Interview with Bloomberg
Transcript
0:01Elon MuskThe thing that really I thought was wrong was we're looking at the data from this test drive, and it doesn't correlate at all to the article that was written.
0:12Elon MuskAnd the result was that the car ran out of range.
0:14Bloomberg InterviewerIt had to be towed.
0:15Elon MuskYeah, exactly. And so there was this sad shot of our car on a flatbed as though that was the only outcome possible for such a drive. And that's just not true unless people said, oh, it doesn't matter if you're right or wrong.
0:29Elon MuskYou don't battle the New York Times like, the hell with that. I'd rather tell the truth and suffer the consequences, even if they're negative. I don't think it should be the end of his career.
0:40Elon MuskI don't even think necessarily should be fired. But I do think he fudged an article.
0:47Bloomberg InterviewerBut what did you hear in the middle of all of this?
0:49Elon MuskWell, we did actually get a lot of cancellations as a result of the New York Times article. So it wasn't. It probably affected us to the tune of tens of millions, if not maybe on the order of 100 million.
0:59Elon MuskSo it's not trivial. 100 million, probably something on that order. Yeah.
1:04Bloomberg InterviewerSo we're talking about probably a thousand cancellations based on this.
1:07Elon MuskNo, sorry, it says of 100 million. I'd say that that refers more to the valuation of the company.
1:12Bloomberg InterviewerI see. You're not talking about orders.
1:14Elon MuskNo, orders.
1:16Bloomberg InterviewerOrders. But you're not talking about the amount of the orders equals 100.
1:19Elon MuskNo, it wasn't as though there were a thousand cancellations just due to the New York Times article, though there were probably a few hundred.
1:27Bloomberg InterviewerNow, Elon, you and I have talked a lot about production targets. So you're pretty much at 400 cars per week. Right. For the. For the Model S. And you are going to hit.
1:34Bloomberg InterviewerIt seems like you're going to hit thousand for this year. Now, some might say, okay, you're going to hit 20,000 this year, but what about next year and the year after that?
1:44Bloomberg InterviewerPerhaps the 20,000 are just the early adopters, and that's where the demand's coming from.
1:48Elon MuskWell, in terms of model is demand, we've seen more new reservations every successive quarter. So the demand appears to be growing, if one is to extrapolate that trend. And we're also seeing that when a Model S is.
2:02Elon MuskWhen a lot of Model S are delivered to a particular area of the country, we actually get increased reservations. So if it were just the early adopters, what you'd see is that when you deliver Model S's to a particular region of the country, that sales decline dramatically because you've satisfied the early adopters.
2:19Elon MuskBut actually we see the opposite. We actually see increased sales. The more Model S's are delivered to a particular area, which means that the word of mouth is very positive.
2:27Elon MuskFor every customer's car that we deliver, we seem to sell an incremental two or three cars as a function of that customer. On average, some customers has been like 20 cars.
2:41Bloomberg InterviewerNow, I know in the fourth quarter you had issue. You, you reported a loss in the fourth quarter and part of that had to do with the increase in expenses.
2:49Bloomberg InterviewerI think was up 29% to $115 million. You also though, promise for the coming year that you're going to boost production. You're going to, as I mentioned, you're going to hit 500 cars per week.
3:00Bloomberg InterviewerSo how are you going to get costs down and boost production?
3:03Elon MuskThe big challenge in the fourth quarter was going from low production rate to that 20,000 unit a year production rate, which is really difficult because, I mean, that's basically over 400 cars a week.
3:14Elon MuskIn the past with the Roadster, we only made 600 cars a year. So we have to manufacture and deliver and service as many cars almost in a week as we did in a year.
3:26Elon MuskSo that took, you know, that's a steep learning curve. Yeah. And no question we made some mistakes along the way and it's not optimal. I don't know what more we could have have done, but there's no question we weren't perfect there.
3:37Bloomberg InterviewerElon, do you think you'd have the same amount of demand for your cars without the government subsidy?
3:42Elon Musk$7500? No, I think, I think would be a little, little less demand. I mean, there'd probably be, I don't know, 10 to 20% less demand. So.
3:53Bloomberg InterviewerAnd you mentioned in your shareholder letter, because you have this loan from the Department of Energy that helps you with Tesla. You mentioned that eventually you want to be able to get rid of essentially this government help and be a standalone business, a standalone commercial enterprise.
4:08Bloomberg InterviewerWhen will that happen?
4:09Elon MuskWe have actually been paying off interest and principal on the loan on time. And one thing that was sort of, I think, not quite reported in some of the media last year was it sounded like at one point that Tesla was trying to delay the repayment loan or something.
4:23Elon MuskActually, nothing could be further from the truth. We've always paid the loan off either on time or ahead of time. So we've got, I think about 10 years. We want to pay it off.
4:30Elon MuskAnd in five, five years or less.
4:33Bloomberg InterviewerAre you learning more, though, about how to deal with Washington?
4:35Elon MuskFirst of all, I'd say my overall impression of Washington is that it's much less corrupt than people think it is. And thank goodness for it, because if it was corrupt, we'd be screwed.
4:45Elon MuskThat's not to say that there isn't some amount of that that goes on. There actually are, I think a preponderance of the leading House members and senators actually are quite idealistic and do care about doing the right thing.
5:00Bloomberg InterviewerElon, I was looking through a recent article, it's actually Huffington Post article, where it seemed to portray you as kind of a peculiarity in Washington. People don't really know who is this billionaire entrepreneur who's come in and and developed the electric car market.
5:13Bloomberg InterviewerHe's got this private spaceship company. One aide for Congressman Tom delay said you showed up to a meeting with a congressman in a tight black T shirt.
5:21Elon MuskI don't remember doing that, by the way. I don't think that's accurate. When I'm in DC, I always wear a suit and a tie. So I believe that is an inaccurate statement.
5:29Bloomberg InterviewerWhy do you think people have that reaction to you?
5:31Elon MuskI don't think that's what Most people in D.C. think of me. And I've been. I've literally made maybe 200 trips to D.C. and I've met with probably at this point, half the Senate, maybe 150plus members in the House.
5:45Elon MuskAnd they haven't just seen me once, they've seen me several times. Yeah, exactly.
5:49Bloomberg InterviewerAnd all the interactions have been like what?
5:52Elon MuskThey've been quite positive, actually. And I mean, contrary to the sentiment of that article. I mean, I believe in being quite respectful in D.C. and I always wear a suit and a tie, even though I don't wear 1 at SpaceX.