot of people and they still think that like Teslas are like super expensive and like.
1:11:03Elon MuskNo, actually the starting price for a Tesla is below the average auto price in the US it's like. And that's a good thing. I mean, I think it's, it's, it's good that it's that way.
1:11:15Elon MuskYou know, like our goal, well, is always to make cars that are affordable to the general public. So. I hear you. I mean, I think, and it's indeed ironic that, you know, Twitter is like highly dependent on advertising.
1:11:31Elon MuskSo, you know, here I am, it's like, you know, never used advertising really before and now have a company that's highly dependent on advertising. So I guess I should say advertising is awesome and everyone should do it.
1:11:48Elon MuskBut I think I hear your sort of larger point, which is that there are amazing features and functionality about Teslas that people just don't know about. And so, yeah, and although there's obviously a lot of people that follow, like say the Tesla account and my account, whatever, on Twitter, to some degree it is preaching to the choir and the choir is already convinced.
1:12:24Elon MuskSo I think what you're saying does have some merits. And you know what? I believe in taking suggestions. So we'll try a little advertising and see how it goes.
1:12:43Elon MuskOkay?
1:12:48Elon MuskOkay.
1:12:51Martin Viecha (IR)All right.
1:12:51Elon MuskI was, I wasn't, I wasn't expecting that level of enthusiasm, but okay, it sounds like our shareholders, if I read between the lines, subtle as it is, are saying we should probably do some advertising.
1:13:04Elon MuskOkay, Very well. All right.
1:13:13Elon MuskHi, Elon. Hi Tesla. Thank you for everything. So my question is regarding you recently add Steam to the car and that's great. We can play video games. Is Tesla currently developing the ability for other parties to develop apps for the car?
1:13:26Elon MuskFor example, if we can buy actually
1:13:29Martin Viecha (IR)customizable teams for the operated heapsync of
1:13:31Elon Muskthe car, I think you, you can make some revenue there like that space themes for the car or Lord of the Rings or stuff like that.
1:13:38Martin Viecha (IR)Do you have any interest in that right now?
1:13:41Elon MuskWell, I mean, the important. So I think the notion of having entertainment apps and whatnot becomes increasingly important as the cars achieve self driving because otherwise you can only really watch, play games or watch movies or whatever when the car is stationary, you know, which, you know, if it's charging or what, whatever, that then you can use it.
1:14:05Elon MuskBut when it's, when it's at the point in which it's full stop driving, I think it's very much about entertainment and productivity. So I think that is something that might make sense in the future.
1:14:17Elon MuskThe, but overwhelmingly the focus right now for Tesla software, apart from improving safety, is achieving full self driving and then getting full self driving to be much safer than human driving.
1:14:32Elon MuskAnd then once, as we, once we achieve full self driving, I think that there could be a lot of opportunity for apps and whatnot. So even in the car as it is today for a Model S and X, we've made sort of a full Steam integration.
1:14:51Elon MuskSo you can actually just literally log on with a model SRX with your Steam account and play any game that is on Steam, which is a lot of games, which is pretty wild.
1:15:01Elon MuskI think a lot of people don't know that you can play with a keyboard or mouse, you can play with a joystick or Controller. You can also play Netflix, YouTube or anything else.
1:15:14Elon MuskI mean for my little son X, he loves watching, you know, actually loves watching rocket videos in the, on the, in the rear screen of the Model S and X.
1:15:26Elon MuskSo yeah, so it is something that we will do long term. But, but what I'm saying is we already have a lot of stuff there and we'll do more as self driving becomes a reality.
1:15:40Elon MuskSo.
1:15:45Elon MuskHey Elon, I'm John or Dr. Know It all on YouTube and I don't know it all, but anyway, my question is, as you guys move completely or finish the transition in full self driving from version 1.0 of the software to 2.0, what do you perceive of as the like potential stumbling blocks after that?
1:16:02Elon MuskBecause it seems like that's the major, you know, kind of step change that needed to happen.
1:16:07ShareholderAnd so.
1:16:08Elon MuskSo you're almost done with that and what happens after that? And also, please let me interview you about full self driving. Like I'll spend two hours talking about just that.
1:16:17Elon MuskSo thank you. Well, you can really think about full self driving as sort of a march of nines of reliability. So we need to get to the point where the probability of injury is lower than that of the average human driver and then ultimately probability of injury is much lower.
1:16:40Elon MuskSo even at the point at which the car is capable of driving itself, there's still actually a lot of work to do because you know, every year there's a million people that die in auto accidents.
1:16:50Elon MuskAnd I think probably everyone in this audience has friends and family that have died or been seriously injured in auto accidents. And for every there's like a million people that died, there's 10 million people roughly that are seriously permanently injured.
1:17:09Elon MuskAnd so it matters that we, you know, if we can get that down by an order of magnitude, you know, there's like 900,000 lives saved per year, maybe 9 million severe injuries prevented per year.
1:17:25Elon MuskAnd so that really I think morally has to be our primary goal. And I guess I'm open to an interview on fsd. Two hours is a long time, but.
1:17:45Elon MuskOkay. Okay. All right, I'll do an interview. It's got to be on Twitter, but sure. All right.
1:17:57Elon MuskHi. Hi Elon. I'm Josh Phillips, long term retail investor. My question's about battery grade lithium supply in the next 10 years. You know, lithium experts all agree that mines are just not coming on online fast enough to meet battery supply.
1:18:12Elon MuskAnd actually Drew Baglino pointed this out recently. Some mines take 10 years plus to be permitted. And even GM has actually announced like Huge lithium deals that will like secure away supply from the rest of the industry.
1:18:23Elon MuskSo what's Tesla's plans? To get more supply of lithium at the mine level outside of refining, but also at a deeper level than a traditional offtake. Because as we know, he who controls the spice controls the universe.
1:18:38Elon MuskSure.
1:18:39Martin Viecha (IR)So
1:18:44Elon MuskI actually think that the industry analysis is incorrect and the constraint is fundamentally that of processing. So our refinery in Corpus Christi that we're building is primarily oriented towards refining spodumene, of which there is a truly vast amount in the world.
1:19:10Elon MuskAbout, I think about three quarters of our lithium comes from Australia. And frankly you could increase the rate at which the mines are operating. And the limiting factor is not how fast can you mine, but how fast can you, can you process?
1:19:27Elon MuskSo the mines are only going to produce ore at the rate at which refineries can handle the ore or pointless. So I think my opinion, and obviously I could, could be wrong about this, but is, is that it's, it's really not, not about the lithium or lithium is extremely common.
1:19:47Elon MuskLithium is everywhere, in every, every country has got lithium. It's not like oil. So lithium is one of the most common elements on earth. But taking the lithium ore and refining it to battery grade is extremely difficult because the purity levels required for a battery are extremely high.
1:20:04Elon MuskIf you have even a small impurity, then you will degrade the life of the cell dramatically. So you need ultra pure battery grade lithium. And that's why, that's why our focus is on refining as opposed to mining.
1:20:16Elon MuskThank you.
1:20:22Elon MuskHi Elon, Thanks.
1:20:24Martin Viecha (IR)It's a great time here.
1:20:26Elon MuskYou spoke about safety in your presentation of the vehicles and I just want to say I'm thankful to you for
1:20:32Martin Viecha (IR)building such a safe vehicle because I'm
1:20:33Elon Muskhere today with my son. We drove in his Tesla 3 over here that he replaced with the one
1:20:39Martin Viecha (IR)that he got rear ended significantly in and it destroyed the car. But we're able to be here today, so great.
1:20:46Elon MuskThank you very much. Absolutely.
1:20:56Elon MuskSo not sure where to look. Okay. Hey, how's it going? My name's Austin Gregory. I'll ask about this because I don't think it gets near enough. Love. I was wondering if there are any updates on the next gen Roadster?
1:21:08Elon MuskActually, yeah, I know it's sort of like the cherry on top and all that stuff. You guys have a lot on your plate as you said before, but if there's any updates on like the release timeline, all that stuff, the SpaceX package maybe.
1:21:22Elon MuskYeah, yeah, that'd be amazing.
1:21:24Martin Viecha (IR)Thanks.
1:21:25Elon MuskTotally fair. And reasonable question, where is that thing? So we expect to complete the engineering design of the next gen Tesla Roadster this year and hopefully start hopefully stock production.
1:21:45Elon MuskThis is not a commitment, but hopefully stock production next year. So.
1:21:51Martin Viecha (IR)But
1:21:54Elon Muskit is like, it is like, as you alluded to, it's not even the icing on the cake, it's the cherry on the icing on the cake. So I wouldn't expect it to be like, it's definitely not going to be a huge contributor to revenue.
1:22:08Elon MuskIt will be a modest contribution, contributor to profitability, but it will be sick. So. And you know, there's some value to me running two companies because the next gen Roadster will have the SpaceX option package.
1:22:29Elon MuskSo that'll make it truly next level. So.
1:22:36Robyn Denholm (Board Chair)Hey, Elon, Eva McMillan here. First of all, I want to thank you for making the absolute best, safest and most fun cars in the whole world. Cars in Florida.
1:22:52Robyn Denholm (Board Chair)We are seeing many, many more cars
1:22:55Shareholderin Florida than a year ago.
1:22:56Robyn Denholm (Board Chair)Matter of fact, cars are doubled.
1:22:59ShareholderSo the question is, we all want Tesla insurance.
1:23:04Robyn Denholm (Board Chair)Is it coming?
1:23:05Elon MuskOh, yeah, yeah. Actually that's a great question. Okay. Zach says it's coming later this year. But I have to tell you, like one of the thorniest things in the United States is car insurance or insurance in general, because it's a state by state and every state's got different rules and regulations.
1:23:26Elon MuskSo that's why it's not like rolled out nationwide. I think really there should be one national standard for insurance, especially car insurance. I think it would improve the cost, effective cost effectiveness of car insurance.
1:23:41Elon MuskBut our intent is to roll out nationwide and ultimately internationally. But there is a staggering amount of paperwork that is, that is needed to get it done. But as Zach said, we expect to offer Tesla insurance in Florida later this year.
1:23:58Elon MuskThank you.
1:24:01Robyn Denholm (Board Chair)Thank you, Elon. Thank you, Elon. Alexandra Mertz. I am Tesla Boomer mama. Very happy to be here. So very grateful to the Tesla team. And you of course, just want you to know we love the emotions every day, joy and less joy.
1:24:19Robyn Denholm (Board Chair)But we're there shareholders. It's not easy. We're here not because it's easy, but because it's hard. So my question initially was on in house financing. You already answered that.
1:24:30Robyn Denholm (Board Chair)And I want to congratulate you to the double investment grade rating. But then I asked my Twitter subscribers, I'm sure you're going to appreciate what they wanted to bring forward.
1:24:38Robyn Denholm (Board Chair)And that question made the cut.
1:24:41ShareholderHere we go.
1:24:42Robyn Denholm (Board Chair)Automotive, including sas peak margin, the same for energy. What number and by when do you have the best elon gas that we get there?
1:24:54Elon MuskSorry, I'm not sure I fully understand the question.
1:24:55Robyn Denholm (Board Chair)So this is the peak margin for automobile mart for automobile, including SAs and energy. And by when will we get there? Your guess? I know nobody will sue you.
1:25:07Elon MuskSorry, what's sas?
1:25:09Robyn Denholm (Board Chair)Well, service software, as a service.
1:25:11Elon MuskOh, okay, you mean fs Self driving fsd?
1:25:18Robyn Denholm (Board Chair)What's going to be the top automobile margin?
1:25:22Elon MuskOh yeah, yeah. I mean what I was saying earlier is that at the point at which you have a truly autonomous vehicle that can drive around with no one in it, the utility of the vehicle, I think as a rough guess is probably five times what it is today because people will drive an average of an hour and a half a day, perhaps so 10 hours a week.
1:25:46Elon MuskBut if the car is autonomous, it can probably just speculation, but it probably can operate for a third of the hours in the week, which would mean 50 or more hours, thus a five fold increase.
1:25:59Elon MuskBut the car costs the same.
1:26:02Robyn Denholm (Board Chair)Sure, I understand. But what is going to be the margin for Tesla then? Because you're obviously thinking you're going to sell much more FSD then, right? You may have a system in place of robo taxes, you may have a cut with fleets.
1:26:17Robyn Denholm (Board Chair)So did you do any projections what the automotive peak margin for Tesla could be in two years, five years and the same for energy?
1:26:29Elon MuskWell, I mean this is definitely, we're in sort of highly speculative territory here, but obviously if you've got a car that costs the same and has say I don't know, a 20 or 25% margin and suddenly is able to be used five times as much, then you might have 80% margins and the revenue would increase several fold.
1:26:57Elon MuskThat's why I say it's the, it's probably going to be the biggest asset value step change in, in history of Earth.
1:27:11Elon MuskAnd, and energy does not have the energy just simply does not have such an increase in asset utilization. So I would expect energy to be, to remain at sort of a 20, 20, 20, 25% is to 30% margin.
1:27:28Martin Viecha (IR)All right, so you said ask the tough questions. You're still good, right?
1:27:32Elon MuskYeah. All right, cool.
1:27:33Martin Viecha (IR)First of all though, as a family man, I just want to say there's a couple of things like a loop for tether of a, of a car seat going through the headrest, which would be super helpful.
1:27:43Martin Viecha (IR)There's a couple other things that would be really nice. The Model Y is the only one you can do that in today. Maybe we could fix that. But when we're thinking about 4680 battery cells.
1:27:52Martin Viecha (IR)Should we be thinking about the efficiency and the performance we're getting today, or is there some updated timeline path that we could see closer to battery day presented efficiency performance that we can look to in the future?
1:28:11Elon MuskWell, I think first of all, it's really important to express the difficulty of, you know, like, for Tesla to go from nothing to making a battery cell, that we aspire to be better than any other battery cell on earth, even when compared to companies where the only thing they do is make a battery cell is obviously not a trivial exercise.
1:28:36Elon MuskThat said, we do see a path to very high energy density and higher energy density and lower cost than anything else out there. But it's a hard path. It's a very hard path.
1:28:52Elon MuskAnd normally it would be absurd for companies to attempt such a thing. And no other car company is really attempting to do anything like this in a serious way.
1:29:02Elon MuskSo I guess technically byd, because they started out as a battery company, but yeah, so it's a very difficult thing to do, but I think we are tracking to success in that regard.
1:29:20Martin Viecha (IR)Hey, Elon, first of all, thank you for undoubtedly making the world a better place for my son to live in.
1:29:26Elon MuskThank you. Can't even be safe.
1:29:31Martin Viecha (IR)Once cybertruck is fully ramped in Austin, what is the target production? And also there's some rumors that you're thinking about stepping down as CEO.
1:29:39Elon MuskPlease say it ain't so. It ain't so.
1:29:54Elon MuskYeah, So I think Tesla's going to play an important role in AI and AGI, and I think I need to oversee that to make sure it's good, because that's a thorny problem if there ever was one.
1:30:20Elon MuskI think generally people do not. Very few people, even in the AI community, do not appreciate just how much capability Tesla has in AI. It's by far the most advanced real world AI.
1:30:36Elon MuskThere's no one even close. And reality has the most degrees of freedom. So I got to make sure that's good. So. And you were saying, sorry, Cybertruck fully ramps.
1:30:55Elon MuskOh, yeah. So I said, you know, we'll start production later this year. We'll start handing over cars later this year. There will be an S curve of production. So it'll be slow at first and then.
1:31:09Elon MuskAnd then ramping up, and I guess we'll see what the demand is like. So, I mean, I think there's. We're likely to do probably a quarter million a year, I think maybe more.
1:31:24Elon MuskAgain, very much dependent on what the demand is like. And it's you know, we don't just need to ramp up production, but we also need to improve the production cost, cost efficiency, which is going to be also a very, very hard thing.
1:31:42Elon MuskSo, but I'd say it's, you know, a quarter million a year is a reasonable guess. And it might be 500,000, I don't know, but we'll make as many as people want and can afford.
1:31:55Elon MuskAnd, but, and then, like I said, it's going to be hard to make the cost affordable because it is a new car, new manufacturing method. So in, in the grand scheme of things, relative to the production rate of all the other cars we make, it will be small, but, but still very cool.
1:32:18Elon MuskYeah. Thanks, Elon.
1:32:20Martin Viecha (IR)Maybe three more questions.
1:32:21Elon MuskSure.
1:32:24ShareholderThank you.
1:32:26Elon MuskGood day, Mr. Musk.
1:32:27ShareholderHello, my name is Delia Archer, and this question aims to address Tesla's efforts in developing skilled workforce, attracting diverse talent, and promoting career opportunities within the company. When I look around, I see a lot of young faces and I think about internships and apprenticeships for students in high school and beyond.
1:32:46ShareholderMy question is, are there any plans to expand existing partnerships and explore new avenues for collaborations with educational institutions and nonprofit organizations to attract the next generation and vary career pathways?
1:33:03Elon MuskYeah, actually we, with, with all of our gigafactories, we work with the local schools, actually from a high school level, community college and university, because it's incredibly important to foster the talent for the factories.
1:33:19Elon MuskAs you saw from the employment numbers, we actually need a lot of people. Even though we've got a lot of automation, we still need a lot of people to operate the factories and really matters that they have the right training.
1:33:30Elon MuskSo we're big believers in reaching out to educational institutions and because frankly, it's in our interest to do so. So thank you for asking the question. All right,
1:33:46Martin Viecha (IR)Elon.
1:33:46Elon MuskJosh Fuller. I had originally thought, thought of asking about the fun police and pushing back on the boombox and allowing us to screech at people with goats again. But after seeing Optimus, I was inspired to ask does.
1:34:03Elon MuskHas anybody asked Optimus's opinion of Mars and does he have a ticket yet? Well, you know, Optimus is not a deep thinker at this point. So Optimus is still, you know, figuring out how to do basic stuff like it couldn't make, you know, cook some eggs or something quite yet.
1:34:29Elon MuskSo we need to get Optimus to the point where it has reasonable agility and can and can do basic things. And, you know, and we're aiming for, to start off doing simple tasks that are sort of boring and Repetitive or dangerous, basically jobs people don't want to do.
1:34:51Elon MuskSo that's our goal and I'm confident we'll achieve that goal. And then we've got to figure out how to make it at scale, make sure that the robots, the robot is safe.
1:35:04Elon MuskI think it's going to be very important to have a local means of turning it off. So safety is going to be extremely important. I can't emphasize that enough.
1:35:19Elon MuskBut right now it is not at an intelligence level where it's pondering questions like Mars, perhaps it will be one day. Hi, good afternoon, Elon. My name is Luke Arsenault.
1:35:33Elon MuskI just want to start off by saying big thank you to you and the team of Tesla for all you guys do. It's been great to see and I'm so happy for you guys.
1:35:41Elon MuskMy question is, with the rise in cybersecurity threats to operational technology and Internet of things, what steps is Tesla taking to protect the company itself and its products from these threats?
1:35:52Elon MuskAlso, as a suggestion, because I know you like suggestions for the navigation, do you think we could do something on the UI that adds in when you're
1:36:00Martin Viecha (IR)about to take the off ramp to show a picture of that exit, kind
1:36:03Elon Muskof like other map systems do? And then also. Oh, man, this is a lot of questions. One of my friends wanted to get a shotgun from you, if that's possible.
1:36:12Elon MuskOkay, well, we are constantly improving the navigation system and being robust to hacking is incredibly important. In fact, we, we conduct a lot of sort of third party hacking contests to try to get the best hackers in the world to break into our cars.
1:36:36Elon MuskAnd actually no one has yet actually broken into a Tesla in a way that would allow you to really control the car in a significant way. But they have gotten to where they can honk the horn and mess with the infotainment system.
1:36:50Elon MuskAnd I'd like to thank, thank them for their efforts. So we take information security extremely seriously for navigation. Yeah, there's definitely things we can improve there, but really down the road, navigation visuals are not going to matter very much because the car is going to take you wherever you want to go.
1:37:14Elon MuskYeah. As for pictures, I, I have to, I have to decline, unfortunately, because otherwise if I say I hate being, I actually hate being rude to people. So if I say yes to one person, then it's like selfies for a zillion.
1:37:30Elon MuskYou know, it gets kind of, gets kind of crazy. So. But thanks for asking. Maybe we'll take one or two more questions actually. So.
1:37:40Martin Viecha (IR)Sure.
1:37:44Elon MuskI don't know.
1:37:48ShareholderOkay. What's your issue.
1:37:52Martin Viecha (IR)Sorry, hello. I had a question on the efficiency. I don't know if you've been paying attention to Aptera and I was curious if you thought that was a space that you could see Tesla getting into as far as not just an efficient manufacturing process, but also the actual car itself.
1:38:09Elon MuskIn range I.
1:38:12Martin Viecha (IR)Or just buy.
1:38:13Elon MuskI'm not super familiar with them, but we have a lot of. We have a lot of products to get done. It's not like this is. It's never a shortage of ideas.
1:38:27ShareholderIdeas.
1:38:27Elon MuskFrankly, I find ideas to be somewhat trivial, but the execution of the idea is extremely, extremely difficult. And I said like, prototypes are easy. Production is hard production and cash flow positive is excruciating pain at a level you cannot believe.
1:38:47Elon MuskSo it's not product ideas, they're irrelevant. That's what I think of them. It's sort of like the idea of going to the moon. That's not. Who could. That's. That's irrelevant.
1:38:58Elon MuskGetting to the moon is the hard part. So. Okay, so maybe one last question. Yeah, Elon, John Lopez from Orlando here. I've got two things for you real quick.
1:39:10Elon MuskThe first one is with rideshare being a growing thing, especially with Tesla owners, are we going to get a guest mode option available for that? The second thing is, is as an X flat owner, I would really love to get track mode.
1:39:23Elon MuskAs a what, sorry, X plaid. Well, plaid has track mode. The Model X plaid does not though. Oh, oh, Model X. Yeah, we can probably add that. Sure. Yeah, no problem.
1:39:40Elon MuskSo rideshare is. A bunch of these things will really not be relevant in a self driving world. You can summon the car and take you somewhere and if you want to add someone to that ride, you can if you want to.
1:40:00Elon MuskBut overwhelmingly it is about achieving self driving. Full self driving. And you know, I think we're really getting to the final stages of full self driving where, I mean, I drove for several days around Austin just dropping pins in random locations and had zero safety interventions.
1:40:21Elon MuskSo it's really. Even in the city of San Francisco, which is very complex. I haven't had a safety intervention in a long time. So I think it's really getting to the point where admittedly I have been optimistic about this in the past, but I think this time.
1:40:47Elon MuskAll right, I won't say it. All right, fair enough. All right,
1:40:59Elon MuskOkay. I think it'll happen, you know, so.
1:41:06Martin Viecha (IR)All right.
1:41:07Elon MuskYou want one last question? Sure.
1:41:14Martin Viecha (IR)So first, congratulations on your decision to try advertising. We all want Tesla to pay Apple in market cap.
1:41:22Elon MuskI Don't realize people wanted it that much. Okay, it's good that a lot of people agree.
1:41:27Martin Viecha (IR)So earlier this year you cut prices on everything, 15, 20%. More recently you've been raising prices on Model Y, Model S, Model X. And can you just talk about the pricing strategy on Model Y going forward and keep it separate from the decision to bring out the next gen vehicles that we all agree is going to blow the doors off on volume, but just on Model Y, it's the best selling product in the world.
1:41:52Elon MuskCan you just talk about strategy of
1:41:53Martin Viecha (IR)pricing going forward on that?
1:41:56Elon MuskI mean it's pretty straightforward. I mean we see what the demand is and then we adjust pricing to meet the demand. Now the thing is that what is, you know what happens with other carmakers is that they're actually constantly adjusting pricing on cars.
1:42:13Elon MuskIt's just not obvious. The, in the case of Tesla you can see immediately when there's a price change that occurs because we don't have any intermediaries, don't have any dealers.
1:42:23Elon MuskThere's no, there's no manufactured manufacturers, just the reason retail price. So but the reality is actually at car dealers the prices are changing radically. I mean last year there were significant premiums above MSRP at sort of the conventional car dealer, you know, like, so you'd pay above MSRP last year and then this year I think things are below MSRP or close to it and then the manufacturers will then also offer incentives.
1:42:57Elon MuskSo what's actually happening is are very big price shifts by other car makers. They're just not obvious. Whereas with Tesla it's obvious. So and this is necessary because demand fluctuates a lot.
1:43:18Elon MuskSo something's got to be done to achieve a supply demand clearing point for volume. So just people are reacting to something that's obvious as opposed to saying oh yes, every car company does this all the time.
1:43:34Elon MuskTesla is no exception. That's the actual reality. So. All right,
1:43:46Robyn Denholm (Board Chair)Last question.
1:43:48Elon MuskI'll be really quick. Okay, so I will say I have been driving fsd. My wife drives fsd. There's a, a term called the wife test. My wife will only drive our kids on fsd.
1:43:58Elon MuskIt's incredible. That's, that, that is a great, I mean the sort of significant other test is a very, a good test because there were, while there, there was like, you know, friends or significant others would be like, please don't put it on, it's too scary.
1:44:16Elon MuskBut then it gets, it's getting to the point where, I mean it's, it's going to be Just smooth as silk. So in fact you'll be able to visually tell, perhaps even now you can visually tell if the car is being driven on FSD or manually.
1:44:29Elon MuskBecause if it's being driven on fsd, it's, it's smooth, smooth and precise. And if you look at actual experience, if you actually closely observe cars going down the highway, people are constantly moving in their lanes.
1:44:41Elon MuskSo the cars are like doing this all the time when they're manually driven. If it's actually on fsd, it's dead center in the lane and it will actually get to the point where it is not merely, and maybe is at that point not merely safer than a person, but actually way smoother than manual driving.
1:45:05Elon MuskI just really, I can't say enough about the profundity of full self driving. It is just one of the biggest changes in history that will occur. It's not some feature.
1:45:20Elon MuskIt's like a profound, it's really as profound as electrification. And we already have millions of the cars on the road that will literally achieve this with a software update.
1:45:36Elon MuskI mean that's like head explosion emoji, you know. And I think probably a lot of people in this room realize it, but the rest, most of the rest of the world doesn't.
1:45:46Elon MuskYeah.
1:45:56Elon MuskGiven how incredible FSD is and how much, you know, merit you're giving to potential future margins of the car as well as how much an impact on society and given that they didn't even want you to say if it's going to happen this year, just you know, not to jinx it.
1:46:10Elon MuskSure. Would it be possible to have just force some type of public facing, investor facing kind of timeline? So that way, you know, we, you mentioned V12 is coming, coming and that's you know, AI front end.
1:46:21Elon MuskCould we just see kind of a timeline on. This is the version we're at. These are the things we're working on and this is when we're, you know, eta.
1:46:27Elon MuskSo we can kind of see that in real time instead of a maybe elon time. So the, the thing that's been, you know, really difficult with full self driving is that it's, it's, it very often seems like it's about to happen until you realize that you're actually at a local maximum and that you need to re architect elements of the software to get out of the local maximum to then a higher local maximum.
1:46:58Elon MuskSo it's been a sort of series of logarithmic curves and that's why it's been like, it seemed like oh, if you Just extrapolate this. On a straight line, it gets self driving, except that it's not a straight line, it's logarithmic curve and it's sort of.
1:47:13Elon MuskAnd you start hitting these like local maximums where you'll sort of asymptote to a certain capability and then have to re architect things. So now I think we're finally at a high enough local maximum or will be this year.
1:47:28Elon MuskWhere to the point where it is, I think probably safer than a person, meaning the probability of injury on average will be better than a person, even if someone pays no attention to the car.
1:47:42Elon MuskIt is worth saying that right now for human supervised Tesla full self driving, it is dramatically safer than manual driving. It's like, I think like four times safer, maybe more so.
1:47:58Elon MuskIt is already a massive safety improvement to have human supervised FSD right now. And I think we will get to the point where we're always going to be in some amount of local maximum, but I think we'll be in a local maximum that exceeds human level safety this year.
1:48:23Elon MuskYeah, but I guess we'll see. So anyway, I want to thank you all for coming and so,
1:48:35Martin Viecha (IR)so.
1:48:49Elon MuskJust want to say, you know, your support is super appreciated and you know the. As I say, a friend in need is a friend indeed. And supporting Tesla when the chips are down, those are the real friends and you're them.
1:49:07Elon MuskSo thank you.
1:49:16Elon MuskOkay.