Welcome to Tesla's 2016 annual meeting of stockholders. My name is Todd Maron. I'm Tesla's General Counsel. We're gonna have the formal part of the meeting, and then after that's done, I'll be introducing our CEO, Elon Musk, up onto the stage with some other Tesla guests. They'll be doing a presentation that I think you guys are gonna enjoy. In the meantime, I want to recognize some special people who are here, our Board of Directors, who's up in the front row. We also have our CTO, JB Straubel, with us. We have our CFO, Jason Wheeler, with us. We have our Lead Design Executive, Franz von Holzhausen, up in the front row, and a lot of other Tesla team members here, so I wanna recognize all of them.
We also have from our independent auditors, PricewaterhouseCoopers, Larry Westfall and Ninos Sarkis in the back there. For the meeting today, there's gonna be two parts. First, in the formal part, we're gonna cover the three items that stockholders have been asked to vote on today. After the voting, we'll turn to the presentation. Let's get started by calling the annual stockholder meeting to order. The polls are now open. As I mentioned before the start of this meeting, if you wish to submit a ballot, or to change your vote, you can find Lisa Brenton, our representative from Computershare, our inspector of elections, over in the corner.
We have a majority of the outstanding shares represented at the meeting, so there's a quorum present, and we may proceed with the meeting. The meeting is conducted in accordance with Tesla's bylaws, and the items on the agenda are as follows. Number one, to elect two Class III directors, Brad Buss and Ira Ehrenpreis, to serve for a term of three years or until their respective successors are duly elected and qualified. Number two, to ratify the appointment of PricewaterhouseCoopers as Tesla's independent registered public accounting firm for the fiscal year ending December 31, 2016. Tesla's board has recommended that our stockholders vote for each of the director nominees and for the ratification of the appointment of our independent accounting firm. Finally, we have received a stockholder proposal as described in our proxy statement.
Our board has recommended that our stockholders vote against this stockholder proposal. The stockholder proposal is proposed by James McRitchie. I understand that Mr. McRitchie's designee, Jing Zhao, is here to present the proposal. Mr. Zhao, can you please identify yourself?
Yeah.
You can come forward, and you have three minutes to present your proposal, Mr. Zhao.
Thank you. Thank you very much. Hello, shareholders. Proposal 3, simple majority vote, sponsored by James McRitchie. Resolved, shareholders request that our board take the steps necessary so that each voting requirement in our charter and the bylaws that calls for a greater than simple majority vote be eliminated and replaced by a requirement for a majority of the vote cast for and against applicable proposals or a simple majority in compliance with applicable laws. If necessary, this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. Shareholders are willing to pay a premium for shares of corporations that have excellent corporate governance.
Super majority voting requirements, the target of this proposal, have been found to be one of six entrenching mechanisms that are negatively related to company performance according to What Matters in Corporate Governance by Lucian Bebchuk of the Harvard Law School. Super majority requirements are used for broad initiatives supported by most shareholders but opposed by status quo management. This proposal topics won 74%-88% support at Weyerhaeuser , Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill, and Macy's. This proposal may obtain a substantial vote at our 2016 annual meeting because Tesla shareholders gave this topic 42% support at our 2014 annual meeting, the first time that Tesla shareholders had an opportunity to vote on these topics. This 42% support represent a substantial majority of the vote from Tesla's non-insider shareholder.
Please vote for this proposal, supermajority vote. Thank you very much. Thank you very much.
Thank you, Mr. Zhao. I'd like to remind everyone that our board has prepared a statement in opposition to the stockholder proposal. That's been in our proxy statement. At this time, are there any proxies remaining in the audience that have not been submitted? If so, now is the time. Raise your hand. If we could have Lisa or others come by and pick up their ballots now, please. Hold them up high, please. Anyone else? One over there. Okay, anyone else? Going once. No. Okay. All right. The polls are now closed. We will formally announce the results of the vote within four business days of today's vote on Form 8-K filed with the SEC. That concludes the official business of today's meeting, which is now adjourned.
I now welcome you to stay for Elon's presentation, and we will leave time at the end for questions to be answered. During the course of our presentation today, we may discuss our business outlook and make other forward-looking statements. Such statements are predictions based on our current expectations. Actual events or results could differ materially due to a number of risks and uncertainties, including those disclosed in our most recent Form 10-Q filed with the SEC. Such forward-looking statements represent our views as of today, should not be relied on thereafter, and we disclaim any obligation to update them after today. With that, please welcome our CEO, Elon Musk, and also J.B. Straubel, our CTO.
Everyone, welcome to the shareholders meeting. You know, we'll start off just by thanking everyone for believing in Tesla and, you know, putting your money and your faith in the company. We're always super appreciative of that. You know, the only reason that Tesla is live at all is because of people like yourself and the customers that took a chance on buying a new product from a new company. Thank you. What we're gonna do today, which is a little different from what we've done in the past, is just go through the Tesla history.
Starting from the beginning and then adding, you know, coming to present day and then talking about the future, which I think people know, like, little bits and pieces about. I think it's important to explore the history and the motivations and the decisions along the way so that people understand, like, what is Tesla all about? What does Tesla mean? Like, why are we doing these things? The decisions of the past inform the decisions and motivations of the future. People have, I think, by now heard quite a bit about the Master Plan blog that I wrote sort of a decade ago. I actually wrote it more than a decade ago, but it got published in 2006.
It was always the plan from the beginning, 'cause it's the only plan that I thought had any chance of success, which is to start off with a low volume car that would have a high price because we didn't have the economies of scale, we had no idea what we were doing. Like, how the hell do you build a car? Like, I don't know. No idea. It's got wheels. It's got a body. It has a motor. Like, all sorts of other things that we don't know about.
You know, being basically completely clueless, you know, we had to do something that was simple and we knew it would be expensive because we didn't have economies of scale, like, and we couldn't even, a lot of times, even get suppliers to even call us back. Like, they're like, "You're who? What? Never heard of you. Bye." Like, that was the usual response from suppliers. We had to start off with something that was straightforward and that was gonna be expensive and low volume. Step two was to have a lower price, higher volume car.
Step 3 was to sort of finally get to something that was high volume and affordable, which is the Model 3 that we unveiled recently, just a few months ago. Of course, there will be, you know, many more vehicles and models from Tesla in the future. The Tesla Master Plan is really just kind of like a very limited perspective on Tesla, and it's really, I think worth going into a more detailed look at the history and the decisions and motivations. You know, most importantly, I think I really want people to understand, like, the decisions we've made along the way, we've really always tried to do the right thing. Like, we really care about that.
When we make mistakes, it's just because we're being foolish or stupid or whatever. It's really always made with the right motivations. It's never meant to be sort of something that We say the things that we believe, even when sometimes those things we believe are delusional. We're gonna do a look into the history of Tesla, and I'd like to welcome JB co-founder JB. Just we're gonna bring in a number of people that were at Tesla from the very beginning, kinda just to tell anecdotes and stories.
This may go on for a while, so if you find yourself, like, you know, getting bored, I won't be offended if you wanna leave. This may go on for a while. Then we're gonna have a Q&A and try to get to all, you know, all the substantive Q&A stuff, and go as long as, you know, as people really wanna go. Looking into the long and somewhat sort of soap opera-like history of Tesla. I mean, there are many episodes to the soap opera, so like a multi-season situation.
Really even this history is to some. It's really glossing over a lot of things, but I think we'll still give people a really good sense for how things started out, what led from one thing to the next, why do we do this versus that, and, you know, just understand really, like, what happened. Because there's, you know, there's a lot out there that some of it's correct, some of it's false, so some of it's quite patchy. But I think hearing it from the people on the ground at the time is, you know, really helpful. The way things really started out was with the AC Propulsion tZero. AC Propulsion is a little company in Southern California that deserves a huge amount of credit and doesn't get enough credit.
We really wanna give them just a ton of credit for the concept of doing an electric sports car.
Yeah. In fact, my first ride in an electric vehicle was in a car that Alan Cocconi, who was the principal engineer and one of the founders of AC Propulsion, built. I was back in college still at the time, but, you know, that's part of what convinced me that EVs had such an amazing potential and such an amazing future. I think, you know, as Elon said, they deserve a lot of credit for having laid the technology foundation, you know, very early on for what this next generation of EVs could actually do.
Exactly. The AC Propulsion tZero was a lithium-ion powered electric car, using cylindrical cells. It actually started off with it being lead acid and then upgraded it to lithium ion cells early in 2003. I think it was early 2003, approximately then. The specs for the tZero were very similar to the specs for the Roadster. It had a roughly 250-mile range, sort of a roughly four second zero to 60 time, a lot of the specs were quite similar to the Roadster that where we commercialized it. It did have some drawbacks, like it did not have a roof or doors. You know, or any safety systems.
Any airbags?
Airbags. The battery was air-cooled instead of liquid-cooled, so it would overheat very quickly. It was certainly not something that you could sell to the general public. The production cost of a tZero was, I think, like $300,000 or $400,000, like really, really high. The basic concept and capabilities were demonstrated by AC Propulsion well before Tesla was created. I'd just like to frankly just give them a round of applause for that. It was like, you know, I mean, like I said, they deserve a ton of credit and don't get enough. In fact, in 2003, JB and I had lunch, in, basically in L.A., in technically El Segundo. At the lunch, we sort of ended up talking about EVs. It actually was, I'm not sure how the lunch exactly got set up.
I think I was trying to get you to invest in an electric airplane.
Yeah. Electric airplanes. How intriguing. Still dying to do that. The lunch that we had in 2003 was really ultimately what led to Tesla as it is today. In that lunch, I mentioned to JB that, yeah, you know, I've been interested in electric cars since I was a teenager and thought that was really the what cars should be from a fundamental physics standpoint. Like it's super obvious from a physics standpoint that electric cars are the right way to go. I obviously believe that very strongly. In the future, people will look back at the era of gasoline cars in the same way they would look back on steam engines.
Like it was interesting, it was a quaint, it was, it was, it's quaint, it's interesting, but it was sort of like a phase, you know. Then really electric is the way. I'd actually originally come out to Silicon Valley to do a PhD at Stanford in advanced energy storage technologies for electric vehicles with the idea of potentially focusing on ultracapacitors with high energy density as a potential solution. Then ended up putting that on hold to start an internet company, Zip2, and then co-found another one, PayPal. Finally, after all that, coming kind of like, okay, time to get back to electric vehicles. Sort of circle back to that. JB, I think, had sort of maybe a slightly less circuitous path.
You were doing, like, Rosen Motors.
Yeah.
Um-
I was trying to build hybrid electric cars with gas turbines and a flywheel, which was kind of an ill-fated idea, but batteries weren't as good as they were at this point. Turns out containing a flywheel in a moving car is not a very good idea.
Tricky.
Even more recently than that, you know, I had started spending more time experimenting and understanding lithium-ion batteries, which were sort of brand new in the early 2000s. You know, they were just coming on the scene for laptops and other electronic devices. You know, I had gotten to know AC Propulsion. You know, I had, coming out of school, you know, followed them for a long time, and actually thought about going to work there, but it seemed like a little bit of a shaky enterprise. They were doing some amazing work.
Yeah
Really interesting, you know, learnings with lithium-ion batteries. I was spending quite a bit of time trying to figure out, you know, how could we adapt lithium-ion technology, you know, into a much larger pack to take vehicles long, long distances.
It kind of makes sense. When GM did the EV1, initially with lead-acid batteries, it had a range of about 60 miles. Lithium-ion has 4x the energy density, these days more than 4x the energy density of lead-acid. Just basically, if you just replace the battery pack, you go from a 60-mile range to maybe a 240-mile range. Really, the basic math was pretty obvious. Despite it being, you know, fairly obvious, nobody was doing electric cars. In fact, you know, at the time, in sort of 2003, 2004, timeframe, electric cars had gotten a sort of a really bad reputation. The auto industry had concluded that electric cars were a waste of time and basically couldn't make a compelling electric car.
Even if you did make a great electric car, people wouldn't buy it because they love gasoline so much. You know, like okay. Anyway, I got the based on J.B.'s recommendation, a test ride in AC Propulsion's tZero in 2003. I was like, "Wow, this is awesome." I tried my hardest to convince AC Propulsion to commercialize the tZero. I mean, I tried, you know, I can be pretty persistent about these things.
I was like, "Guys, you've gotta, you've gotta show the world that this is, like, real, and prove to the industry that they're wrong about electric cars." I was hounding, like, Dan and Al, like, "Guys, just, you know, commercialize the tZero." It's like, "Okay, look, if you won't commercialize tZero, can you at least make one for me?" Like, no, they don't wanna do that. Okay. I'm like, "Can you convert my current car to an EV?" "No." "Okay." Finally, it was like, you know, I was like, "Okay, look, guys, if you're sure you don't wanna do a commercial version of an electric sports car, do you mind if I do that?" And they're like, "No, that's cool.
Yeah, we're cool with that." My initial plan was just basically to just get together with JB and say, "Hey, JB, let's form a company and, you know, essentially commercialize the tZero concept and create an electric sports car." The AC Propulsion guy said, "Well, you know, there's some other groups that are also interested in doing the same thing. Why don't you team up with them?" That's when we teamed up with Martin, Marc, and Ian and created Tesla. You know, that's sort of kind of how it happened.
I think it is important to emphasize, like, you know, when we created Tesla, it wasn't from the standpoint of like, "Hey, this is a great way to make money." You know? It was like, when I told my friends about this, they're like, "You're crazy." Like, "How much money do you plan to lose?" Not, "Will you lose money?" "How much money are you planning to lose?
It was a pretty crazy idea.
Yeah
I was trying to convince all my friends to join and come and work at the company, and even some people that were building electric cars didn't wanna come and join because they thought it was too risky. It, yeah, it's hard to understate how untrendy electric cars were at that time. Everything was focused on the internet and no hardware companies, nothing even remotely like building a whole car.
Yeah, I mean, basically, like, in 2004, the idea of starting a car company was considered extremely stupid. The idea of creating an electric car company was like stupidity squared. It's like, wow, that's dumb. Okay. You know, I'm a big believer in, like, don't ask investors to invest their money if you're not prepared to invest your money. I really believe in, like, the opposite philosophy of other people's money. It's like, it just doesn't seem right to me that, you know, if you ask other people to invest, that you shouldn't also invest. My opinion of the success of Tesla at that point was so low, I thought maybe optimistically we had a 10% chance of success.
I actually put, essentially 99% or thereabouts of the Series A was money that I made from PayPal. Just because I'd rather lose my money than any of my friends' money or investors' money. I thought, "Well, this is really probably not gonna work, and, you know, if I lose the money, it's not the end of the world." The beginning investment was really just all me. Not from the standpoint of, like, "Oh, this is a great way to make money," but just actually I didn't want to have it on my conscience that other people had invested and then I'd lost their money. If they'd asked me what my opinion on the likely success was, I would say very low. Yeah.
Even most of the early employees had kind of a similar mentality. I think we knew that it was going to be incredibly risky and the odds were against us. You know, everyone believed in the mission so much, and they believed in the possibility of the technology and the change that we could create, that it's worth taking the risk. Even if it was 10%, you know, if you can make this much positive good on the world, why not take that 10% shot?
Yeah, exactly. I think we pretty much all thought, "Well, this is probably gonna fail, but it's worth a shot." Because the big car companies had abandoned electric vehicles, we're like, "Man, if the big car companies don't do electric vehicles, then the only option is for a startup to do electric vehicles." Even though the historical track record for automotive startups in the U.S. is extremely bad, I mean, if you look at, say, today, the only two American car companies in history that have not gone bankrupt are Ford and Tesla. Okay? Sorry, I'm just getting the get moving sign from the back. Anyway, like I said, this one's gonna go long, and I totally won't be offended if you wanna leave.
Because we're gonna cover a lot of ground. You know, if you have other obligations or it's, like, getting tedious, please, you know, don't feel obligated. Anyway, that was like the, the beginning of it. Like, like you said, we felt we had to create a startup car company 'cause the big car companies had all abandoned electric vehicles and everyone thought they were dumb. You know, General Motors was in the process of recalling their EV1s and then taking them to a junkyard and crushing them so that nobody could ever use them again, which I thought was just a terrible tragedy.
I mean, people wanted their EV1 so badly that they were so sad about it that they held a candlelit vigil at the junkyard where the cars were crashed. Like, who holds a candlelit vigil for a product? Ever? It's a GM product. I mean, it's like. You know? I don't know what kind of wake-up call you need to say, like, "Maybe you shouldn't end that program," you know. If people are holding a candlelit vigil like it's like someone's about to be executed, then you should really say, "Wow, maybe we should not cancel that program." Anyway, that was, like, the situation. Gasoline was super cheap, you know, $2 per gallon gasoline.
Anyway, just, like, you know, it was definitely not from the standpoint of, like, "Oh, this is gonna be a great investment and a way to make money." It was just, like, terrible investment and we're probably gonna die. Anyway, nonetheless, we got going. The first thing we did was to create the, a test, sort of a Tesla test mule, which was to take a Lotus Elise, then highly modify it to add the Tesla battery pack and the AC Propulsion drivetrain. This I think a point that may be helpful to entrepreneurs out there that are, you know, creating companies.
The reality is that, like, the creation of Tesla was based on two fundamentally false premises that turned out to be, in retrospect, staggeringly dumb. One was that we'd be able to use a Lotus Elise, a sort of slightly modified Lotus Elise, add an electric powertrain using AC Propulsion technology and then be done, and that would work. In reality, when you convert a car to electric and you wanna make it something that passes all of the federal safety standards and all the legalities necessary for a road legal car, you actually invalidate all of the crash tests. The battery pack ended up being too big to fit in the car, so we had to stretch the chassis.
We couldn't use the air conditioning system 'cause that was previously run off of the engine power. We needed to have a new AC system. We had a new wiring harness.
All new suspension, all new brakes.
All new suspension, all new brakes, 'cause the car was 30% heavier. The body was a little different. In the end, only about maybe 6% or 7% The Tesla Roadster had parts in common with any other car, period. Okay. It ended up actually being much worse than if we simply designed an electric car from scratch. You know, it's like if you have a particular house that you wanna house in mind that you wanna build, instead of building that house from a, sort of, from a fresh start, you take some existing house, and then you end up modifying everything except one wall in the basement.
You're like, "Okay, that's actually much more expensive and harder to do than if you just design it and build it right from the beginning." The AC Propulsion technology, while great for a prototype, actually ended up not being producible. Like, it wasn't reliable, it wasn't producible, and it wasn't consistent, and it would break down all the time. I don't know if this is Yeah.
I mean, it was pretty amazing. The motor controller, the brain, the computer that actually controlled the motor was 100% analog. I mean, it was this unbelievable invention. I mean, genius engineering to actually make it run at all. It wasn't something we could reproduce. Among the sort of difficult engineering tasks we took on in the very early days, you know, one was the battery pack, you know, re-architecting the whole battery pack, making it liquid-cooled, making it safe.
The liquid cool thing was really important 'cause the AC Propulsion battery pack, even though it used cylindrical lithium-ion cells, because it was air-cooled, it would very quickly overheat, and it was highly susceptible to a thermal runaway event. If one cell went into thermal runaway, it would domino to the rest of the cells.
Yeah, and it was also packaged in the doors, which was not a very good place to.
Yeah.
the battery pack.
Yeah.
It was like, "Oh, how do I get out?
Oh, I can't." "It's on fire.
It was either side of the car. Re-architecting the entire battery pack, making it liquid-cooled, and it's still amazing to me how much of the If you look at that first mule and put it next to, you know, a final Roadster, they were phenomenally similar, actually. It was a very innovative time when we came up with these kind of concepts and architectures that made it work. One of the big things were the electronics in that brain to control the motor, and we had to start from scratch. I mean, as Elon said, it would've been more efficient on the car. We did actually do that on the electronics.
Yeah.
you know, some of the key engineers are here still that did that work. Drew Baglino is one of the folks. Do you wanna come up here?
Yeah, Drew, why don't you come up?
Maybe you wanna share a couple of quick anecdotes or stories about.
Yeah.
some of those early motor control days.
Sure.
This has been 12 years, by the way.
Yeah, it has been a long time.
Drew was, basically part of the founding team of the company.
Thank you, Elon. Yeah, just over 10 years for me now. I'm on the timescale pretty early on here. Yeah, JB mentioned Alan Cocconi. Alan Cocconi actually, we tried to figure out what some of his circuits did, and we would simulate them and be like, "Oh, this is what it does," and then 3 months later, we'd be like, "No, that's what it does." It was kind of a learning by doing. We needed to get out of this ghost in the machine world where we were with the analog PEM. We said, "Okay," about a team of five engineers, "let's start from zero. Let's start with today's technology, digital motor control using DSPs."
We went out and set to do it as a parallel path, so we wouldn't disturb the rest of the validation. 'Cause we had to go through crash tests, we had to go through performance tests, we had to, you know, we had to run on rough roads for hours with cars that worked. That didn't deter our determination. We, in like 3 months, we went from the first schematic to a driving car, and I actually remember that first day when we went out driving and we brought JB along, and it was my first 4-second 0 to 60 experience, and I had never experienced anything like that. You know, my prior car was, like, you know, 80 horsepower Civic or something like that.
It actually held together, and it was an amazing four seconds, and that certainly hooked me on electric, and I haven't looked the other way ever since. After that, we decided to take this car for somewhat of a range drive, so we drove through over to Mountain View to Google, actually went right by here, with one of these digital motor control prototype cars. Colin was in the car. He's back there in the audience.
Hey, Colin, anything you wanna come up and say?
I remember I was staring at the waveforms, and we were like, "Ooh, maybe we've got a loose ground or something." Sure enough, like somewhere coming back through Redwood City, we actually had to pull over, I remember J.B., we were all like peeling back the top of the PEM cover. We had this like portable screwdriver just for this sort of exact use case. We probe inside. We figured out it was a loose ground, fixed it, drove back, and we were like wheeling in, eking into the Bing garage with absolutely no power left.
The San Carlos Bing, the Bing garage, yeah.
Oh, yeah, the Bing garage or San Carlos.
It was super tiny.
Super tiny little garage.
Yeah.
We almost had to wheel it in, but it actually got in on its own power. Kaput. It was done.
Yeah.
The motor control, we actually were doing the charge control digital as well, all redone because it was analog before and really unreliable and finicky, especially when connected to like generators or, you know, long high impedance lines and things. We hadn't solved the charge control digital for low battery SOC yet. We were like, "Oh, no, we need to charge the car." It was actually doing this. It had this problem, it was a bug at the time. It was doing this like self-destruct thing where it was running the compressor to cool the battery.
Full disclosure sort of.
Yeah, exactly. Even though it was the end of the state of charge, didn't make any sense. We were like, "Oh, we gotta get it on charge." We ended up unplugging the compressor cable and charging it, back-feeding through like the DC connection of the compressor. It was a very successful drive all said. Digital became the plan of record. I flew out to Hethel with some other folks from the team to retrofit all the EPs with-
Hethel is Lotus.
Yeah.
That's Lotus's headquarters in England.
Yes.
Yeah.
Flew out there, we retrofitted everything to full digital, and then we started developing, you know, digital traction control, all the pedal feel that everybody still has in their cars today. That all came together for Roadster back then. It was a ton of fun.
Yeah.
Yeah.
In fact, I remember like in the early days giving a test drive to Larry Page and Sergey Brin, who I've known for a long time. There was some like bug in the system and damn it, like the car would only go 10 miles an hour. It's like, "Look, I swear, guys, it goes way faster than this." Anyway, they were kind enough to put a little investment into the company nonetheless, despite the world's worst demo.
Yeah, that's the, that's the digital motor controls story. It was this team of like five engineers, and we worked in this tiny little power cube for three months and got to the bottom of that problem and solved it. We still build on the leverage of that technology today with all the cars that we have on the road.
Yeah, it was pretty amazing what we could do with small teams and, you know, pretty tiny budgets when we had this incredible focus. Every single thing was just, you know, solve this problem or else.
Yeah.
So-
That was another thing we learned, right? You can't just take AC Propulsion technology and expect it to work. We really wanted to get the heart of the machine, the heart of the car into our, you know, our IP, our code. This was an opportunity to do that.
Yeah. I mean, I mean, essentially when I say like the company was founded on two false premises, one was that you could easily modify an existing gasoline sports car to be electric, totally false. The other was that we would be able to use the AC Propulsion technology that we'd licensed for a production vehicle, also totally false. They'd done some great technology that worked well on prototype cars, but basically did not work at all well for a production vehicle.
Anyway, but I think the lesson here for people thinking about creating companies, and is that even though, you know, even if your company starts off with, based on things that are, yeah, completely untrue, that you don't know about. What really matters is adapting, recognizing the mistakes and adapting quickly, and kind of fixing the sort of the false premises upon which the company was founded. That's what really matters, you know, for people that thinking about creating companies. Just you gotta adapt quickly, acknowledge and recognize your mistakes, and the sooner you do that, the better.
Should we ask Colette maybe?
Sorry?
Should we ask Colette to share a few stories too?
Yeah. Let's have Colette come on. Yeah. Thank you.
Hello. My name's Colette Bridgman. I'm employee number nine at Tesla, so I will be coming up on 12 years in July. A lot of this history as well as being Elon and JB's history is my history. I'm super proud to be here. Back to what Elon was saying is the company founded on an idea that didn't come to fruition. When I was interviewed, I was told that this company would be about 35 people. They had a three-year business plan. We wanted to commercialize electric vehicles, which sounded brilliant to me, being the only non-engineer of the company for the first year. That we would outsource everything.
Well, turned out to be true, of course.
Yeah. Yeah.
I mean.
Yeah. From what you guys know about Tesla, obviously, that business plan took a complete one eighty in the first two years. You know, we're so vertically integrated from the top down. Just goes back to saying, you know, when you start a business plan and you think that the company is gonna be one thing and what it ends up becoming 13 years later is something totally different. I think at the core of all of it is a company full of passionate people that are mission-driven. When you stand behind a mission, I think that what you think you can accomplish and what you think you can do isn't paralleled with what you can actually accomplish.
I wanna take a moment to say thank you to these two who've been such an inspiration, and to all my fellow employees. We have some lots of oldies out here, that Drew, every time I look at Drew, I just think about those weekends that they would work in their little lab, and I would have to come in and pick up the paper airplanes from the ceiling. All over the floor, 'cause it was a little bit of like a, you know, a frat house back then, but super fun and, you know, we've got dozens and dozens of stories about how this mule came to life and, how we all got here, and it's DNA that runs the company to this day. Thank you.
Cool. Thank you. Thanks, Colette. I mean, Colette's made a huge contribution over the company, for the company over many years. Thank you for everything you've done. Building the Roadster test mule, you've heard a lot about that. We needed to get to an actual Roadster prototype that was more of the production design. We redesigned the body. I was basically the chief designer of the body. You know, if you like it or don't like it, for Roadster version 1 and 1.5, that's basically me.
Like my two favorite cars were McLaren F1 and the Porsche 911. If, you know, there's sort of elements of that in the design. I don't think I'm a good designer, by the way. That We're gonna get to Franz who is a really good designer. Actually, it's relatively easy to design a sports car that looks good because the proportions naturally lend itself to excitement and beauty. It's incredibly hard to make a sedan that looks good. Like that's a whole different level.
Yeah. This picture in 2006 was actually from our Roadster launch event. This was a really pivotal event in the company's history. It was the time when we went out of stealth mode. You know, before this, nobody ever heard of Tesla. We'd never had a single media article. We'd never taken any customer deposits. We had no customers. We had no sales team, actually.
Nobody had heard of the company.
Zero
Tesla was a rock band. Or if you're a scientist, like if you're a scientist, Nikola Tesla, of course, but for in the public, like, "Oh, you mean the rock band?" Okay. No. By the way, those guys are awesome. They've been huge supporters all the way along, they never bugged us about the fact that we, like, used their name and everything. Yeah, rock on, Tesla, the band.
This event was awesome. I mean, this was, we had two prototypes built at this time. We had that yellow mule-
Yeah
that we started out with, and then we built two working prototypes for this event. There was a red car and a black car. You know, we had this kind of concept at the time to do an event where we'd give customers test drives, and then we'd start taking reservations and all and do it all at some giant big party, maybe at an airport. This sort of formula became something we started to repeat.
Yeah
became the Tesla DNA a little bit of how we would do product launches and start getting customers closer to the product.
This was at the Santa Monica Airport and yeah, basically in L.A.
It was awesome because we got, you know, we went from 0 to having all these customers, hundreds of them. We thought it was massive numbers, hundreds of them, you know.
Yeah. No, we really thought that was crazy, that like 100 people would buy our car. We had the names. Like, we were like, "We got 100 people to buy our car. That's amazing.
There was actually a projector, and we'd type in everybody's name.
Everybody's name, yeah.
put it on the wall. 'cause we thought there'd be like ten.
Yeah.
It filled up. Anyway, it was pretty amazing. Even though the cars were basically just hardly holding together.
Yeah.
Those two cars were basically destroyed by the end of the night. You know, that was our most of our durability testing and, you know, we had to drive them behind a curtain and actually pump ice water through parts of the powertrain in order to keep it from overheating so we could keep going with more test drives. Nobody knew this at the time. It was amazing, though. I mean, we left that event-
Yeah
with demand being 10 times what we expected and, you know, a whole ton of engineering challenges to go solve. We knew for sure that people wanted this car in numbers that nobody else expected they did.
Yeah. Exactly. It was a hugely energizing event, 'cause we had no idea whether people would like we thought maybe nobody will buy the car, you know, except for like friends and family or something. We got like total strangers bought the car, which was like, "Wow, that's really Wow, okay.
It was a long road, obviously.
It was a such a long road.
Much, much longer than I think we ever expected. From 2006, showing off two cars that could do a few test drives at an airport, you know, through to when we actually would need to deliver those hundreds of cars we had sold.
Yeah. Hundreds.
The cars we were tested for.
Holy mackerel. Jesus. We have like an army of cars here.
I'm looking like we're gonna be able to deliver four cars to the sales team here.
This is frightening.
What's going on here is the team has been doing a little bit of rework today. Remember I was talking to you earlier about the vehicle that had the noise?
We had a drivetrain issue, so we're swapping in a new one right now.
Let's not even wait for the analysis. Just put a new powertrain in.
Put a new one in.
Table it for analysis and let's get it out there.
Absolutely.
Right now we're facing an issue, which is that it's like sort of a crisis of confidence among our customers. Yeah. I mean, if anybody's interested in, I think there's a great movie by Chris Paine, who did the well-known documentary called Who Killed the Electric Car?, and then he did a follow-up documentary called Revenge of the Electric Car. It ended up following four car companies, one of which was us. He actually, the movie actually follows what was the most difficult time for Tesla in its history and like, you know, multiple near-death experiences. I'd really recommend I just wanna give a shout-out to Chris Paine, who's just an awesome dude.
It's like if you're curious about like the, you know, seeing like the early history of Tesla, That Revenge of the Electric Car is like a great movie to watch and get a sense for things. Since as I said, we had no idea how to build a car, we had so many huge challenges with the Roadster. Like, one of the biggest was that the transmission didn't work. We'd actually contracted with three different companies to build the transmission, 'cause it was originally gonna be a two-speed transmission because the motor from AC Propulsion, motor design from AC Propulsion, required a two-speed transmission in order to achieve the specs that we'd promised for the Roadster.
You could not achieve the 0 to 60 time, you could either achieve the 0 to 60 time or the top speed, but not both, unless you had a 2-speed transmission for electric car. The problem is that electric car transmission is really different from a gasoline car transmission because the RPM is much higher, the torque transfer is much higher. When we'd work with these, like, quite well-known companies building transmissions, the transmissions all broke because they just couldn't take the torque transfer and the RPM. The first Roadsters that we delivered, which were about a year later, actually still had the bad transmission that our suppliers had delivered us, but we locked it in second gear.
The acceleration was actually not very good, but at least you could get up to highway speed. We actually had to end up replacing the drive unit for all of the Roadster version 1 cars 'cause they basically, well, didn't work.
I mean, it actually forced kind of a key invention.
Yeah.
We essentially, you know, re-engineered the power electronics and the motor in order to get rid of the gearbox. You know, that was the trade-off that we made in that very early generation, once we had done that, it was clearly better in basically every single metric.
Yeah.
It was lighter, it was more efficient, it was cheaper.
Yeah.
fewer parts. It was definitely the right way to go, but we just weren't ready when we started production.
Yeah, that was hard too.
We had to, you know, catch up after the fact.
Yeah, exactly. In fact, I remember the conversation that JB and I had flying back from our gearbox supplier and, you know, that was like, "Man," it's like, "JB, we are really screwed.
I think that was the third gearbox supplier.
The third gearbox supplier, we're like, "We are screwed." Now we know that if we redesign the motor, we can do this with a single-speed transmission that doesn't require a clutch, which is, like, orders of magnitude easier to do than one that does have a clutch and has to shift gears at very high torque and very high RPM. 'Cause essentially, if you have a single-speed, then it's just an RPM reducer. It required us moving away from the AC Propulsion motor design. We had to redesign the motor, redesign the power electronics that powered the motor.
It was actually easier and faster for us to do that than to try to make the 2-speed transmission work.
Yeah, well, it required twice as much torque from the electric motor.
Yeah, exactly.
It was a pretty big redesign.
Yeah, that's why, I mean, in the end, we didn't use really any of the AC Propulsion technology, even though they did a great job with the prototype. Everything had to be redesigned. Anyway, that's just a minor taste of the Roadster challenges. There's many more. Of course, we received, you know, huge amounts of support from- Yeah, I mean, like, you know, with support like this, I mean, how could you not be energized to solve the solution, you know, figure out the solution?
It was crazy. I mean, even our friends were, you know, sitting there reading all of these death watches.
Yeah. Our customers were like, "do you wanna buy a car?" "Well, it's like I was reading about this death watch thing.
This was before we'd actually delivered to the customers that had bought the car.
Yeah.
That was a difficult thing when they're reading about the company that's about to die, you know, who they just bought a car from.
Yeah, exactly. I mean, there was quite a bit of schadenfreude in the media who were sort of like we had the temerity to try to create a car company. It's like, "Who do these arrogant jerks think they are that they can create a car company? You know, the hell with them. They're just gonna die." There were, like, multiple blogs maintaining a Tesla death watch. That really pumps you up, you know. Anyway, despite that we managed to make the first Roadster deliveries in 2008, I got. The rule at Tesla is whoever puts down the deposit for the car first, it gets, that's their order in line. I put down the first deposit for Roadster 1.
You know, it got delivered, I think, like February or so of 2008. Frankly, this car, although it technically passed all the regulatory requirements for a street legal car, was completely unsafe and broke down all the time, it didn't work really. I, you know, I, and it was stuck in 2nd gear. It was all hand-built. Like really, the production wasn't working. There were so many issues that we had to redesign the whole production process. I mean, from 2008 through 2009, we had to do a complete reboot of the design of the car, the technology, and most of our suppliers had to be changed out in the span of two years.
Yeah, we actually started building I mean, per Colette's story, we started building most of the powertrain overseas 'cause we had this, you know, slightly misguided idea that everything must be cheaper and better if built in Asia.
Yes.
We started building battery packs actually in Thailand, in a not very appropriate.
With a contract manufacturer, I mean, they were well-intentioned but had no idea how to build battery packs.
Yeah. Actually it was a barbecue manufacturer.
It was a barbecue manufacturer.
They were neighbors or friends of one of the other engineering leaders. You know, we built motors in Taiwan, batteries in Thailand. You know, we had this crazy supply chain, not surprisingly, it was extraordinarily hard to get good quality product at the rate we needed from these suppliers. In that timeframe, that 2008 to 2009, you know, we had to do some amazing things. You know, moving those factories, you know, taking control of them, moving them back to California, resetting them up completely. What we had done in Thailand was utterly inappropriate for what we would do here.
Yeah.
Maybe Jason, you know, do you wanna?
Jason, do you wanna just say a few words? Like, Jason was one of the key guys that really made it happen in transitioning the battery pack in particular from a contract manufacturer. Yeah. Yeah. Fair enough.
Thanks, guys.
I mean, I remember having a conversation with Jason. It's like, "Jason, dude, we are doomed if we do not in-source this, the battery pack because we have a supplier in Thailand that is great at making barbecues, but not at making battery packs." The supply chain is so long that it would take six months from when the cells were built to when the battery pack was done and in a car. That means the capital cost of that supply chain was gigantic because we'd have to pay for that whole, all of that inventory and process. Inevitably there would be mistakes made in the design or the fabrication of the battery pack, and we'd have six months' worth of battery packs that didn't work.
This was like sort of doom on a stick. It's like, man, even though, like the idea of like manufacturing in San Carlos was kinda mad, it was less mad than, you know, outsourcing to a situation that definitely didn't work. I was like, "Jason, we have like basically months to in-source this operation so that we can iterate rapidly on the battery pack design, iron out our issues, and tighten the supply chain.
Yeah. Well, I started in May of 2005. It was funny when my friends asked me what I was doing. I would say, "Well, I can't say much, but this is kind of the gist." They're like, "Does that have any chance of working?" I'm like, "No, of course not." "But I'm doing it, and it's gonna be great." In late 2005, after having made two prototype batteries of very different designs, we started work on our third and also simultaneously decided that we were gonna make it in Thailand. We were simultaneously designing, in true Tesla fashion, simultaneously designing the thing and building the factory out in Thailand. The CM, like you said, I think, Elon, was extremely well-intentioned, but just absolutely no experience.
The building was open to the air. You would literally have animal droppings on the product. That's when we were like, "All right. We gotta have a building, man. Come on.
Yeah. Like roofs are important, you know?
After two years of spending, I spent personally 50% of two years there. A bunch of people in this room spent as much if not more time there getting the thing running. Like you said, also the lag. We would show up in Thailand with, I don't know if you guys know what a Pelican case is, but it's this awesome plastic suitcase. We'd show up with seven of them at the airport, and these guys would just look at us. "What are you guys doing?" We learned the term tools of trade is kind of a hot button to just go, "All right, all right. Go, go." Because trying to get tools and parts. Anyway, we brought it back in January of 2008.
We packed up seven shipping containers, we reassembled that factory in San Carlos at that Bing Street warehouse that Drew was talking about. We reassembled it in about 5.5 months, that's where the battery that went in your car came from.
Yeah. By the way, just for those that don't know the Bay Area, San Carlos is like basically in the Bay Area.
Like it's 10 miles up the road.
Just 10 miles up the road.
Yeah.
You know, manufacturing things in the peninsula is like considered super mad.
Yeah, this was kind of our, you know, it was really early, like telltale vertical integration is the way to go. Some would argue we might have over-centered in some areas in that area, really we had control now. We had all the engineers right there. We didn't have batteries on the water, not only from Thailand to England, cars on the water from England.
Yeah
to here.
That's what I mean by the six-month supply chain.
Yeah
we would only find out if there was an issue with either the design or the manufacturing of the battery pack six months after it was built. You can imagine the insanity of having some in-built design or manufacturing flaw and have six months worth of inventory that all has that flaw.
Yeah, some of the same people that we were working with building the factory in Thailand, we would do missions to Hethel, to the U.K., to the Lotus factory, again, with these Pelican cases.
Yeah
glue and popsicle sticks and mixers, and we would do these retrofits of, I think the record was, like, 15 batteries in two and a half weeks, where we disassembled the whole thing, did the retrofit, assembled it. The Lotus guys thought we were insane.
Yeah, they did
they had a point.
Yeah.
We were. Yeah, that's a really quick story kind of about bringing that, bringing it home, seven months reassembling.
The motor as well.
Boom. Yeah, we did the same-
Yeah
with the motor years later, so.
Yeah. Just, like, congratulations to you on, and your team on making that happen. That was, like, an amazing feat, so.
Thank you. Thank you.
All right.
I think, you know, that taught us a really key lesson that is still incredibly relevant today, which is a lot of the technology and intellectual property was in how we actually make the products.
Right
underappreciated by a lot of people, but, you know, no one knew how to make these battery packs.
Yeah.
Like Jason and his team and a lot of the engineering team were inventing how to manufacture the thing that we had designed. That ended up being, you know, actually more complicating in a lot of ways.
Right
to do it at rates and at high quality. I think we learned that appreciation pretty early, and that's helped us immensely to be able to, you know, scale Model S later.
Yeah
Eventually Model 3.
In fact, that sort of, you know, foreshadows what I'm gonna talk about at the end, if anyone's still around. Which is the, you know, the realization of how important it is to build the machine that builds the machine, and how much harder it is to build the manufacturing system that builds the product than it is to create the product in the first place. I mean, you can create a demo version of a product or, you know, like a few cars worth of a product with a small team in maybe, you know, three to six months. To build the machine that builds the machine, it takes at least 100x to 1,000x more resources and difficulty.
It's just not something I really, I would say, only fully came to that realization maybe even just two or three months ago. Yeah. Like, it's a bit I'll talk about that at the end and just how important that is and how I think very few people really appreciate how important that is and how important manufacturing, and supply chain is, and how I think that that's actually the main problem to be solved. I'll talk about that at the end. The first retail store opened up, this was in L.A. on Santa Monica Boulevard. It was formerly, I think, a kids furniture store.
You know, this was, like, a controversial decision at Tesla. In fact, like, the original business plan Tesla called for using the sort of the regular sort of auto dealer network and that kind of thing. I was really adamant that, like, we need to improve the buying experience. Just, I don't know anyone who loves the current car buying experience of, you know, usually, you know, when people tend to view buying a new car as equivalent to going to the dentist, and maybe the dentist is better, it's just never something people look forward to.
We thought, well, you know, look, if we're gonna make a new car company, we don't wanna inherit the negativity or the sort of the bad elements of how it's been done in the past. We wanna do it right, and we wanna make sure that people love coming to buy a car. They look forward to it. Like, the most important thing I said to the Tesla retail team is, like, look, the number one thing is that when someone comes in our store, like whether or not they buy a car, the most important thing is they look forward to coming back to the store. That's it. Just, like, that's their goal.
Make sure that when people visit our store, they look forward to coming again. That's it. Don't try to sell them something that they don't need. Don't try to sell. Don't sell. Like, your goal is just to communicate, and make people feel good. We got a lot of opposition from the auto dealers, as you might imagine, and they were not happy campers about this approach. We felt like, hey, man, We want people to love it. love, you know, love buying a Tesla from all the way from, like, the initial buying experience to see the car, ownership, the post-sale service experience. you know, it's really, it's sort of about, like, you want people to fall in love.
Like, you want them to just, you know, just love it. We thought we had to do it for that reason. We weren't sure if this made sense from an economic standpoint or whether it was gonna, you know, serve us poorly or well. We just knew that we didn't want to replicate the negative experience that people had that most people have in buying a car. We got the first retail store established in L.A., and then shortly thereafter, another one in the Bay Area in Menlo Park. In fact, this is where I first met Franz von Holzhausen. Franz, join. Come up and tour.
Yeah, if I knew the history then when I first met you, I don't know if I'd be standing up here.
Basically, I was, like, the chief designer, you know, for Tesla for the Roadster. I sort of fully realized, like, man, there's definitely people who can do this way better than I can. Then I tried at first to outsource the design of the Model S to a few different companies. That was a whole saga in and of itself, and that really didn't work out. It's like, man, I actually knew that I couldn't do a great job of designing the Model S because designing a four-door sedan that's beautiful is incredibly hard.
Designing a sports car that's beautiful is relatively easy 'cause the proportions lend itself so well to beauty. A sedan's proportions do not. You know, asked around, and was told, you know, like, "There's this guy, Franz, who's really great. I don't know if he's, like, gonna be, you know, willing to jump, but he's really great, and you should go talk to him." I think it was the first meeting we had was actually at the opening party for the Tesla store, and it was a good party.
Good party.
Like, I think, like, one thing Tesla's good at, like, we throw good parties, okay. I was like, "Okay, great, this is gonna feel real good." Franz and I. I spent, like, a large portion of the night just talking to Franz at our first store opening party. We really hit it off. Sort of really been, like, friends ever since. It's been a great honor working with you.
Yeah, likewise.
Yeah.
I think, you know, in my first conversations with Elon, I, you know, I had spent 16 years already in the auto industry. I was, you know, in the early days of Tesla, I was driving an EV1 around because I worked for General Motors, and I was, you know, experiencing range anxiety in Los Angeles, experiencing the, you know, plugging in and having the neighbors come and unplug me in the middle of the night and then not being able to get to work the next day. All those things that were kind of the trouble side of electric vehicles, but the kind of there's an aha moment when you just experience the acceleration and even in an EV1, which, you know, was heavy and not nearly like a Roadster. That moment kind of always sat in my mind.
I went to Mazda afterwards and continued to try to get somehow this green initiative going. When I met Elon and his real drive for, you know, changing the world and really changing the automotive industry to be much better, I realized that there's no automotive manufacturer out there that really will do this in earnest and put their money down and not have it be an R&D project.
It was always gonna be an R&D project for them, and it was always gonna be like, "Okay, our main kind of appetite is for internal combustion engines, but this electric thing or this hybrid thing, yeah, we'll dabble in it and see where it goes." Talking to Elon, and then subsequent to the party, I went to SpaceX, where I saw actually kind of the proof and a little bit of the genius behind it and the ability to, "Okay, if this guy can really get rockets into space, then this car thing's not gonna be that hard.
Although I should say technically.
Although at that time, he hadn't quite gotten there.
At the technically at that point, we had actually not succeeded.
Right
in getting to orbit.
That is true. You could see the determination and the drive. I think that's where I realized that the drive and the character was there. For me to kind of jump ship and against my, like, my inner circle of friends and family telling me, like, "You are crazy to leave your career behind and go do this." I realized that it was really the future in a future way and that these guys were gonna do it. Shame on me for not jumping on board.
Yeah. I think, like, the just super randomly, like the in designing the SpaceX logo and name and then the Tesla logo and name, I'd worked with a couple of graphic designers that randomly knew Franz. And they like, they said, "Yeah," you know.
Yeah.
They gave me, like, the thumbs up.
One of my best friends was dating the girl who was working on-
Yeah.
the graphic.
It's kind of a small I think it was K-like Kimberly, I think.
Yeah.
Kimberly was like, you know, gave a good endorsement of me. Yeah, in fact, if you see sort of slight similarities between the, you know, Tesla name and the SpaceX name, it's sort of, there's a reason for that, 'cause it was sort of done by sort of the same team. Yeah, anyway, so Franz joined, basically mid, I think you started mid-2008.
Yeah, around August 2008.
Yeah.
You know, we had talked several times about designing a sedan for Tesla. Of course, this thing needed to carry seven people.
Well, I said that was my fault.
No.
Uh-
-thinking like, okay, this-
I gotta put my kids in here, like.
A sedan that seats seven.
Franz, we need two rear-facing seats, okay?
This will be a good challenge.
Yeah. I think it was, like, quite a difficult set of requirements. We didn't even have the money for a design studio. The design studio in the beginning just was a corner of the SpaceX rocket factory. We basically just put a tent.
Yeah, we pitched a tent in, like my first day, we put up the tent, and that became the design studio. We had, I think, a couple of contract guys, and we started in earnest. One of the first things we did was drive a forklift through a Fisker model, dump it in a dumpster. That was basically the beginning of kind of clean slate, start over, do it the Tesla way.
Yeah.
Kind of jettison the past a bit.
Yeah, yeah. Exactly. We just started really from the beginning when Franz joined designing the Model S from scratch. One of the things that was obviously very important was to design a car that is meant to be an electric car as opposed to a gasoline car that is then repurposed for an electric car. The fundamental design, coupled with the engineering, we really need to design it for an electric powertrain battery. It couldn't really be, particularly on the, you know, in the internals, derivative of a gasoline car because it doesn't work. It sort of would be the equivalent of a horseless carriage. Like, you don't want a horseless carriage, you want a car.
Yeah, we weren't really trying to follow any, you know, we weren't certainly weren't trying to copy or emulate any other car designs. It really was just, we need to design a car that's meant to be an electric car that looks great and achieves the functionality that we're aiming for. It was just a tiny team doing the Model S design in a tent in a corner of the SpaceX factory.
Yeah. It's amazing to think about where the car is today from its kind of little humble beginnings. Yeah. Thanks for getting us started.
Thanks for joining. Going on to 2009. Just backtracking slightly. In 2008, we were really still trying to figure out how not to die. One of the things was that I thought would really help is if we had a strategic partner, like one of the big car companies to be a you know, strategic partner. In October 2008 actually, I think it was, I stopped over in Germany, in Stuttgart, and met with Thomas Weber, who is the head of R&D for Daimler, and said like: "Look, you know, we'd love to figure out how to work with Daimler.
Is there anything that you guys need on the electric vehicle front? Is there anything we could do? He said, "Well, you know, they're-- they wanna make an electric Smart car, but they don't have a good source for the battery and powertrain." I was like, "Okay. Hmm, okay, this sounds like maybe we can help here." He said that, well, there's a Daimler team, a senior Daimler team that's planning to visit Silicon Valley and meet with a bunch of companies, in January, I think it was like January 10th or something like that, of 2009. I was like, "Okay, we've got three months.
Okay." And he said that he would ask them to meet with Tesla, and kinda make their assessment. I was like, "Okay. Wow." I immediately, as soon as I left that meeting, I called JB and was like: "JB, we have three months to make a working electric Smart car." JB was like, "What are you talking about?" And it's like, okay, there's some challenges here because the Smart car was not actually available in the U.S.
Couldn't even get one.
You couldn't get one. They weren't shipping in the U.S. Did you wanna tell?
Yeah, sure. This was a kind of ridiculous, crazy story.
Yeah.
I mean, meanwhile, of course, we were all, you know, hard at work trying to make the Roadsters actually work and scale up production.
Yeah, exactly. It's not like we didn't have stuff on our plate.
This was quite a non-sequitur. Three months, we put together a rough plan on how we could even possibly achieve this. You know, first of all, you know, we had to get a car physically, and the only place we could figure out to get one this fast was in Mexico. You know, literally, you know, the next day, we sent an engineer to Mexico with about $20,000 in cash.
It was legal. I mean, sort of, you know. Sort of legal.
To purchase a Smart car, and he drove it all the way back to San Carlos. I think the day after that, we tore the entire, you know, propulsion system out of it and started designing a custom battery pack, you know, from scratch. You know, we had ideas on how we had done the Roadster pack, of course, but that didn't fit in this car. It was way too big. You know, a very tiny team, you know, small SWAT team of engineers prototyped and architected a one-off battery pack, a lithium-ion battery pack that could fit into the Smart car.
Yeah.
I did make things slightly more difficult because I said, like, "Look, you gotta put the powertrain and the battery pack in the car, and it, and it needs to look unmodified." Couldn't touch the passenger compartment.
Yeah, exactly.
so it had to-
You couldn't just, like, put it, you know, put it in the, in the, you know, in the trunk. Like, just have a big battery pack sitting there in the trunk or something. It's like, it needs to look like it's a normal Smart car.
The battery was a big challenge. We had to you know, invent this brand-new battery pack in two months and build it. On the drivetrain, we had to figure out how to adapt a Roadster motor and power electronics system and charging system into the back of the Smart car in this tiny volume. Amazingly, we were able to repackage that whole thing. You know, that team didn't sleep a whole lot in those two months, and it was also through the holidays, which was great.
Yeah.
Um-
Thanksgiving, Christmas, you know.
You know, everybody was having the time of their lives. It was super fun. We were in a little teeny garage in San Carlos, you know, trying to make this, you know, Smart car electric. One of the things we realized pretty early on is that this was going to be the fastest Smart car that had ever been made.
This was amazing.
It would have all the torque of a Roadster.
Yeah
this tiny little car.
I mean, it was so fast, you could do wheelies in the parking lot.
Yeah, it was, anybody that got in that car, you know, exited just with a huge smile on their face.
Yeah.
They just absolutely loved it. That, that car basically led up to the meeting where we, you know, met with all the Daimler engineering leaders.
Yeah
and executives.
Exactly. Let me tell you about how the meeting went. Like, you know, Daimler senior engineering team shows up and, I mean, it was clear when they entered the building they were, like, not excited about meeting with some, like, American car startup whatever, you know. They've, like, been told, you know, that they need to do this, and they were like, well, this is obviously gonna be a waste of their time. They were quite grumpy, actually. We started off with a PowerPoint presentation and they really didn't like the PowerPoint presentation. They'll, like, I said, "You know what? Why don't we skip the PowerPoint presentation?
Would you like a test drive?" They're like, "What are you talking about? What do you mean a test drive?" I'm like, "Yeah, we made one." Like, "Made one? What do you mean?" "Yeah, we made one. It's just outside. Do you wanna drive it?" They're like, "Sure." They went out and test drove the insane performance Smart car. As JB was saying, it's like, basically you can't exit that without a grin on your face. They went from being a bit grumpy to being like, "Holy cow, this is awesome." We actually out of that meeting, it got our first development contract with Daimler to create an electric Smart car.
That was really I think if we hadn't done that, Tesla would have died because the Daimler partnership gave us credibility that a major OEM was willing to work with us. They also, you know, they paid us for the development program, which was really helpful from a revenue standpoint. Then most importantly is that when Tesla kind of was running out of money around May 2009, and I had no money left. I'd, like, given all of the money that I had remaining to Tesla. I didn't even own a house. I was like I had to borrow money from friends to pay rent.
I was like, "Man, I am out of resources." I was like, "I just don't even have any more money to invest, we need to seek outside investment." This is early 2009, and just to sort of paint the picture, General Motors and Chrysler were going bankrupt at the time. The idea of investing in an electric car startup was not popular. I remember we'd talk to investors, and they would be angry that we even called them. You know, thankfully, Daimler did invest, and then they invested $50 million in May of 2009, which was a lifesaver.
I just really, you know, I'd like to just say thanks and give a hand to Daimler for that. That was like, you know. I mean, without that investment, Tesla would've been game over. They invested, thankfully, and that gave us the resources that we needed to get the company to, you know, moderately healthy position, and actually get us to the point where we could build Roadsters without losing money on every car. Our Roadsters that we delivered were significantly negative gross margin until about basically 3rd or 4th quarter of 2009. Because we had to redesign so much of the car, we had to change out suppliers.
Actually every Roadster we sold before, like say, the second half of 2009, actually cost more money. We earned less revenue than it cost to build. By late 2009, we'd finally redesigned the car and changed out, like, most of our suppliers and were able to generate positive margin on the car, and then we had positive margin on the Daimler development contract. The combination of those two factors got us to a reasonably healthy position, but we would never have gotten there without the Daimler investment. I think this is important 'cause, like, a lot of people think that, you know, Tesla was, like, bailed out by the federal government or something like that. This is not true.
We were bailed out by Daimler, not by the government. They're the ones who deserve the credit here. Tesla wouldn't be around if they hadn't helped out. In fact, we still have an ongoing program with Daimler for an electric B-Class, and yeah, we're, you know Like, they're just a great bunch of guys, so.
Yeah, I mean, it's worth saying that that first Smart program led to what became a pretty, you know, thriving powertrain business for Tesla in those, you know, intermediate years. You know, we made a lot of profit, as Elon was saying, and did some great engineering work for Daimler, building a production Smart EV and then also a production EV A-Class, and today the B-Class, which is still shipping. You know, those programs also taught us a huge amount. You know, being a supplier to Daimler was not terribly pleasant sometimes, but it also, you know, trained us in quality, and it trained us in some of the systems that they had used, you know, for 100 years.
You know, we got to really accelerate up the learning curve on building some of these very complex systems and how they validated them and how they made them last for, you know, hundreds of thousands of miles.
Absolutely. like, we just wanna, you know, express a huge word of appreciation for Daimler and their help with Tesla, without which we would just not be around, so. then sort of getting to the DOE loan, which a lot of people are aware of. There's like, you know, some people out there who sort of constantly beat Tesla over the head with this, like, DOE loan thing. it's important to appreciate what this program was about, which was it was actually a program that was signed into law during the Bush administration. although, yeah, it was executed during the Obama administration, but it was signed into law during the Bush administration.
It was a program that was intended to accelerate the development of energy-efficient cars. One of the prerequisites for being in this program was demonstrating that you were a growing concern, which is why this program was inaccessible to GM and Chrysler because they were bankrupt. Unfortunately, in the media, this got confused with the There was the auto bailout, and then there was the energy efficiency loan program, which really got conflated, but are actually completely different programs. The first money that Tesla got from the DOE loan program was actually only in March of 2010.
The way the loan program worked was that there were a whole bunch of milestones of technical milestones and product development milestones that we could only invoice for the milestones after they'd been accomplished. Pricewaterhouse would audit the financials, then we would send a request to draw down the loan in little bits and pieces. It would usually take maybe two to three months after we'd actually spent the money to receive any of the loan proceeds. Again, this is, like, really fundamentally different from what happened in the auto bailout, although a lot of people sort of think it's the same thing. The timing that we started receiving DOE loan money was after Tesla was out of the danger zone.
If Tesla had actually needed the DOE loan when we were in dire straits, we would have been doomed. By 2010, Tesla was actually in sort of a moderately healthy position, and the DOE energy efficiency program was meant to serve as a catalyst for the acceleration of energy-efficient vehicles. You know, that was its purpose. I guess people tend to sometimes say it was either completely necessary or completely unnecessary, and neither of those are true. The fundamental purpose, and I think the DOE did a great job of implementing it to that end, the fundamental purpose of the DOE loan was to accelerate the advent of sustainable transport.
It's very important to note that Tesla could have raised money from alternate sources. This was not, we could have raised money from an equity standpoint or from a debt standpoint outside of the DOE loan program. DOE loan program was there. Our competitors were using it. Ford, for example, got $5 billion-$6 billion from this program. Nissan got $1.6 billion. Tesla, for the Model S program, got $380 million, and then $100 million for a powertrain factory to supply other companies. Fisker got more than we did, $500 million-$600 million.
I mean, of the names that you've heard of, Tesla actually got by far the least, and I think did quite a lot with those proceeds. It is important, like, this was definitely helpful and served a catalytic purpose, which was in the intent of the program. It was not a case of sort of being accused of being propped up by the government or something that was fundamentally necessary for Tesla to exist. It was helpful and catalytic, but not fundamental. The Daimler investment a year earlier was fundamental, but not the DOE loan.
I think something most people always seem to overlook was it was a loan. It wasn't a grant. I mean, this is obvious perhaps in the name, but we have to pay it back.
Yes.
You know, very different than the Daimler investment, you know, which was an equity investment in the company.
Yes.
you know, this is something where we had to start planning on how we would pay that back and prove to them that we would pay it back.
With interest.
With interest over, you know, the expected period of time before we even could get the loan.
Yep. Just wanted to make sure it's sort of real precise. Tesla is certainly grateful for this, and it was very helpful, but it was not necessary. It was not fundamentally necessary. You know, going on to the IPO. The IPO process was certainly an interesting roadshow. There's Deepak, who I think did an amazing job on the roadshow. It was funny. I mean, we'd meet with potential investors. You know, Tesla is a company that tends to inspire either love or hate. People are rarely indifferent.
If they're like, "Well, how do you feel about Colgate?" I'm like, "you know, it's okay." With Tesla, it's like either you guys suck or you're great or like, yay, you know? It tends to be very much either love it or hate it. In the IPO roadshow, we'd sometimes meet with investors who would tell us just how stupid we were and that this is a waste of money and how dare we even take their time. I'm like, "Thank you." We'd meet with some that are like, "Yeah, you guys, this is great.
We're all in." You know, we have like some sort of, you know, great investors like Fidelity who, you know, despite all sort of the negative news and stuff, has been like a stalwart supporter of Tesla through the years. So we're like, that was the IPO. Yeah, it was an arduous IPO. We managed to raise, you know, get Tesla public, and just sort of clean up the capital structure and raise some, you know, a bunch of money from the public markets. You know, shortly after that, we became one of the most shorted stocks on the Nasdaq.
Like quite a while there, we were trading places as the most shorted stock on the stock market. We were trading places with Skullcandy, Travelzoo, and Coinstar. For who would be the most shorted. Okay, like, anyway. Next big thing, you know, this was, I mean, also in 2010, and kind of time-wise, approximately the same time as the IPO, we met with Toyota, and Akio Toyoda actually, you know, came by and we had breakfast at my house. He was sort of really interested in working with innovative technology companies. We thought, "Well, you know what?
What are the ways that we could potentially work together? We came up with three things. One was to do a sort of a joint EV program to do the new electric RAV4. The other was buying the Fremont factory, the former NUMMI facility, 'cause Toyota had decided to shut down the NUMMI facility. It's understandable because it was half-owned by GM, half-owned by Toyota, and it was half-owned by like the portion, by like the what was considered the bad portion of GM. GM got split into two pieces. One was called Liquidation Motors. Half of NUMMI was owned by Liquidation Motors, half by Toyota, and it just sort of didn't make sense for Toyota to kind of be in that kind of a partnership.
They decided to shut down the NUMMI plant, and we said, "Well, you know, it's a huge plant for Tesla, but we don't have much money, but we're, you know, we'd be interested in buying that." That was one part of the deal. Then the other was like, you know, was making investments at the IPO. They said, "That sounds cool. We'll make a $50 million investment at the IPO," which was actually really helpful to us when we were doing the roadshow, 'cause people would ask us how we're gonna compete against big car companies.
We said, "Look, we've got the Daimler partnership, and Toyota's investing at the IPO." You know, those are good signs. These three parts of the deal were independent of each other. You know, either all three could work out or none of the three could work out. They weren't tied together. They were just sort of three things that we thought would be good. I know, again, I'd like to thank Toyota for their support. They were, you know, a huge help to Tesla. Thank you, Toyota. The Model S beta. We finally produced a Model S that was, you know, close to the production design.
Or very close, really. And we unveiled that to the public and it was quite well-received. And we had a lot of people who put down deposits on the car and that gave us like a big boost of confidence. Like, wow, people really like the car. It looks like we'll be able to sell enough to, you know, pay for the cost of the factory and everything. Yeah, so that was, you know, thank you for everyone for making, for those that made those early purchase orders for the Model S. You know, again, without you, we wouldn't be around. Yeah.
It wasn't quite as exciting as the Roadster, you know, launch event. It was close. There was definitely some serious drama at this, at that first Model S, you know, customer ride event that we had at Fremont. Yeah, I definitely remember a few crazy stories. I think at least one point we had one car, you know, completely die with some huge firmware problem. A thing we've done at all these launch events is we have a kind of a control center in the back somewhere hidden away with a bunch of engineers that can watch the cars via their wireless connection. I remember this car that, you know, basically had a problem.
Well, we opened all the doors and the trunk and the hood and everything and put it on display in front of everyone. Meanwhile, the engineers rewrote some of the motor control code in that car to ignore the sensors that had, you know, gone wrong and were the problem. We put it into this, you know, kind of limp mode, got in and sort of very carefully drove it away at about 10 miles per hour. It was great. You know, nobody ever knew there was any problem. We, you know, drove it back to the shop and, ultimately it was like one bad temperature sensor that had, you know, shorted out and caused this problem.
I think it was really amazing that we could, you know, what we could do with this new software capability because the Model S was the first time we had that ability to send new software to the car. It was kind of foreshadowing, I think, how important this has become for the entire production fleet, you know, even on that very first day when we were, you know, giving the first rides to customers.
Yep, onto Model S deliveries. Here we go. Thanks, Nancy.
Whoo!
That's my friend Billy. He's a stalwart supporter of Tesla from the beginning. That, that was a, you know, big milestone for the company, delivering the first production Model S's, from the Fremont factory, where at the time we were occupying just a tiny corner. Yeah, I think that was definitely one of the most joyful experiences in the history of Tesla.
It was a pretty awesome event.
Yeah.
I mean, it's Everyone worked so hard for that time, and I think the whole company was there.
Yeah
every single person, production employees, engineers, sales, everybody crammed in 'cause they were so proud to deliver those first few cars.
Exactly. Yeah. Right. We'll go a little faster through some of these later years. Because I think, like, these later years are better, sort of better chronicled in the press, whereas the early years, like, nobody knew we existed, that's kind of, like, lost in the midst of time. We unveiled the Supercharger network, which we hadn't actually told anyone about. When people did the first reservations for the Model S, they had no idea that we were going to create the Supercharger network. We built into every car a high voltage DC bypass direct to the pack that would enable high-speed charging. This was critical to solving the long-distance travel problem.
We were sort of, certainly hoping that some other company or companies would create high-speed, you know, convenient high-speed charging networks, but nobody did. We're like, "Okay, well, we better do it." Yeah.
Yeah, it was pretty crazy. I mean, we literally had, you know, teams of a few interns that we were sending out to different travel rest stops and trying to have them, you know, figure out where the good places to put these Superchargers would be.
I-interns are great 'cause they don't know what's impossible.
They just get it done.
Yeah, yeah, let's do it. Great.
Harris Ranch was actually one of our very first, you know, Supercharger stations out on Highway 5. I just remember the craziest conversations trying to convince these ranchers from the Central Valley on, you know, how this Supercharger station was possibly going to work. You know, there were no cars yet. They'd never seen a Model S. They didn't believe an EV could even get there.
Yeah
It was fairly amazing how this all grew, only four years ago.
Yeah, we were kind of amazed that they worked, actually. We're like, "Hey, wow, it works. That's cool." Most of the time. Yeah, that ended up being fundamental to really just answering the question of, like, can I drive my car long distances? What it really comes down to is freedom. Like, when you're buying a car, you're really buying freedom to go where you wanna go. If you're constrained, if you're tethered to your charge location, you don't have the freedom. Supercharger is really about making it freedom, giving you the freedom that you want when you buy a car and making it real easy and convenient to go wherever you want. Paid off the DOE loan.
Yeah, it's worth noting, like, we, you know, we, Tesla was the first company to pay off of all. All the automotive companies had either gotten direct government grants or they had been in the loan program. Tesla was the first company to pay off the DOE loan. In fact, we had to pay. There was a prepayment penalty, and we actually because, you know, you had to pay the interest plus a penalty for prepayment, because the normal loan would have been paid off over 10 additional years.
In this case, we paid it off 10 years early, and just paid the penalty 'cause we just wanted to, you know, make clear like, Look, this, you know, we're. I don't know, it just felt like morally the right thing to do, so that's how we did it.
His goal wasn't to build the world's best electric car, but to build the world's best car that just happens to be electric. Tesla Model S.
What's been achieved here for the first time is to create an electric car that truly is the best car of any kind. That was obviously a big milestone for Tesla, winning, essentially getting kind of best car in the world of any kind, not just electric. MotorTrend told us that it was the first time that the judges had actually been unanimous in a decision. We actually had to manufacture these things. It's just worth dwelling on just how big a leap it was to go from making the Roadster to making the Model S. In the case of the Roadster, our production, our annual production was maybe 500 or 600 a year.
Lotus made the body and chassis, and we made the powertrain and battery and then we did final installation of the powertrain and battery in the car, and then delivered it to customers. We were really, for Roadster, we were basically doing, like, half the car, and it was a much simpler car at very low volume. We went from call it around 500 cars a year, where we did half the problem, to 20,000 cars a year for a much more complicated car, where we did the whole thing. This was a very steep learning curve and, you know, very, very intense.
I'd just like to congratulate everyone at Tesla and the production team that made it happen and did what you know, a lot of people in industry considered impossible. Many late nights and weekends. Thanks, guys.
Something that we did, I think, at that time that was a bit unique is we had really all hands on deck. It wasn't that there was a factory operating smoothly somewhere and we just sort of sent them a car design ready to go. You know, literally the entire engineering team, you know, even some of the support teams, you know, everyone was in the factory, you know, making those lines run. We had engineering leaders, you know, that were actually doing operations for months at a time to try and, you know, get that moving faster. I think that that cross-learning, you know, ended up saving us a huge amount of hassle, and it was something that we'll hope to reuse in the future.
Yeah. It was definitely tough sledding there. We were basically there seven days a week, you know, all hours of the night, just trying to figure out how to make a car. We managed to sort of achieve the target, but it was a huge amount of sacrifice by everyone. Like the Gigafactory. We're thinking about, like, okay, how do we go from Model S at, you know, 20,000 units a year, which is now sort of approximately 50,000 units a year or with the Model X, you know, almost 100,000 units a year. We wanted to execute the, you know, the goal from the beginning, which was to make a high-volume, affordable electric car.
If you just do the basic math and say, "Okay, how many batteries do you need to do that?" If you have 500,000 cars a year and an average kilowatt-hour level of 70, then you need 35 gigawatt-hours. That's just for the car. Then if you do, as we later talked about, stationary storage, then you need additional capacity on top of that. Now this is quite challenging 'cause the total worldwide production of lithium-ion batteries of all kinds, for phones, laptops, power drills, cars, everything, was only 30 gigawatt-hours. We're like, "Hmm, okay, this math does not work." Obviously, we are not going to get every factory on earth to just do our stuff.
Even if they did, there still wouldn't be enough. It's like, we gotta build a factory here 'cause, otherwise, if we don't build it, we don't know how to solve this issue.
Yeah, it was also a chance to reinvent the way that batteries had been built.
You know, up until this point, basically all lithium-ion factories were more or less run by consumer electronics companies. They were built in consumer electronics volumes and sort of with those methods. You know, we sort of had this idea that we could vertically integrate this much more and get a lot of the inefficiency out of that process, you know, moving the upstream, you know, materials and sort of raw material processing very close to where the cells were made, and then moving the battery pack and module production right next to where the cells were made on the other side. Doing all that, we have a pathway to reduce the cost of the battery way faster than anyone expected. Ultimately, that's what makes the high volume of cars, you know, accessible at a price point that people can actually afford.
It's worth noting, like, sometimes people think, like, Tesla's just using commodity, you know, cylindrical cells meant for laptops, but this is actually not true. The standard laptop cell does not work well for electric car. It has the same external form factor, but the internals are quite different from what would be used in a laptop. It just happens to look the same from the outside. Actually, during the Gigafactory, we wanted to reconsider even the external dimensions, and did a first principles analysis of what would be most optimal and concluded that we needed to go to, from an 18-millimeter diameter to a 20-millimeter diameter and from a 65-millimeter height to a 70-millimeter height.
That's, you know, the equipment that's really, that's being installed at the Gigafactory, and that's the cell form factor we think is probably optimal, you know. This is, in establishing the Gigafactory, this is where we first really started to think hard about the importance of building the machine that makes the machine. How do we rethink cell production, module, battery module production, battery pack production, and production in general, on a physics first principles basis to achieve the best possible outcome? Because we had to do that out of necessity for the Gigafactory. As I'll talk about later, we're gonna do that for the whole car.
I should say, the initial expectations for the Gigafactory were about 35 gigawatt-hours at the cell level and 50 gigawatt-hours at the pack level. We thought we would internally produce most of the cells, but still draw upon factories in other parts of the world to make up for the rest of the cell volume, so we could get to a 50 gigawatt-hour level at the module and for modules and packs. That incremental As I said, to get to 500,000 cars a year, you only need 35 gigawatt-hours, but the other 15 gigawatt-hours was meant for stationary storage. Now as we've gotten deeper and deeper into the Gigafactory Oops, sorry. Let me go back here. Let's release the Titan. If it goes back. What? Sorry.
As we've gotten more and more into the Gigafactory design, again, sort of, like, my favorite thing is to think about things from a physics first principles standpoint, 'cause I think that's sort of the best way to think critically about particularly a technical subject. We've actually found that we can, I mean, theoretically, do probably 3x our initial estimate in the same form factor as the Gigafactory. I'm not saying that we will do 3 x, but within that form factor, you know, within what you see there, which is sort of, I try to be slightly romantic about it, which is, like, it's designed sort of like a diamond and aligned with true north.
Within that form factor, in principle, we could actually do triple the volume that we initially expected. Yeah. Yeah, we're gonna have the Gigafactory party, opening party. Well, it's actually, the Gigafactory's been open for a while, but the party will, you know, be happening in July. Like I said, we, you know, we throw a good party, so I think people are gonna enjoy coming. And that's the dual motor all-wheel drive- Let's release the Titan and Autopilot. This is why I sort of infamously tweeted out that it's time to bring out the D and something else. That honestly was an innocent tweet. When I read the Twitter comments, I realized this could be misinterpreted.
I'm just glad I didn't, I'm just glad I didn't tweet out, "Time to bring out the D and the A.
We don't really have a big marketing agency off somewhere-
Yeah
figuring this stuff out for us, actually.
It's like stream of consciousness, you know.
It's like a two or three-minute discussion in the office. Off goes the tweet.
Exactly. We introduced dual motor all-wheel drive, and it's the first time there's been dual motor all-wheel drive in a car, which actually gives it fundamentally better handling characteristics than a single motor with a mechanically attached longitudinal axle. 'Cause it essentially gives you digital control over the front and rear torque at kind of the millisecond level. It's, from an architectural standpoint, fundamentally better in traction than a single motor that's connected mechanically.
Yeah, this was kinda the ultimate refinement of that digital motor control Drew talked about very early on. You know, I think, there's an awesome example of a dual motor Model S, you know, out accelerating a snowmobile in Norway, zero to sixty. You know, the traction was that good just because every single wheel was doing, you know, the exact maximum it could.
Yeah. That was a key sort of product milestone for Tesla. The Tesla battery pack. I mean, in order to solve the sustainable energy problem broadly, there are really three elements that are needed. You need to have sustainable transport, essentially electric transport. You need to have sustainable energy generation in the form of solar, wind, geothermal, hydro. The third critical ingredient is stationary storage because obviously the sun only shines during the day, and wind is intermittent. In order to solve the sustainable energy problem, you really need to be able to buffer the energy in a stationary battery pack.
That combination of factors, and I obviously am a big believer in solar, but wind and the other things also are gonna be big contributors. If you have electric cars, stationary battery packs, and solar power, you can completely solve the world's energy problems in a sustainable way. So that's really what we wanted to convey with the launch of Tesla Energy and Powerwall and Powerpack version 1. Yeah.
This business is growing well. We're making those products actually at the Gigafactory today. You know, they've been being built out there since, you know, December last year. That little video ended with sort of a hypothetical drawing of a 50-megawatt hour, you know, field of Powerpacks, and we're actually starting construction on a site that's almost identical to that in Hawaii in just a few weeks. That's not just an animation anymore. You know, that site is going to be powering a reasonable percentage of the peak load of the island of Kauai. It's base load, you know, solar energy, so it's providing that solar energy actually well into the night, you know, way after the sun has set.
It's so exciting 'cause it's actually cheaper than the fossil energy, the fossil fueled energy that they would otherwise have to buy. As soon as, you know, we get that installation up and running, you know, it's an example, a case point that we can just continue to scale anywhere that it has that economic payback. It's pretty exciting.
Yeah, I think, like, we're really increasingly excited about the potential for Tesla Energy. We think, you know, previously I'd said that the battery pack allocation would be roughly 2/3 vehicle, 1/3 stationary storage. I'm actually at this point, I think it's probably gonna be closer to even. 'Cause the interesting thing about the Powerwall and the Powerpack is that they scale on a global basis a lot faster than cars do. 'Cause when you have cars, you've gotta deal with the regulatory regime in a wide range of countries. You know, most countries have a, like, a very specialized regulatory regime, you're dealing with entrenched competitors, it's quite a difficult battle.
Whereas for stationary storage, there's really no one's really, at least yet, doing it right. The regulations are much more consistent from country to country. The scaling potential is gonna be quite a lot more than cars. I think the rate of growth is gonna be several times that of the car side of Tesla. The Model X deliveries. All right. This program has been challenging. I think I, you know, particularly need to sort of fault myself here for, as I've said before, a fair bit of hubris in putting too much technology all at once into a product.
In retrospect, the right thing to do with the Model X would've been to take a lot of the really awesome, cool things, but kind of table them for a future version. If I wind back the clock, I would say like, "Look, we've got these great ideas, the things that I want to really implement, and that other people want to really implement," but the smart move actually would've been to table those for version 2 and version 3 and so forth of Model X instead of piling them all into version 1. This is, you know, definitely a case of sort of getting overconfident and whatnot. In particular, the software that controls the Model X and the operation of the doors has been incredibly difficult to refine.
Getting the complex set of sensors to work well has been incredibly difficult to refine. I think we're almost there in making the doors useful. Actually it's a software problem. It's figuring out how do you interpret all the information from the sensors, what should you remember, what shouldn't you remember, how should you open the door, in different circumstances if you're in a low ceiling or a narrow situation. You know, if a sensor is giving erroneous feedback, when is the right time to ignore the sensor? I mean, this has been, like, Digging ourselves out of the hole has been quite hard.
I think with the software release that's going out shortly, and then another one that's going out maybe in a month or so, I think finally we'll be at the point where the doors are better than normal doors. As opposed to worse. I think anyone who's considering buying a Model X, if you order a Model X, you know, now or soon, trust me, you will love the doors, 'cause the software will actually be right. And it's, I'm pretty excited about where that's gonna be. Now going to the Model 3 launch. Thank you to everyone who's placed an order for the Model S and put down a deposit.
I'm really confident that you're gonna love the car when you get it. It's gonna be amazing. Yeah, the Model 3, you know, sometimes people wonder about, like, the presentations that I make or Tesla makes, and the Model 3 one was the first time we actually rehearsed for one day. If they seem a little off the cuff sometimes, it's 'cause they are. You know, we're, like, trying to make the Our efforts are focused on making the cars as good as possible and solving problems, and you know, presentations and whatnot tend to be a lower priority than actually making the products good.
Yeah, I mean, this is a car we're all just incredibly excited about. You know, for many, I think many people at Tesla, even, you know, those who have been there all the way from the beginning, you know, this is the car we've wanted to build since the company was founded. You know, we often get this criticism that, you know, we're in business to make, you know, expensive electric cars, you know, for wealthy people, but it's absolutely not the case. This is not why we started the company. You know, the Model 3 is the ability to, you know, realize all these innovations and improvements and learnings we've made along the way into a product that, you know, people can actually, you know, a large number of people can afford.
Exactly. Of course, in order for us to produce the Model 3, we're critically dependent on the revenue that we receive for people that buy the Model S and the Model X. It's real important to bear in mind, the thing that is enabling the Model 3 to exist is fundamentally the people that are buying the Model S and the X today and historically. I also wanna emphasize that people sometimes wonder, should I buy a Model S or a Model 3? The Model S is always gonna be our technology leader, the Model S and the X. They're gonna be our technology leader.
The reason for the Model S and the Model X being the technology leader is because when you create new technology, before you've had time to refine the design and achieve economies of scale, whatever that technology is, it's gonna be expensive. I wanna, I wanna emphasize, like, the reason the technology in the Model S and Model X will precede the Model 3 is not because we're trying to intentionally withhold it from the Model 3, but rather because it's fundamentally more expensive when you have new technology until you can do multiple design iterations and achieve economies of scale.
Those that buy a Model S and Model X should know that they actually will be buying the most advanced car, and they will effectively be paying for that technology to then make its way to the Model 3. That's the, you know, sometimes people, like, aren't sure. It's like, is S or X better? Oh, sorry, is the X, Model S or the Model 3 better? The Model S is definitely, you know, better. It's gonna have the leading-edge technology and all that. Then over time, that technology will make itself to the Model 3. We really appreciate those that are buying the S and X and enabling us to make the Model 3 and subsequent vehicles.
sort of You know, just a quick slide on Tesla finances. You know, we won't spend a lot of time on this, but, you know, one of the criticisms we receive, particularly from certain quarters, is, like, Tesla is basically just getting all these government subsidies, and, you know, that's the reason we're alive, and this is just not true. You can see that basically the money we receive from government relative to revenue and investments, and where it goes down in 2013, that's Tesla paying back the DOE loan.
The actual amount of money that Tesla has gotten for from the government is a very tiny amount relative to what we've gotten from the government is a relatively tiny amount relative to. The amount that Tesla's actually received from the government is really quite small and only a tiny proportion of what Tesla's received from investors and from selling vehicles. You can see that basically the gray is kinda the money from government, and you need to net that out against the fact that the loan was repaid in 2013. It is really quite small.
Now, this doesn't include incentives that consumers. If we don't have that equipment, Nevada doesn't still pay us money. It's, like, it's a no-lose proposition for Nevada, and that's why I wrote a blog, you know, titled The House Always Wins. Okay. Nevada is very familiar with the house. So, you know, just so I think it's real important to clear that up. I particularly wanted to spend time on this because obviously we're in an election year. What happens in an election year is like, you know, particularly Tesla gets sort of made into a political football and kicked around quite a bit. Yeah, I mean, in the, you know, the last one, there were three presidential debates.
Of the three presidential debates, Mitt Romney attacked us in two out of three by name. Like, that's a lot of time to spend on a little company. I don't think he came up with that attack by himself. You know, that was not Somebody asked him to do that. Somebody with not good motivations. He actually called us, like, a loser. You know, like, it's like, okay, well. He said, like, Tesla's, you know, yeah, he's like, you know, Tesla is like a loser of a company or something. You know, I mean, he got the, you know, object right but not the subject.
In terms of the Tesla fleet, a lot of people question, is Tesla gonna be able to make 500,000 cars a year? That's such a big jump from where we are right now. You know, we're hoping to be at an annualized rate of somewhere between 80,000-100,000 cars a year by the end of this year. How do we do, you know, go from there to 500,000 cars a year?
That's where I think it's important to just point out, like, we've made much bigger leaps than this in the past, going from, you know, 500 or 600 Roadsters a year to where we made half the car to the Model S to, where we made 20,000 cars, and we made the whole car, and it was a much more complicated car.
I mean, you can see, you know, essentially, you know, going from, you know, the, high, you know, high sort of in terms of, you know, fleet going from 110,000, or, you know, going from, let's say, you know, five years ago where we had or 2010 where we had roughly 1,500 cars total, to five years later with 110,000 cars. That's a pretty big leap. I think it's certainly gonna be a challenge with the Model 3. It's gonna be hard. I think we've shown that the Tesla team is really dedicated and that it's something we can make happen.
Particularly with, thinking about the mistakes we've made in the past, where, you know, where we've sort of overcomplicated products like the Model X and if we, you know, We're really making sure that we don't do that with the Model 3 and that we have a tight interaction loop between manufacturing and engineering and design so that we design a car that is easy to make. That, you know, if there are cool features, it's great. We'll table those to version two, version three, version four.
Maybe it's worth making another point 'cause sometimes people ask me, like, "When should I buy like a Model S or a Model X?" It's like, you know, "Are you gonna make an improved version?" I'm like, "Of course." I mean, if we're always gonna keep improving the product, if somebody wants to wait until Model S or X stops improving, well, they're gonna be waiting forever, 'cause we're gonna keep improving the product every year, sometimes every six to nine months. I think generally, you know, the right time to buy a car is always now.
You know, depending upon how much you like new technology, then, you know, buy a new car at whatever that periodicity is that you think makes sense. Yeah, just talking about the future, I think that the most important point I wanna make is that, what I referred to earlier, that we've realized that the true problem, the true difficulty, and where the greatest potential is building the machine that makes the machine. In other words, building the factory. Really thinking of the factory like a product. Not sort of a hodgepodge of things that are bought, you know, where the machines are kind of bought from a catalog.
Actually, just like we do with the car, you know, we don't try to create a car by ordering a bunch of things off a catalog. We design the car the way it should be, and then we make, either we or with working with suppliers, make all of those individual components. There's almost nothing in a Model S that's in any other car. I think the same approach is the right approach to take when building the machine maker, the factory. I actually think that the potential for improvement in the machine that makes the machine is a factor of 10 greater than the potential on the car side. I think maybe more than a factor of 10.
I've really come to appreciate that, you know, over the last two, three months in particular, when I've sort of just been on the production floor all the time and sort of seeing things, you know, running production personally at a detail level. I don't even have a desk or an office anymore. I'm just basically standing on the production floor and occasionally meeting in a conference room. It's like, wow. You know, I do my favorite thing, which is apply physics first principles. It's like the best tool possible.
Wow, you know, when you think of a production facility on a fundamental level, for a given size of factory, the output is gonna be volume times density times velocity. Let's sort of look at our factory and say, "Okay, what is the density of useful to non-useful volume?" It's crazy low. It's like 2% or 3%. If you look at volumetrically, not just on a planar level, but volumetrically, it's literally 2% or 3%. When you say car to non-car volumetric ratio, like, wow, okay, that seems like there's a lot of room for improvement. You say like velocity. What is a reasonable expectation for the exit velocity of vehicles from the factory?
At first you may think that, say, some of these advanced car factories around the world are very good at making cars and they may make a car every 25 seconds. That sounds fast, but actually if you say, well, the length of the car plus some buffer space is approximately 5 meters. It's taking 25 seconds to move 5 meters. Okay, that's 0.2 meters per second. Basically, you know, you're not much faster than a tortoise at that point. You know, it's like, wow, that really doesn't seem fast. Like, how come these factories Like a slow, a sort of slow walk would be approximately Well, slow to medium walk would be 1 meter per second.
A fast walk would be 1.5 meters per second. The best car factories in the world are doing 0.2 meters per second. Like, huh, seems like you should be able to have cars exit at least walking speed. This doesn't seem so crazy. The density improvement, like there may be as much as an order of magnitude improvement in density possible as well, going from maybe 2% or 3% to 20% or 30% of the volumetric density being optimal. You can also think of it like the design of a modern system on a chip or a computer.
You say if you look at, say, the complexity of the board and you see how close together the line traces are, and how focused things are on clock speed, and data transfer from RAM to, you know, say, a solid-state disk or the internal CPU cache. It's like, wow, there's crazy potential for improvement here. I think at least an order of magnitude potential for improvement on production. So with less, like, significantly less engineering effort, we can make dramatic improvements to the machine that makes the machine. I think that's like I think, I mean, I think like probably a lot of people will not believe us about this, but I'm absolutely confident that this can be accomplished.
Yeah. There, there are opportunities we're finding all over the place. As you start to, you know, shift some of the design resources that have been, you know, you know, improving motor technology and power electronics or batteries and are working so hard to try and find tenths of a percent of efficiency gain or performance gain on those different systems. When they start to go and look at the factory, they say, "Oh my gosh, you know, this is, this is crazy." You know, we can find, as you were saying, you know, easily tens of percent or 20, some cases hundreds of percent efficiency gain that were sort of unheard of in terms of, you know, what you could do in the design world. The impact there is pretty phenomenal and quite close at hand.
We're basically gonna design a factory like you design an advanced computer. In fact, I think use engineers that are used to doing that and have them work on this. I found that, like, once you sort of explain this to a first-rate engineer, the light bulb goes on. They're like, "Wow." As JB was saying, like, they spend huge amounts of effort trying to get a fraction of a percent of improvement on the product itself. Actually, that same amount of effort will yield an order of magnitude greater result if you focus on building the machine that builds the machine. It's just that a lot of engineers don't realize that this is possible. They think that there's like a wall.
They're basically operating according to these invisible walls. We just need to, we're in the process of just going through and explaining those walls don't exist. I think it's going to be pretty amazing. Just to thank you to everyone who's a shareholder and to our customers and the Tesla team. My apologies for the long story. I hope you enjoyed it. Now we'll go to Q&A. Yeah. Sorry.
Oh, wait.
Sorry. Yeah.
All right, everybody, I can give you the instructions.
For the Q&A, if you have the endurance to stick around.
Actually, and just before that, we wanted to bring in some of the longest-standing Tesla, you know, employees. Hey, guys, can you come up on stage? These are just people that have been with the company for on the order of a decade. Just, we're gonna need two lines here. All right, guys, just wanna say, you know, thanks for all the many late nights and weekends and intense effort along the way, and it's been an honor working with you. Yeah.
Thank you.
All right, we'll jump right into Q&A.
Okay, I'd like to give the instructions for the Q&A. It looks like most of you know how this works. We queue up behind the mic stands on both sides of the room. We'll take as many questions as we all have endurance to answer or hear the answers to. I ask you to state your name, and please restrict yourselves to one question, so we can be respectful of everybody in the line. Okay?
Okay, I'm Mark Peters. One question and one suggestion. Real quick, we need to sell a lot of Teslas, obviously, between now and Model 3 arrival. My wife and I are doing our part. We're on our fourth and fifth Model S's, our third one's going to my brother. We're keeping it all in the family and trying to fill the world with Teslas. One of the concerns, though, is that whenever we talk Tesla to all of our friends and family and neighbors and everyone that we meet, it seems like there is a remarkably large percentage of people that don't have a clue about climate change, greenhouse gases, completely off their radar.
I'm wondering if, especially because you mentioned this Merchants of Doubt DVD and the documentary, the book as well, if maybe we could get licenses for a clip or something at the galleries or maybe on the website, just because so much of the population that could buy our cars simply doesn't know the moral kind of imperative to save the planet and why it matters. If we can't get the license, send out a team to interview some of the principals that were in the DVD, just to get more people lining up to keep Fremont running seven days a week, three shifts a day, whatever it takes to fill the world up with Teslas.
Thank you. That's a great suggestion. That's a good point. I mean, we're pretty close to the issue, so for us it seems, like, really obvious. I think just having something that, you know, explains to people who aren't exposed to the level of detail that we are and, you know, maybe just like a, like, a little video-like thing you could forward or something like that, just to sort of explain it. It's super straightforward. There is a lot of misinformation out there and, you know, as the threat of EVs becomes more and more significant to the oil industry, obviously they step up the propaganda campaign. That's to be expected, you know?
It's real important to fight hard to counter the propaganda. I think that's a great suggestion. We'll do it.
Thank you.
Sure. Fire away. Go ahead.
Well, we want to buy cars, and I wanted to let you know that we have some suggestions that we don't wanna make public in regards to the product itself and the customer service experience. I got a package for all the board members as well.
All right. Thank you. We'll take it.
Thank you, Mr. Musk. My name is Skip Daly. I'm from Northern Nevada. I work for the Laborers Union. I'm here as a shareholder representative. Mr. Musk, I have a letter here addressed to the board from the Northern Nevada Building Trades Council outlining concerns over labor abuse, safety violations, and the unfair use of immigrant and out-of-state workers, which has caused over 300 workers to stop work at the Nevada Gigafactory. Additionally, in light of the recent-
Sorry, I. Please try to keep the questions fairly short.
Yeah.
One at a time. I can't hear what you're saying.
Oh, okay. I'll try to speak up. Additionally, in light of the recent case where an H-2B visa worker was exploited and seriously injured at the Fairfield facility, and the many documented safety violations at the Nevada site due to, in large part, to the bottom-feeder practices to hire workers from staffing agencies with questionable skills and capabilities.
This is not a question, this is a statement. What is your question?
Okay, my question, thank you for giving me my two minutes here. Will you agree to hire and allow an unfettered investigation of these concerns by an outside and independent auditor to protect our investments? The safety issues, you just talked about a metric, building the factory to build the factory. Well, there's a way to build the factory as well. I don't think you're using the most efficient model. I'd like you to put your thoughts to that so we can get a better product out there.
Okay. Yeah, I mean, I think this, like, a real important principle to, you know, bear in mind here, like if Tesla's fundamental optimization was minimizing labor costs, why on earth would we have a factory in California or the Bay Area for that matter? We would do what every other car company has done and move vehicle production either to a different state or a different country. It's obviously false on the face of it to make any assertion that Tesla is minimizing labor costs. It's obviously false.
Maybe just to quickly comment on the Gigafactory piece I think you alluded to there. I mean, part of the agreement we made with the State of Nevada was that we would bring, you know, at least half of the construction and operations labor for the Gigafactory from in-state in Nevada. That's a commitment we've kept, you know, every single, you know, reporting period, every single month of operation since we started several years ago. Today we're over 70% local in Nevada, and we do everything we can, you know, to hire people locally. At some point, though, going, you know, higher, you know, reduces the speed of execution. We simply, in some cases, can't find enough of a certain, you know, discipline of worker.
You know, we need to trade that off, but we're well in excess of the commitments we made and that were agreed to by the state.
Yeah. I mean, and Yeah.
Hi, my name is Haydn, and I'm a shareholder. I got my 85 D last July, and since then it's gotten about 150,000 miles or so on it. Even with daily full recharging, we've only lost about 6% total battery capability, and there's been no real maintenance cost except for, like, four sets of tires. My question is.
Depends on which tires oh, it sounds like you have the high-performance tires maybe.
No, the 19.
Really?
Okay. A lot of miles maybe? I don't know.
Like, regarding the free long-distance travel and Superchargers for life, how long do you intend to act on that? Once the Model 3 comes out and there's upwards of 500,000, 1 million cars out there, how are you gonna keep up with that?
Right. I mean, to date, we wanted to make it really straightforward and easy. That's why, you know, the Superchargers are set up, at least to date for people that have bought the car, as free long-distance for life. Obviously, that has fundamentally a cost. I mean, I don't wanna make this some big news headline, but the obvious thing to do is to decouple that from the cost of the Model 3. It will still be very, very cheap and far cheaper than gasoline to drive long distance with the Model 3, but it will not be free long distance for life unless you purchase that package.
It's not. Like I wish we could, this is not. In order to achieve the economics, it has to be something like that, you know? You know, it's like, I wanna just emphasize, like what Tesla's motivation is to make electric transport as affordable as possible. That is what informs all of our actions. If we do something and we charge for this or charge for that, it is not because we, you know, we want to make things more expensive, it is because we, you know, we can't figure out how to make it less expensive. That's all.
Yeah. It also just sort of pains us to see people misvaluing their time at Supercharge stations so often.
Yeah.
You know, it is far more convenient and faster for you overall to charge at home or at work. You know, it takes one second to plug in. You don't have to go to a separate location and wait for the car to be there. You know, time and time again, we see people that, you know, drive to a Supercharge station, sit in their car, wait there for 20, 30 minutes, and then drive to a different destination. If they do the math on the value of their time, you know, it makes no sense.
Yeah. I think part of it is just people.
Yeah
you know, are used to a paradigm where they go to a gas station to fill up, and that's just normal. they get an electric car and it's like, "Oh, I need to go to the Supercharging station to fill up because that's what's normal." but actually the best thing to do with an electric car is to charge your car where you charge your phone. you know, would you really take your phone to a gas station? No. so I think a lot of it is just people kinda, they're used to an old way of doing things, and they kinda do it by default.
As JB was saying, like driving to a Supercharger and, you know, in order to like maybe get $5 worth of electricity, and spending half an hour for your time, like you're, you know, maybe barely at minimum wage. It's actually not, it's just not the best thing for people, but, you know, they kinda do it out of habit.
Hi, my name is Emmet Peppers. I'm a long-term investor and a product enthusiast. I have an S and a signature X. By the way, Steven Bainbridge at your San Rafael service center has been excellent in taking care of a few minor kinks with the X. My question for you is, given your hints that a vertical takeoff and landing electric plane at some point, do you think that, as a long-term investor, I'm thinking, you know, 10 years maybe later, I don't know, but do you think as a long-term investor that Tesla would explore designing and producing such a machine, or would that be more of a SpaceX project?
Well, I think we're getting a little off topic here.
Okay.
But-
Well, I'm a long-term investor.
Okay.
I'm just trying to think 10 years plus out and, you know, what could happen?
Well, I mean, I think nobody's more keen on doing, like, electric aircraft than, you know, me or JB. Like, and we need to stay focused on, like the primary mission of electric cars. The energy density of batteries is not yet ideal for aircraft. Like, we need still to make more progress on, you know, for the energy density of batteries, you know, for the gravimetric energy density before aircraft really start to become compelling relative to kerosene-fueled aircraft or petroleum-based aircraft. It's not, I mean, it's not out of the question that Tesla would do electric aircraft in the future. I mean, our goal is to accelerate the advent of sustainable transport.
That goal has been there from the founding of the company, and that's what is gonna remain true for the future. Sustainable energy, yeah.
My name is Elizabeth Farrell Peters, and I wanna thank you, Mr. Musk, and acknowledge you for creating an environmentally friendly interior that's comfortable, beautiful, and soft. The Ultra White interior is a moral and ethical option that aligns perfectly with Tesla's sustainability goals. My question is, when can we expect this interior in other colors and be available in all models of Tesla?
Sure.
Hopefully soon.
You know, we generally sort of try to minimize comments on future products, except that I think, I mean, I kind of agree with the general sentiment, and that it should be available for all colors. I agree. Yeah.
Hi, I'm Amina. You seem to be a very important part of this company, and I was wondering what your strategy is for ensuring your personal mental clarity and long-term health and security, like yoga or goji berries?
I'm probably not engaging in a set of actions likely to maximize my lifespan. Yeah. I don't know. I do think, like, you know, at this time, I'm You know, in all the history of Tesla, this is the most excited I've actually been about the future of the company. I think, you know, that sort of excitement is just a, you know, powerful driver and makes me wanna get up in the morning and come to work. I think it's incredibly important that you have an environment in general where people look forward to coming to work, because it's just so much easier to work hard if you love what you're doing.
You know, stuff I was saying about building the machine that builds the machine, I'm just really fired up about that. I think it's one of those things where so much more is possible than people realize. So I think we're really gonna positively surprise people there. I'm really excited about spending time on that and, you know, JB is, and the rest of the team are. I think, yeah, you know, I'm feeling pretty fired up, actually. Yeah. Thanks for asking.
Elon, my name is Will Chamberlain. I recall four years ago you said that the new owners of Model S would not be disappointed. I can tell you that I am so not disappointed in my signature Model S that it now has a twin in my garage. Now we have somewhere between 100 kWh-160 kWh of storage sitting in the garage. I'd like to buy a Powerwall, that only has 7 kWh of storage.
I'm wondering whether there can't be at some point, a connection so that you could trickle charge the Powerwall and keep the house secure for a lot longer than the few hours that the Powerwall would currently take care of.
Do you mean connect the car to the?
Yes.
Maybe if this isn't possible for the current cars, I guess I would just say that I think it would be a useful thing to do for the future, because I think then people will both have an incentive to buy a Powerwall since they have the car, or if they have the Powerwall, they'll see that they should be buying a Tesla, so that they can have that extended energy use.
It's definitely something we've discussed internally and we've talked about that. You know, one of the main missions for the Powerwall is to, you know, cycle very often, every single day. You know, a secondary benefit it's really helpful is to be able to provide backup power in an outage. That really isn't the reason, the only reason we would create the product. When you connect your car to your house, you're mainly solving or improving the backup power situation. You know, it's not something where you'd buy a Model S and park it in the garage and never drive it, obviously. You know, that's part of why we didn't focus that much on that particular problem.
Also the characteristics of the batteries in the car, you know, make it such that if you wanted to do that very repeated cycling, it's not really designed for it. The Powerwall is dedicated in its design, you know, to cycle daily and to do that for 10 plus years.
Yeah.
The car is designed to cycle so essentially weekly.
Right.
Order of magnitude difference. It's something that intuitively makes sense and actually the very, very early days of the Roadster prototypes, you could do that. You could actually power It could send power both ways. Then we, for reasons that J.B. mentioned, we decided like, okay, that's probably not a good thing. It's also tricky 'cause if there's unexpected back driving of power from the car, it can create electrocution risks and do things that people aren't expecting. You get into a separate regulatory regime where the car is driving power into the house. This gets very complicated, particularly as you go to different jurisdictions and different permitting environments.
We think of course if you wanna be able to use your car and your house at the same time. If power goes away for the house when you drive, then probably the rest of your family will be upset about that. I think it really is kind of a 3 part problem of sustainable power generation, storage, and car.
My name is Aaron McCall Stanley. I work in the Presidio, or as I like to refer to it, Starfleet, I was gonna ask about planes and spaceships the battery power you were gonna do for that. Instead, since I'm a cook, the gentleman that asked about the c oming to fill up at your stations and you saw a higher value of their time somewhere else. Seeing this room full of people, obviously we all seem to value coming here and meeting you and meeting the other people that are vested in this adventure. Don't you think it would behoove you to have a destination of the Supercharger stations with a restaurant or something to engage them while they're charging?
Well, we actually have a whole program we call Destination Charging. It's well-named. You know, these are basically AC chargers that we install at hotels or restaurants or other, you know, points of interest, you know, parks, museums, things like that. We actually have more of those now than we do Supercharger connections. They don't get publicized as much, you can find them on the Find Us page on our website. You know, it's phenomenally useful if you're taking a road trip using Superchargers to get somewhere, then you want to decide where do you stop at the end of your road trip, you can charge and have your car plugged in even when you're at your hotel or wherever it is you're going.
We designed those two systems to work, you know, in tangent, in parallel with each other so that they could, you know, have a synergy.
All right, thanks.
Hello.
We really wanna try to get to everyone's questions, so if I could ask you to try to state the question quickly, and we definitely try to get to as many people as possible.
Yeah. I've reduced this from about two minutes.
Okay
-to 20 seconds.
Okay, great. Thanks.
My name is Ron Freund. I'm the Vice President of the Social Equity Group, which is a socially responsible investment firm in the Bay Area. By the way, we had no idea how popular you are. When you came in, I thought for sure maybe, "Is that Stephen Curry behind him?" Anyway, we own shares of Tesla, and we also share the vision of sustainability that the company represents. We are very concerned about the upcoming election.
Yeah. Yeah, we're gonna get beaten up.
One of the candidates is committed to the fossil age.
Yes.
I'd like to get your comments on the implications of that. Secondly, we would like to further, in the interest of transparency, if you'd be willing to post on your website what your political contributions policy is and whether you could disclose the contributions and shine some solar light on that subject. Thank you.
Sure. Well, I mean, actually, all my contributions are public. You can actually, Google them right now. I don't support any super PACs or anything, 'cause I, you know, believe.
That's a company.
Sorry?
That's a company cooperation.
The company doesn't really make contributions. Like, there's, I mean, there's no material contributions made by the company. There are contributions made by individuals of the company, but not by the company itself. All of that is a matter of public record. It's one Google search away. I think I should point out, like, sometimes people conflate my contributions with Tesla when they're actually related to SpaceX. My, I mean, the political contributions I make, I basically make virtually zero as far as political contributions for Tesla. I do make political contributions for SpaceX because, you know, the way the system works is SpaceX is fighting the big defense contractors.
The big defense contractors make 20 times the political donations that me and the people at SpaceX do, literally 20 times. If you just take Boeing and Lockheed, SpaceX competes against them for large contracts. What those contributions just do is they just get us a conversation with legislators. Yeah, that's all. If political contributions were really what made the difference, SpaceX would have no hope. No hope. Thank goodness they don't. Yeah.
My name is Steve Kastner. I am an IPO investor and owner of Roadster number 33, delivered in October of 2008. I appreciate the early history that you were talking about.
Thank you, and my apologies for the challenges you've probably encountered in that time period.
Actually, it's been pretty good. I wanted to ask about Roadster 3.0. You've talked about this on a couple of occasions over the past few years, and the question really is: Will there be anything more than the battery, the, increased capacity battery done? The original proposal was that there would be a demo drive to Los Angeles showing how it would go 400 miles.
Oh, yeah, we did that.
Mm, well, it hasn't really been-
We did it. I guess we didn't publicize it enough, but yeah, we.
Right.
the Roads Yeah.
Sorry, there was going to be additional changes beyond the battery, some possibly aerodynamic changes, tires, and other things.
Oh.
We haven't heard any more about that. I'd like to know whether there will be more.
Yeah.
The batteries seem to be trickling out very slowly. I have put my money down, but I can't really get any information about how long in the future it might be before I get one.
I guess I can talk to the battery, you know, rate question first. You know, we have a pretty limited production capacity. You know, this is using some very old Roadster equipment, some of that same equipment Jason alluded to in the morning or a little bit earlier. You know, we can right now build a few battery packs a week, something like 3, 4, 5-ish battery packs a week. I should say retrofit 'cause we take back the old battery pack, and then we, you know, retrofit it completely into a new battery pack. You know, I'm sorry we don't have more information that's gotten to you. I can follow up on that. It shouldn't take that long.
It should, you know, perhaps be on the order of maybe a few months of wait time for someone in queue now, to get that retrofit done.
Yeah, the tires. We have the tires, right?
The tires, we did find a new set of tires, but, you know, we've been working on finding, you know, the right set of trade-offs. Some people certainly still want great handling as well as efficiency. You know, we have a few options, but we haven't really publicized that very dramatically. You know, the number of people that have been interested in some of these upgrades has been a little bit lower. I can follow up with you separately and see if those tires are something that would be of interest to you.
Yeah. I think the main thing is the battery pack makes a huge difference. We were able to drive all the way from the Bay Area to L.A. on a single charge with the Roadster. I guess we didn't publicize it enough, but I think that's a pretty cool milestone.
Yeah.
Great.
Hi, my name is Danielle Quilese. I have a future design question, which you're not gonna be thrilled about, I wanna ask anyway. I'm not ungrateful because I love all the designs you've ever done. I'm wondering if there's any demand that you're hearing about for something between, like, a Roadster to sedan, a convertible sedan, two cramped backseats, anything like that, you know?
I mean, it's always tricky for us to comment on, you know, future product roadmaps, you know, except to say that in the future you can expect a wide range of vehicles from Tesla.
My turn?
Yeah.
Okay. Hi, my name is Emil Gilliam. My wife, Eliza, and I recently participated in the Fun Run in support of veterans through the factory, and that was an awesome and very illuminating experience. First of all, thank you all for allowing that to happen. Now my question is there enough lithium supply in the world to enable you to build everything that you ambitiously want to build in the next few years at an affordable price?
I mean, the nice thing about lithium is it's extremely abundant on Earth. I mean, lithium is the third most common element in the universe. I mean, the reason we don't have just free hydrogen available is 'cause it's bound up in water. The reason we don't have a lot of helium is because it floats away. But lithium does not float away. There's lithium in salt form virtually everywhere. There's definitely no supply issues with lithium.
To get to the nuances of the question which you're probably aiming for, which is, like, in the timeframe available, like in the next year or two years, will there be lithium in the form that Tesla needs, which is lithium hydroxide, in sufficient quantities at a price that is reasonable and does not materially affect the cost of the Model 3. JB.
I didn't see that one coming. I mean, you're exactly right. I mean, we need to make sure that we have the extraction and processing capacity. But it's not that much different than lining up other supply chain elements or components even for the car. It just has a little bit longer lead time. You know, Tesla's spent a lot of time working with all the different lithium companies, all the way from tiny startups up to the sort of large name lithium companies all around the world.
We're working with them to figure out what are the most economical and efficient ways to either have them invest or, you know, perhaps even have us be involved to make sure that they're investing on the right timeline to have the capacity ready when we need it. We're also finding ways to potentially even reduce the cost here below what people had done in the past. Because a little bit like with batteries in the Gigafactory, you know, lithium is not a mature market. It's not traded on the London Metal Exchange. It's subject to a lot of speculation right now. You know, there's, you know, kind of lithium booms that happen in different parts of the world. This does not relate to the actual cost of production of lithium.
You know, that is relatively stable, and as Elon said, there's a lot of it. You know, once we can, you know, appropriately invest in the extraction, refining, processing, you know, the price of lithium is quite low and quite stable.
It's also worth mentioning that although something is called lithium ion, the actual percentage of lithium in a lithium ion cell is approximately 2%. I mean, technically, our cells should be called nickel.
Nickel graphite.
Yeah, exactly. Nickel graphite. The primary constituent in the cathode is, or in the cell as a whole, is nickel. On the anode side, it's graphite with the silicon oxide. There's a little bit of lithium in there, but it's kind of like the, it's like the salt on the salad. You know, it's really not. You know, it's a small percentage of the mass.
It's still important to avoid supply constraints and to make sure that the tail doesn't wag the dog on cost, but the main determinants of the cost of the cell are the price of nickel in the form that we need it, and, you know, there's a little bit of cobalt and some aluminum, and then the cost of the synthetic graphite with the silicon oxide coating.
Hi, my name is Jason Chang. I own one share of Tesla.
Great.
First I wanna say I love you.
Love you, too.
You're awesome. I had a question about climate change, but I can't ask it. I'm told to ask, how big do you think the Tesla energy company or part of the company can be?
That's actually a great question. I mean, obviously at this point it is highly speculative. I mean, I try to bracket my answers with the appropriate level of uncertainty. In this case, I'm bracketing it with a high degree of uncertainty. But my gut feel is that from a revenue standpoint, that Tesla Energy and Tesla vehicles long term end up being roughly similar in revenue.
Sheldon Carey. Hi. I recently brought my car in for service on a minor issue, and the appointment was scheduled a month prior, and it turned out that a day later they hadn't even looked at the car. The question is there a reliability problem with the cars, and what was with the bad service experience for me?
Sorry, is this with an S or an X or?
S.
You know, I mean, obviously when we have, you know, 120,000 or 130,000 vehicles in the field, there are gonna be some cases where the actions are suboptimal with respect to service. I mean, it is worth noting, in terms of the Consumer Reports surveys on how do people feel about Tesla service, Tesla service consistently ranks number one by far. Now that doesn't mean it's far from perfect, and there's obviously a lot of room for improvement.
I mean, I think we're somewhere in the, you know, mid to high 80s or 90s on people's sort of happiness with Tesla service, but that still leaves, you know, let's say 10% of people that are unhappy. Particularly in recent months, the burden on the Tesla service team has been very high because of the introduction of the Model X. That's absorbed a lot of resources on the service side. Now I think in the months ahead, as we've solved a huge number of issues with the Model X, the burden of the Model X on the Tesla service team will be dramatically reduced, which should translate to a significant improvement in the timeliness of service.
Hi. My name is Chris Waywith, shareholder and Model S owner. A multitude of groups now are performing research and development on autonomous driving technologies, Tesla included. This technology is relatively bleeding edge stuff, and I surmise that many of the companies keep some of or all of their research private as trade secret. Now, I have no issues with this when it comes to convenience or luxury. In this context, consumer-driven competition seems appropriate enough for advancing the industry forward. When it comes to autonomous driving safety, technical merits and flaws are difficult for the average consumer to assess unless they're, like, highly technical engineers, both before and after the purchase. If you never get in a serious accident, I mean, like, how can you give it less than five stars there?
This is quite long.
Yes. Yes.
We can't have long questions or we will not be able to.
I will skip to the end.
Okay.
I am curious as to if the industry promotes the cross-pollination of safety research in autonomous driving or if there's some sort of issues with, like, people wanna keep this stuff secret as a trade advantage. I have no insight into this, and I wanna know if it's something I need to worry about or not.
I don't know. I mean, from a Tesla standpoint, we've offered to share all of our autonomous driving data with the Department of Transportation. On a statistical basis, like, we don't have any issue with them sharing it with other manufacturers. You know, obviously, we're very sensitive about that on an individual car basis, but on a statistical basis, that's an offer we've already made to the Department of Transportation. We're, Yeah, we wanna be helpful.
Just to, I think I’m already quite late for the board meeting that was supposed to follow this, you know, so I think we can probably take maybe, you know, two or three questions more from each side, and then we’ll have to call it a day. Thank you.
Hey, my name is Russ. I wanted to know when you expect the first lithium-ion batteries to come off the line start to finish at the Gigafactory.
Yeah. You wanna take that?
Sure. Later this year.
Yeah.
That's the very quick answer. You know, we're already building the Tesla Energy packs out there, as I mentioned, and the first lithium-ion cells will come off the production lines, the first production lines, at the end of this year, being built all the way through into modules and packs.
Yeah, I mean, actually, like, the most impressive machinery at the Gigafactory is the cell production machinery, but that machinery is proprietary to Panasonic and those machines are incredible. Like, wow. It's just that we can't put that on the normal tour. I mean, we've actually worked closely with Panasonic on the production system and again, playing physics first principles, saying what is the actual potential and density and volume to improve the production rate of cells with a given set of equipment?
I would say highly confident, if not I mean, I'm never completely confident about something, but I'm as close to completely confident as I can be that this will by far be the best cell production in the world, by far. Great.
Hello, my name is Gerard Dumuk. Firefighters throughout the Bay Area train regularly in vehicle extrication. In recent years, with more Teslas on the road, it's inevitable that they may be called upon to extricate a victim from one of your vehicles. Myself and many peers have not yet been trained or offered information as to how to extricate people, that's safe for both the victim and the rescuer. Is this information and training exists? How can I get a hold of it? Can I start the process?
Yeah.
I need the training material.
I think we do actually have a section of our website with the first responder, like, information. Like, in a nutshell, it's actually pretty straightforward. The most important thing for first responders not to do is don't hack a hole in the battery pack. This is the cells have the both the fuel and oxidizer is present in the cell. If you, if you hack a and the battery pack shell is designed for thermal containment. If you, Normally, what you might do to douse a fire is to hack a hole in something and then douse it with water or foam to get rid of the, so it can no longer access oxygen in the atmosphere.
Because the oxygen, the oxidizer and fuel are together in a cell, that actually doesn't work and any penetration of the battery pack actually then allows the flames to escape in a direction that is undesirable. There are built-in vents in the battery pack that automatically vent hot gases down and to the side for on the bottom of the battery pack. That's probably the single most important thing is don't hack a hole in the battery pack. Then also the rate at which the thermal runaway occurs is very slow compared to gasoline. Gasoline can be like, you know, super big fire immediately, whereas the cells, it's real slow.
I mean, like, you'll be like, "Man, this is boring." That's. The rate at which the, you know, fire propagates is very low, and there's also multiple firewalls between the passenger compartment and the battery pack. Even if there is a hole in the battery pack, it's very difficult for that to then get to the passenger compartment. That's really the main thing is just, you know, it, you know, don't worry about the car. You know, get the people out. You actually have, well, you have way more time than a gasoline car.
Except in very very rare circumstances, even when there's been a high-speed accident that's caused, like very high speed, like 100 mile an hour type stuff that's caused thermal runaway in the pack, the battery went into thermal runaway, the passenger compartment was untouched. Even if they'd been unconscious, they would be okay. All right.
Hi, Elon and JB. My wife and I traveled here from Minnesota to be here today, and I had a question about Tesla offering an Uber-like service. If someone like Uber were to set up a driverless sharing fleet, you'd think they'd have to buy all the cars themselves, charge them themselves, and service them themselves, whereas Tesla might be able to use customer-owned cars in some kind of revenue sharing model with the customer. Tesla wouldn't have to deal with charging or cleaning the cars and wouldn't have to store them when they're not in use. You would think this would have a broader reach because the cars would instantly be spread out across the country, right in people's garages.
It seems like Tesla could provide a better service without having to deploy a ton of capital. What advantages do you think Tesla might have if they pursued something like this?
Yeah, you wanna go?
Well, I You know, I think that's a interesting, insightful question. You know, we've hinted about, you know, our long-term thinking along those lines, a few times in the past. You know, right now, we're really just focused on making the autonomous technology, you know, helpful to customers and making the cars safer. That's really where all of our attention from the Autopilot teams are is today, is just heads down, making sure that we've, you know, really deliver value to the customers today, and primarily that's coming in safety and convenience for the owner.
Yeah. absolutely. It's worth noting, like, I mean, this is sort of inevitable, but, you know, you see every now and again, like some article about how Autopilot, you know, caused an accident or didn't prevent an accident. You know, the important thing to appreciate is, like, autonomy doesn't mean there are no accidents. It just means there are fewer accidents than if it was in manual mode. I mean, that's really the important thing. As long as the probability of injury has decreased, even if there are still injuries, although actually not aware of any injuries that have actually been caused by Autopilot.
As long as it is on a probabilistic basis, you know, lives are saved and injuries are reduced, it is still better to introduce autonomous functionality. I mean, the data we see is very promising and very positive in the direction of improved autonomy. We'll just take like maybe, sorry, just maybe two more from each side. Well, the board's been waiting for an hour. If you got something real important, we can do it, maybe. Just bear in mind, like, yeah. The board's been waiting for an hour, we have an all-hands meeting back at Tesla that's been waiting for about the same period of time or will be delayed by the same period of time.
I wish there was infinite time. People sometimes assume that we have, like, unlimited time, but we're, like, not sure. Yeah, sorry, far away.
My name is Jonathan Fiamore. There's this new research at UCI that says that if you rub the nanowires on the lithium batteries with propylene carbonate, you can increase the shelf life by 100-fold.
Yeah, that's not true.
Okay.
Yeah. The amount of BS that's in batteries is ridiculous. You can basically believe maybe 1% of what you read about batteries. Yeah, maybe 1%.
Mr. Musk, my name is Christina Reese, and I have a question about Destination Charging. I'm from the Midwest, where we don't have a ton of the Destination Chargers yet. My in-laws are farmers, so we're driving two little toddlers to lots of rural areas. I wondered selfishly, if you would ever think it'd be possible to allow destinations to have the option to charge, to charge people to get their electricity in order to incentivize more places to participate. I was thinking maybe they could set a rate, you know, just some reasonable fee that would motivate them to get involved.
I would think that a destination like a McDonald's, we pass lots of them to visit the in-laws, that they'd be less likely to offer charging if the $0.50 worth of electricity that the customer gets could be the entire profit McDonald's would make, say, off that customer's meal.
Yeah, I think, we don't have any issue with somebody offering Destination Charging and asking people to pay for it. That's totally cool. We have no rule that prevents that. If somebody wants to, you know, get, you know, a high-power wall connector and charge people to use it, that's fine with us. No problem.
Yeah. In some cases today, they're in parking lots. They cost, you know, cost money to park in the lot. Actually, the parking space is usually more valuable than the electricity.
Yeah, true. Exactly. Like, if you're in, yeah, in like a lot of malls, it's actually your per hour parking charge is greater than the electricity.
It's growing like crazy. I mean, basically, we're shipping out hundreds of those destination chargers or hundreds per month for sure. It's something we're, you know, we're kind of the rate limiter right now. Even if we had more people coming to us, I'm not sure that we'd accelerate that much.
All right, super quick questions.
Quick question.
Super quick.
I drive a solar-powered pickup truck. It's fantastic. Is that something you're considering with panels on the vehicle?
We're not currently doing that because we think the most efficient place to put solar panels is on the roof where they can constantly charge. You know, it's fine to put them on the car, but actually then if you're parking in a garage or, you know, beneath trees and so forth, the fundamental economics, you know, very much favor a fixed rooftop installation. All right, thank you. I apologize for being short in my answers, I will try to get through everyone that's in line right now. Short questions, short answers is the only way I can do it. I, like I said, our board meeting is gonna be quite significantly impacted by this.
My question is thinking about big sustainable energy, we see the car tipping with Tesla moving to electric vehicles. What do you see next? Planes are probably the farthest off, but maybe ships and trains, sorry. Little naive.
Sure. We're gonna focus on road transport for several years. We may go beyond that in the future, but focus is incredibly important. If you have, you know, a certain amount of resources to the degree that you diffuse your focus, you impede your ability to execute.
Thank you.
Sorry. Next.
My name is Dolly from AT&T Public Relations. I'm a stockholder of Tesla, and it's my American dream to own a Tesla motor. If I cannot-Have a Tesla motor, can I have or where can I get one of those Tesla shirt so I could give it to my son who is in our country, the U.S.?
Sure
Air Force?
Well, actually we sell Tesla apparel at our stores. Yeah. In fact, one of the things it's obviously a sort of a background item, but I really want to do a lot more with Tesla apparel and accessories in the stores. Yeah. I didn't realize it'd be that popular, but yeah. All right. Thank you.
Hi, my name is Brett Chamberlain. I live in Fremont, California. Question is, the Fremont factory, as you ramp to 500,000 cars in 2018, maybe 1 million in 2020, what do you see that meaning to the city of Fremont in terms of the growth overall? As vendors who supply to you move in, what does it mean for Fremont's growth?
Well, I think it's gonna be very, very good for Fremont. I mean, I'm not sure how to exactly quantify it, but it's gonna be, I think, incredibly good because the, as you're alluding to, like, what a lot of people don't appreciate is that it's not just what Tesla does, but it's all of our suppliers that co-locate nearby. With the Gigafactory, for example, we talk about the, you know, roughly 6,500 jobs that we expect to directly have at the Gigafactory. Our nearby suppliers will probably have at least as many employees as that, maybe more. The knock-on effects are really, I think very, very significant.
This is why states and communities lobby quite hard to have things like, you know, the Tesla vehicle factory and the Gigafactory, is 'cause they genuinely do, I mean, they're incredibly helpful to the community. Really waiting for that, you know, the rapid transport for, there's like a Is it a BART thing or is it-
Yeah, the BART.
It's a bus station.
That's right.
which there's a bus station right next to the Fremont factory, which I think will be really helpful for, you know, improving road congestion and making it easy for employees to get to the factory and get home and that kind of thing. That's gonna be really helpful. They've got the train, you know, rail head that we wanna make more use of. No, I think it's gonna be really great for Fremont and also for the greater Reno region.
I have a Bill Foos, a very negative question. I don't wanna go there. Is there a place I can get an answer to my question that has more to do with SolarCity than it does right there?
Well, I mean, I'd recommend the SolarCity annual shareholders meeting.
Sorry? I went there last year.
Oh, okay.
I got lied to.
Oh, okay.
SolarCity owes me $30,000. I went to Tesla. I got SolarCity to come out to put solar panels on my barn. The employee stole my carbon fiber titanium bicycles.
I'm sorry. I, you know, I don't run SolarCity. I cannot answer SolarCity questions for you. I mean, I have only awareness that if it's related to solar, we need to move on. My apologies. Next.
Oh, is it on? Yeah. Yeah, my name is Bob Bynum. I live in Fremont, two and a half miles from the plant. I've had my Tesla about almost a year. I've got 20,000 miles on it. My question is, how can I get some ideas to the design team? I've got various ideas on how to that I'd like to incorporate into the Tesla.
Well, I mean, I think, you know, I mean, there's the Tesla Motors Club forum, and there's various forums online. There's the Tesla forums. You know, we do try to read those and try to gather feedback. I would recommend sort of bringing those ideas up, either on the Tesla forums or the Tesla Motors Club or related forums. There are people that try to read those and see, okay, what is something that is getting a lot of interest from a large number of people? 'Cause obviously, you know, we get a big number of suggestions, we have to filter those for what is gonna have the biggest impact on people. That's what I'd recommend. Thanks.
Peter Joseph, I work with Citizens' Climate Lobby. Thrilled that you came to COP 21 in Paris. I heard you talk at the Sorbonne, calling for a carbon tax. There's no question that that would help you and SolarCity greatly. What do you think is the best strategy to get the U.S. Congress to pass such a tax?
Yeah, I think the thing that I think is maybe conceptually important for people to bear in mind is that every gasoline or diesel car that's going down the road has a de facto subsidy on it. This is like people sometimes don't appreciate that. It's like whenever something is burning fossil fuels, it has a de facto subsidy. It's a subsidy of the public good. The, they're spending the carbon capacity of the oceans and atmosphere, not to mention, the, you know, the sulfur and nitrous oxides that are emitted, as it turns out, in greater quantities than, you know, regulators were told. So everything that burns fossil fuels has a de facto subsidy.
In order to address that, you need to basically fix the pricing error in the economy. It's economics one on one. You have an unpriced externality. The only real way to address an unpriced externality is for those who set the rules, in other words, the government, to correct the pricing error in the economy. Now, in terms of the best way to address that, I think the thing that'd be most palatable is a revenue neutral carbon tax. You know, just as we differentially tax things that are bad for us compared to things that are good, so we might tax and should. You know, we tax cigarettes and alcohol a lot more than we tax fruits and vegetables. Well, of course.
Yet, ironically, we have the opposite situation going on in transport for the most part. Those that are producing toxic emissions are doing so for free. It would be like having no tax on cigarettes and alcohol. That would make no sense.
I think the palatable thing would be to say like, "Look, the total tax burden will not change, but we are going to differentially tax the things that 98% of or basically the entire scientific community thinks are bad, and we'll tax those things more and other things less." You know, that hopefully makes it less of a partisan issue 'cause then we're not increasing the size of government, we're simply adjusting the, you know, what gets taxed versus not. I think it's just common sense that you want to tax things that where the overwhelming scientific opinion is that it's probably bad. Like, why would I mean, the counterpoint to that makes no sense.
I think that's the thing that's important, and I think there's an opportunity to do it and to change the tax structure in a way that maybe is, you know, maybe at least slightly moderately helpful to low income groups. I mean, the ideal thing from a progressive standpoint would be to lower sales taxes 'cause those are quite regressive, and then increase carbon taxes. That's like the, I think the most logical and reasonable thing to do.