Good afternoon, welcome to Tesla's 2015 annual stockholder meeting. We're real glad that you could be here today. There's gonna be two parts to this meeting. After the formal legal part of the meeting, we'll introduce our Chairman and CEO, Elon Musk, up to the stage. For now, I'd also like to introduce several important members who are with us today. Our board is in the front row, if you guys can wave. We also have our CFO, Deepak Ahuja, here today. Our Vice President of Investor Relations, Jeff Evanson, is here. I think I saw our CTO, JB Straubel, around as well. You might see him. We also have from our independent auditors, PricewaterhouseCoopers, we have Larry Westphal and Ninos Sarkis here. We can now get started.
After the voting, Elon will be on the stage, as I mentioned, to provide a brief overview of the company. He'll answer your questions. For now, let's get started by calling the meeting to order. Please refer to the agenda and the rules that you received when you walked in today. In the interest of respecting the time of all the stockholders who are present, we ask that you help us run a smooth process by following those rules, in particular, those relating to the stockholder questions and comments. I declare that the polls are now open.
As I mentioned before the start of the meeting, if you wish to submit a ballot to vote your shares or change your prior vote, you can pick one up from Lisa Brenton, our Inspector of Elections, who's in the back, and you can drop it back with her as well. Lisa, can you wave your hand again in case you've moved? There she is. Tesla's board of directors has appointed Lisa as our official Inspector of Elections, she will file the minutes of today's meeting. Computershare has certified that starting on April 22, 2015, the proxy materials or a notice of internet availability of the proxy materials were mailed or provided to all stockholders of record as of April 15, 2015. Copies of these proxy materials and related certificates will be attached to the minutes of the meeting today.
We have a majority of the outstanding shares represented at the meeting. I declare that there is a quorum present and that we may proceed with the business of the meeting. We're conducting the meeting in accordance with Tesla's bylaws. The items on the agenda are as follows. Number 1, to elect two Class 2 directors, Antonio Gracias and Kimbal Musk, to serve for a term of three years or until their respective successors are duly elected and qualified. Number 2, to ratify the appointment of PricewaterhouseCoopers as Tesla's independent registered public accounting firm for the fiscal year ending December 31, 2015. Tesla's Board has recommended that our stockholders vote for each of the director nominees and for the ratification of the appointment of our accounting firm. We've received two stockholder proposals as described in our proxy statement.
Our Board has recommended that our stockholder vote against each of these proposals. The first stockholder proposal is proposed by Mr. Mark Peters, who is here today. Mr. Peters, please, if you would like to go to the microphone and present your proposal. We will get you a microphone.
Fine. Sorry. Hold on. Fellow shareholders, board members, and Mr. Musk, thank you for your time. Despite tremendous odds, Tesla has created a brand that is changing the course of history, and as both shareholders and owners, we are very, very pleased. We have logged many thousands of miles in our Model Ss and have yet another one on order. Our planet faces unprecedented risks due to the dumping of greenhouse gases in our atmosphere and oceans. Mr. Musk has accurately called this the dumbest experiment ever, and we concur 100%. We feel it's morally irresponsible that we're running a planetary scale experiment on our one and only planet. Mr. Musk has previously used a lifeboat metaphor to describe this situation, and I'll go ahead and borrow it here. We're in a lifeboat Earth with water up to our kneecaps and rising.
Tesla has invented an awesome bailing bucket, but upwards of 90% of those buckets are having holes drilled in them, so every time they're used, water pours back into our lifeboat. Let me explain how this directly applies to the Proposal No. 3. I suspect that the vast majority of our customers, and even our shareholders, have no idea the greatest source of greenhouse gases is actually animal agriculture, producing more greenhouse gases than all transportation combined, as the UN reported back in 2006. Bill Gates noted a more recent analysis in 2013, estimating that livestock produces nearly 51% of the world's greenhouse gases. 51%. Tesla exists to create sustainable transport. Which is why this is inconsistent to offer leather.
Tesla does not offer a leather equivalent or a faux leather interior, and it goes even further by blocking a half dozen must-have options if one does not order leather, thus effectively forcing our customers into the non-environmentally friendly interior. Exacerbating this logic conflict is the fact that competing luxury brands have been using environmentally friendly leather-like materials for years. All to rave reviews by the nonprofit Consumer Reports, as all listed in Proposition 3. Tesla is an intelligent, data-driven company. We encourage Tesla to apply its principles to the interiors of our cars. By using leather, Tesla is promoting the animal agriculture industry, the industry that's doing the most damage to lifeboat Earth. This is in direct conflict with Tesla's goal of reducing greenhouse gases, and frankly, it is un-Tesla. My three minutes are almost up.
Mr. Musk, you and the other board members were sent a DVD copy of a documentary called Cowspiracy. It has over 20 pages of source links over on cowspiracy.com/facts, 20 pages. I have brought another seven copies for the board and will seriously hope that the environmental black hole at Tesla can be fixed. We, and the future occupants of lifeboat Earth, truly trust you'll make the right choices going forward. Thank you.
Thank you, Mr. Peters. Thank you, Mr. Peters. The other shareholder proposal that we have today will be presented by Elizabeth Farrell Peters. You now have three minutes as well, if you wanna step to the microphone. Thank you.
Good afternoon, fellow shareholders, Mr. Musk, and board members. Thank you for your time. Our first Tesla purchase was in 2013. Since the moment we acquired our car, our enthusiasm has been bursting at the seams. Much so that some of my patients have given me the nickname Tess. Our friends are extremely concerned that my husband and I have been infected with a severe and incurable case of Teslaitis. My first Tesla was an anniversary gift. It was fully vegan. I was quite pleased that Tesla had accommodated the request. Later found out that my husband had to go through extreme measures to get a fully vegan Tesla. I was very surprised by this because I thought Tesla was such an environmentally aware company. Please allow me to share the reality of animal agriculture.
I grew up on a farm, a veal farm. I know firsthand the grim existence the animals endure. I experienced the ammonia stench of untreated waste, the extreme confinement of the baby calves, and the merciless way they are shipped to their death. This is the unfortunate truth of agribusiness. Nearly all animals used as commodities and used for their parts are treated this way. There is no reverence for life or compassion for the sentient beings that they are. Mr. Musk, at last year's USC graduation, you spoke of first principles. You said, "Boil things down to the most fundamental truths you can imagine and reason up from there." This is a good way to figure out if something really makes sense or if it's just what everybody else is doing. Let's apply that same test to Tesla. Tesla has two choices.
Tesla can continue to fill cars with the skins of sentient beings that suffer unspeakable horror while adding massive amounts of greenhouse gases to the air, according to the UN and other sources. This is a fundamental truth of using animal skins. Tesla can adopt one of the many faux leather interiors used by Mercedes-Benz, Lexus, BMW, Infiniti, and others that are cruelty-free, have wonderful reviews, last a long time, come in multiple colors, and involve far less greenhouse gases. We don't want to plug other brands, we visited luxury various brands, dealerships, and found that seats with faux leather alternatives were simply outstanding. They are even available with heating and cooling functions. In light of the facts, how can Tesla remain attached to the first choice? Sometimes awareness is the first step to making a difference.
Mr. Musk, given the potential risk to our planet, please review the facts and stop forcing the ordering of leather. Please adopt environmentally friendly interiors. Our planet not have decades to spare. Thank you.
Thank you, Ms. Peters. As a reminder, the Board has prepared its position in response to each of those proposals. Those are set forth in the proxy in a joint statement. As we wrap up, are there any proxies that need to be submitted? Lisa Brenton, again, is in the corner. If anyone wants to raise their hand if they need someone to pick it up, this would be the time to do it. If anyone from Tesla can come and help pick up the ballots, that would be great. Thank you. I see one back there. Anyone else? Okay. With that, We've got one more over here. With that one exception, I declare that the polls are now closed.
Tesla will formally announce the results of the voting by filing a current report on Form 8-K with the Securities and Exchange Commission within four business days of today's meeting. That concludes the official business of today's meeting. I now welcome you to stay for Elon's presentation. We will also leave time at the end for questions and answers with Elon. During the course of Elon's presentation, he 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 Mr. Elon Musk.
All right. Welcome everyone to the annual shareholders meeting. I think we've got a great year to recap for you, and then I will talk a little bit about the upcoming year, and then there's some product-related announcements to be made, which I think you'll be pretty excited about. All right. You may be familiar with this car. Let's move to the next slide. It's all right. It's not clicking or anything. Thanks. To et cetera. You know, things have been growing quite quickly, as shown by this here graph. It's really a quite steep growth for a company that's building a complex product where there's several 1,000 unique parts, and there's hundreds of suppliers from all around the world.
It's quite tricky to grow at that pace, but we've been able to grow at, I think, a pretty decent pace for a car company. It's like really unprecedented for a car company to grow to have this level of percentage growth. We're gonna try to maintain it for as long as possible, but it seems as I've said before, it seems likely that we'll be able to maintain a roughly 50% average growth rate per year for several years to come. It won't necessarily be 50% every year, but 30%, I think, on average, is actually, I think quite an achievable target. This year we introduced the dual motor all-wheel drive.
I think, actually I'll have to admit I think in introducing it, we probably didn't do an ideal job of explaining that dual motor meant all-wheel drive. I mean, there are two motors, and they're connected to the four wheels, but that's that connection was not clear for a lot of potential customers. Our fault really because we should just, we should have always called it really the all-wheel- drive Model S. It's the best all-wheel drive architecture that's ever been done because of the fact that there are two motors and we can dynamically shift the torque front to rear at the millisecond level.
Whereas a traditional all-wheel- drive has a single motor that has a mechanical axle, that's essentially dumb, it doesn't have any intelligence, and it has a lot of latency, and it can't react differently. Because we've got two motors, it can immediately react to traction at the front, traction at the rear. The reaction speed of an electric motor is so fast that the car almost feels like it's standing still to the control sequence in the motors. It's actually able to achieve a level of all-wheel drive handling that no car has been able to achieve yet. We're really excited about this. Moreover, it provides drive unit redundancy. It's like having a twin engine plane.
If one motor goes down, you can actually still drive on the other motor. This is particularly if you're sort of stuck, you know, you could potentially be stuck somewhere, having those that dual motor capability is, it's like having a twin engine plane, such that you're, you can still drive even if something happens to one drive unit. Having that, I think, is a pretty cool capability. Certainly this has increased our addressable market quite significantly because there's a lot of people who only will buy an all-wheel- drive car. And it also helps retire a lot of risk with the Model X since the Model X will be using the same drivetrain.
We also introduced Autopilot, initially starting with the hardware suite, and now we're gradually updating the software. The current Autopilot Version 1 hardware consists of a forward radar, a camera, and 360 degree ultrasonics that go out to about 5 m or roughly 16 ft around the car. That allows us to do what we call sort of highway Autopilot, as well as some cool features like Autopark and being able to summon the car on private property. I'm actually just testing the latest version of Autopilot every week. In fact, I've typically two or three builds per week that I'm testing in my car. We're making gradual progress towards what I'd say is a releasable bit of software.
It is quite a tricky thing, and we wanna make sure that our testing is exhaustive before we release the software. If we keep making progress, I think we may be able to get it out to early access customers, which is sort of our public beta program, around the end of this month. That should be pretty cool. We also introduced the dual motor 70 kWh car, and the goal here was to provide an all-in package that offered great value for money. It all inclusive was all-wheel drive, Supercharging, Autopilot, apart from the convenience features, but navigation and so forth.
It was intended to provide a package that even if you bought the base car with no options, you would still have a great product. That was the goal with the 70 D. That's been very well received by customers, and we're seeing sort of upwards of a third of customers choose the 70 D. This is sort of interesting in terms of looking at the North American market share of high-end premium sedans. We're actually the number one seller. We're really excited by this, because if we can take this level of success and extend it around the world, there's really a lot of potential for sales growth for the company.
I think even in North America, while we are strong on the West Coast, in the South, we are not that strong in the Northeast. There's really a lot of potential in the U.S. Northeast, and within Canada broadly. We're also gonna be opening up in Mexico later this year. Yeah, it's properly be North American. I think there's potential there to grow things. Yeah, this is I think a good indication.
As we bring out new models in the Model X, in the SUV category, obviously, and then more affordable cars, this bodes well for being able to replicate this level of share for Tesla in other product segments. Yeah. With the Model X, the long-awaited Model X. We're expecting to begin our first deliveries in probably about three or four months. As with the software, I'm looking at the latest iteration of the Model X every week. It really is, it's turning out to be a really great car. I think the Model X may arguably be a better SUV than the Model S is a sedan.
That, I think is really, really exciting. We wanna make sure obviously that some of the key features of the Model X, particularly the falcon-wing door, and the way that the second-row seats are done, and a few other things that people aren't aware of, are done just right, and provide true functionality and true a true value improvement and, you know, versus just sort of feeling gimmicky. It's gotta be a genuine improvement in utility and aesthetics, I think for it to be right. Getting those final nuances right for the Model X is what we're focused on right now. But we're really in the short strokes with getting this to market. Superchargers have really grown rapidly. I mean, sort of like kelp on steroids here.
You know, when we launched the Model S just three years ago, there were no Superchargers anywhere. In fact, we didn't even tell people there was such a thing as a Supercharger. People, for the first six months of the car, bought the car not even knowing that there were going to be Superchargers. We'd actually put a high voltage DC bypass in the car that people didn't even know was there. We opened the first Superchargers, I think early in 2013. It's only been like two years. Now you can travel almost anywhere in the U.S. using the Supercharger network. Then going to sort of next year. That's next year. It's a lot.
You can see that that's from zero to that in three years. A similar level of density is gonna be the case for Europe as well as Asia. You know, eventually, you'll be able to go anywhere in the world using the Supercharger network. We're planning on sort of further upgrades to the Supercharger system. We've just introduced an upgrade, which is a liquid-cooled cable, which means that the cable can be really thin. In fact, we have the first working version of that here at the Mountain View Supercharger location, so you can try it out for yourself.
It has caused some customers to be quite puzzled that they're plugging in a Supercharger with this tiny cord, and they thought something was wrong. That's actually just our next generation cord. Because if the cord is liquid-cooled, you can actually make it very thin and supple. Instead of trying to wrestle sort of a good-sized snake into the car, it's this thin, supple cord. It's really, really great. It also has the potential for increased power of the Supercharger long term. Recently, we announced the official creation of Tesla Energy with the Powerwall and Powerpack and being available in two sort of configurations, one as kind of a backup UPS capability, and then the other as a daily cycler.
There was a bit of confusion in the press because they would conflate sometimes the backup functionality, the UPS functionality, with the daily cycler functionality. They're really two different things. The daily cycler is sort of more about economics or getting off the grid completely, whereas the backup UPS is just there to ensure that your house has power if there's ever a power outage. And we did get obviously a fair bit of feedback on the Powerwall. A lot of it was positive and some of it was not so positive. But we actually took some of that negative feedback to heart, and I'm very happy to announce that we've dramatically increased the power capability of the Powerwall.
It's actually gonna go from having a 2 kW steady, 3.3 kW peak, to a 7 kW power, 5 kW steady. Price is unchanged. It basically will more than double the power output of the Powerpack, and the price is gonna stay the same. We're also prioritizing delivery of the Powerwall to people that have a solar installation. Doesn't need to be SolarCity, any solar installation that's compatible.
SolarCity is of course, I mean, you know, preferred. If you like the best. We're gonna prioritize delivery of the Powerwall to people that have an existing solar installation or are getting a solar installation because the solar installation comes with an AC to DC converter, which means you don't need to buy an additional AC DC inverter for the Powerwall and because that cost is already there with your solar system. We're also gonna be prioritizing delivery of the Powerwall to partners that minimize the cost to the end user, so that the net result is we're expecting people to be able to purchase and install the Powerwall for about $4,000. Yeah.
That's basically $3,500 for the Powerwall with the increased power capability, and then figure $500 of installation, labor, and cost. That's the expectation. I think that dramatically improves the capability of the Powerwall and improves the and reduces the effective cost to the end user. I think the value for money is dramatically better with the changes that we're gonna make. Then, of course, there's the Powerpack, which has been very well received by the utility industry. We have opened up a new castings and machining center in Lathrop, which is basically near Stockton. It's out in the Central Valley.
We're gonna be doing a lot of machining and casting, a lot of foundry work, and producing a lot of parts that will go into the Model S. That'll be done in the Central Valley. That, that allows us to expand our vehicle capacity in Fremont and allocate more space for vehicle final assembly. We've also installed a new stamping press line in Fremont, and this is gonna have greater automation, and it's gonna be great for, particularly for the Model X, stampings. We're bringing up the new S/X body production line, which has also a lot more automation, greater flexibility.
We should be able to do at least within the body line, about 3 x more than we're able to do in the current body line. It's not the whole factory, but at least for this element of vehicle production, we will have approximately a 3x increase in capability. We also have a new paint center. This is quite a huge sort of capital cost for us. The new paint center is actually set up to be able to do 10,000 cars a week. This paint center is intended to be able to match the production level that includes the Model 3. We can paint all of the cars at the basically 500,000 unit per year level with this paint shop.
To the best of our knowledge, this is gonna be the most advanced paint shop in the world. The Gigafactory, we're making good progress with the Gigafactory. There's a lot of people, bloggers online and so forth that will take photos and videos and drone videos of the Gigafactory. It's pretty easy to monitor the progress. Search the internet. We've made, you know, quite good progress here. We expect to have phase one built and operating and producing battery packs by the middle of next year. All right. With that, I think it's been a really great year. I'm very proud of the Tesla team for everything that they've accomplished.
There's often a lot of attention on me, but really it's a huge team effort. I just wanna say I'm incredibly proud of the Tesla team for everything they've accomplished over this period of time. There's one final thing I wanted to announce, is that our CFO, Deepak Ahuja, are you-
Yeah, I'm here.
Right here. Do you mind coming up? Deepak is actually gonna be retiring later this year. I wanted to just call him up on stage and sort of personally thank Deepak for doing an incredible job over the last, I guess, seven years it's been, through hell and high water, and staying sort of calm and steady through some incredibly difficult times. Yeah, just thank you very much for everything you've done. Deepak's gonna be staying on through, well, for as long as it takes to find someone, to find a new CFO, and then we'll be working with the new CFO to make the transition, so it should be a very smooth process. I wanted to just bring Deepak up on stage and just personally thank him for everything he's done for the company. He's done an amazing job. Thank you.
Boy, this makes it even more emotional. Firstly, Elon, thank you very much. It's been an honor working for you. I have discovered more potential in myself than I could have imagined. The credit goes to you for that. It's been quite a remarkable journey for me of self-discovery as well as a very fast roller coaster ride, probably akin to what we will experience in the Hyperloop when that comes to reality. As you can imagine, leaving or making that decision to leave Tesla has been really hard for me.
It's akin to letting go of your own baby, is how I look at it, because I've been in Tesla since 2008 when we started with a lot of passion, a lot of a vision to go change the world, but limited resources and we had to fight the battles to get there. It's been much harder than I thought it would be to be here and make that decision. It's the right one for me at this point to go check off a few things on my bucket list and pursue a few other life goals that I have. I'm actually quite speechless, and I wanna just again thank you everybody, and I'll miss this incredible passion of our customers and our shareholders and the incredible Tesla team, so thank you.
All right. Thanks again, Deepak. With that, let's open it up to questions.
Okay. If we could have people, queue up behind the microphones. We'll take your questions in the order that they come. We'll alternate between sides of the room, and obviously, remember the rules that our general counsel mentioned at the beginning of the meeting.
Hello. Anne Blankenship, shareholder. My question really is, do you have any questions for us? I mean, we're always lobbing questions at you, but, you know, is there anything you would like to ask us about the future or how Tesla plays into what we want from the future?
Sure. What do you think? Yeah, I mean, what do you think we should be prioritizing?
Well, actually, what I'm thinking more of is, like, Tesla is about the future, and I think it's about what we want from the future. Like what we were talking about today with the vegan interiors, I think that really resonated with me, and it shows what people want from the future. I guess they want a company that is, like, really focused on looking ahead, like, not just the car, but looking at the future of the future. I think that's what Tesla shareholders are. That's what our mindset is. You know, I just want some feedback from you, essentially just, like, brain candy. Like, when we leave here today, what would you like us to think about in terms of the future?
Sure. Well, I mean, our goal at Tesla is pretty straightforward. It's really to accelerate the advent of sustainable energy and, particularly sustainable transport. In order for humanity to have a good future or for life on Earth, really, to have a good future, we have to figure out how to make that future sustainable, meaning not to have crazy amounts of CO2 in the atmosphere and, you know, ultimately get into a situation of hydrocarbon scarcity, which would be economically disastrous. That's what we're focused on. That's our primary goal is accelerate the advent of sustainable transport and then with the batteries help accelerate the advent of sustainable energy production. I think anything that furthers that goal, you know, we'd love to hear about. I mean, for sure, making the cars compelling, making them more affordable. Same thing with the energy storage products.
Those are key things. If there's ways for us to make the car better or the batteries better, we would love to hear about those.
Hello, Mr. Musk. During the Tesla Energy announcement, you indicated that the Gigafactory would be like a product and that you would continue to improve on it and open up the designs. As you've also noted, there's a need for multiple Gigafactories. I was wondering if there's any indication that Tesla would accept orders for Gigafactories or be looking to build more sooner rather than later? Thank you.
Well, we gotta build one first. I mean, our focus right now is just making sure that we build Gigafactory Version 1 correctly. That's gonna be quite a difficult challenge over the next few years. We'll have the first part of it active next year, but then we wanna try to get to full production in roughly three years or maybe a little roughly three years, three or four years. That's gonna be quite a challenge. I think once we get to that point, we're gonna be. Actually, before we get to that point, we wanna figure out where to put, say, Gigafactory 2 and 3. I don't think we should, until we feel we've got a firm handle on Gigafactory 1, we don't wanna spread our energy over multiple efforts. Yeah.
Thank you.
My name is Barry Brisco. I'm a shareholder and Model S and Roadster owner. I was very excited with your presentation on launch of Tesla Energy. I have a specific question about the Powerwall. You reiterated earlier today the two different models, and I understand that. I assume one can, in a residential installation, combine both types of Powerwalls to a single inverter. The Powerwall software can manage those, but in an emergency situation like a grid blackout, does the software only draw backup power from the 10 kWh model, or would it ever, in some circumstances, draw from the 7 kWh?
Well, combining them actually wouldn't be super great. It's gonna be, I mean, right. Actually, we could make the software do that, but it doesn't currently do that. It's simply gonna treat it, if you had a seven and a 10, like a 17 kWh system. And depending upon what your draw is, it would currently, I believe, draw equally from both. Maybe JB should join me on the stage and answer some of these questions. I think it really depends on what the application is that you'd wanna use it for. I mean, usually it tends to bifurcate quite clearly into either a backup uninterruptible power supply for the house or a daily cycling application.
In the U.S., the daily cycling application is gonna be fairly limited because the time of day charges are usually not substantially different. I mean, there are in a few places, but in most places in the U.S., people are charged something either a flat rate or something very close to a flat rate. It's In terms of economics, it's gonna make more sense to oh, there you go. Hey. You wanna come on stage?
Sure.
Anyway, it's, like, in terms of economics, it's gonna make more sense to. Well, actually, basically, it's in most parts of the U.S., it doesn't make what SolarCity said, which was misinterpreted in the press, was in most parts of the U.S., it doesn't make direct it doesn't make economic sense, like purely, a purely economic sense to have a battery pack because in most places in the U.S., you can't arbitrage your time of day use. Now, in many other countries, you can. In places like, say, Germany or Australia, the daily cycler pack makes does make great economic sense. It's like an awesome thing even if you couldn't care less about renewable energy. In the U.S., you'd really have to care a lot about renewable energy, well, not a lot.
You'd have to care about it more than economics in order to do the daily cycler thing. Separately, there's the uninterruptible power supply application, which again, there's probably not a huge number of households that want that. It is nice to know that if there's a big storm or earthquake or hurricane, that you will have power. That's the application. That's really when we'd be paying to have that capability. With the increased power capability of the Powerwall that I just talked about, you should be able to, with a single 10 kWh pack with a peak power capability of 7 kW, be able to put everything in your house except air conditioning on that circuit.
If you wanna put air conditioning as well, you can have two of them, 'cause it would typically be about 14 kW, 15 kW inclusive of air conditioning draw, and you can stack even more if you want. yeah.
Maybe one thing also I think that gets forgotten is that the backup battery can also cycle quite a lot. You know, it can cycle once a week.
Sure.
For 10 years. The cycling difference between the two is maybe a 4:1 or 5:1 difference. People should never be afraid to actually use the backup version kind of in a hybrid application, where you could be still cycling.
Right.
It quite often, thousands of times. you know, also, you know, with the Powerpack or the Powerwall, I mean, it legitimately lets you use more of the solar energy that you generate at your house. You know, instead of exporting it to the grid, selling it essentially to the utility, and then having to buy it back, you're legitimately storing your own energy and then using your own solar energy for your loads.
Yeah, I mean, to be sort of precise, I mean, the so-called sort of low cycle thing would be, like, roughly 1,200 cycles. The high cycle would be 5,000 cycles. If 5,000 cycles, if you do a daily cycle, that's about 15 years. Even, you know, the 1,200 one, that's, you know, it's one quarter. You could conceivably do a daily cycle for maybe three or four years even with that. All right. That may be, like, an overly comprehensive answer. Actually, it's probably worth also elaborating on the Powerpack, which we expect most of our activity to be with the Powerpack, not the Powerwall.
It's probably 80%, maybe more than that, of our total energy sales likely to be at the Powerpack level to utilities and to large industrial customers. That's where the economics are very compelling because there's an important difference between price and cost. The cost to the utilities of between day and night is quite substantial because the power usage is often sort of a 2: 1, at least if not greater than 2: 1, sometimes substantially greater than 2: 1, between peak day usage and trough night usage.
So, there's no question that at the utility side, their cost of power generation has a big difference between day and night. That's a separate question from whether they are pricing that as such to the consumer. Since the cost is fundamentally there between day and night, for utilities, it's quite compelling to use the Powerpack. They can look at it from a levelized cost of energy standpoint and say, well, they could either sort of upgrade an existing power plant, or they could get a new power plant, or they could get a battery pack. They can look at it in a really simple way like that, and the potential is there is enormous.
In fact, I mean, even if renewables were not part of the picture, the Powerpack is independent of renewables. You can actually take probably somewhere close to half of all the power plants in the world and turn them off if you had batteries. I'm not sure this is sort of well appreciated.
Yeah. The whole distribution system, all the wires, all the transformers, all the substations, you know, don't run anywhere near full utilization. You know, as you kind of optimize that whole system, you can get much more value, the utilities can get much more value out of the entire grid without having to build more wires or buy more transformers.
Right.
The whole system. That all happens, you know, somewhat separately from renewable energy, and it can happen in different locations.
Exactly. There's another key advantage of the lithium-ion is that it's very compact, so it's in a very tight package, as compared to some of the other battery solutions, which although they have a theoretically low cost per kilowatt-hour, although it's theoretically low because they're actually quite high. They're bulky. Being bulky is really difficult because if you're a utility, and you wanna add a battery buffering to the grid, and you can with the Tesla solution, you can put that at the substation level. You can take our Powerpacks, and they're compact enough to fit in an existing substation.
This is a very big deal because it means that they do not have to create a new substation or expand the existing substation. In most neighborhoods, in order for them to do that, they would have to buy someone's house and level it, and put in a new substation, and then the neighbors do not like that. It's big pain-in-the-butt factor. If you can put the batteries in the existing substation, it's very easy, and it's a turnkey solution. Even, you know, big corporate customers, they like plug- and- play. Like, if it's a low headache, super easy, order it, install it just works, they love it just as much as consumers do.
Elon, as you probably hear every day, thank you so much for all the amazing things you have done and are doing. My name is Salim. I live in Albuquerque, New Mexico. If I may respectfully submit a plea that when time comes for you to think of installing a second Gigafactory.
Sure. Sure.
As opposed to the states you are considering.
Sure.
Candidates, you could become part of the hearts and history of New Mexico also.
Sure. Well, certainly, Albuquerque was one of the finalists, that would be, you know, a strong contender.
You know, some of the other states, they have lots of things going for them. For New Mexico, if you did this you could be what Microsoft and Boeing did. I hope you will consider that.
We'll definitely consider it. Thank you.
Thank you. Thank you for letting me speak.
Of course, absolutely.
Hi, my name is Haydn Sonnad. I'm a shareholder. I'm finishing up tenth grade tomorrow down in L.A. One of the really things I've noticed about the majority of Teslas is that they're really not being utilized too often. They mostly just sit around. What I've been able to do due to some pretty fortunate investments, I've been able to order an 85 D. What I really hope to do with this car is use it to its full potential. I'm gonna be doing this. I'm gonna be creating a constant loop of this car with constant people filled in it, and it's gonna be going between Culver City and Las Vegas. I call it the Tesloop.
Okay.
And by doing this, I assume I can save around 40 tons of carbon dioxide emissions into the air every month by these cars. Thank you. Thank you.
Sure.
My question is about Autopilot in version 7. I wanna know that if I do lend out the car for people to drive it from L.A. to Vegas, if Autopilot will be good enough to really ensure their safe travels over the road and on the highways specifically. I wanna know if you're planning on linking the sensors in the current Teslas to other cars in the road. Lastly, I wanna know if you are going to be open sourcing the hardware and software for Autopilot like you did with the electric designs.
Yeah. The Autopilot, at least, version 1 of Autopilot, the expectation is that someone is paying attention to the road and is ready to take over if there is an issue. It's really intended in the same way that Autopilot for an aircraft works, where Autopilot for an aircraft alleviates pilot workload, the pilot is still expected to pay attention. You can't, like, turn on the Autopilot and go to sleep. That is certainly true of the Autopilot that we'll have. In the long term, we'll have, I mean, sort of several years from now, there will be a fail-operational Autopilot with redundant sensors and everything that's needed for someone to actually literally go to sleep and wake up at their destination.
This is an extremely difficult engineering project. And it means you have to take care of all of the corner cases, and there are many corner cases. The real question for Autopilot is not can you know, is it gonna work, how many nines of reliability? And how much safer does it need to be than a person driving before the Autopilot can take control with no attention from a person. I mean, I think probably we'd want Autopilot to be at least statistically 10x safer than a person before we would suggest that someone simply turn on Autopilot and wake up at their destination.
Autopilot version 1, is really intended as a load alleviation for the driver, and, you know, something that sort of just makes it easier to drive, but not one where you can not pay attention. Then as far as vehicle-to-vehicle communication, there is a little bit of that that will be done in terms of figuring out, say, traffic data, like traffic speed data, so we can do better navigation over time. We can say, "Okay, how fast are Model Ss going on this road?" That gives us the ability to give better navigation to users.
It's hard to imagine much more than that because there's such a small number of Model Ss on the road, and the vast majority of other cars are not Model Ss. You'd only be communicating so much sporadically. Did you have a Fine.
Are you gonna be open sourcing the Autopilot software and hardware?
In general, we don't open source our software because, you know, we're a little hesitant about potential vulnerability exploits. We use an open source operating system. It's just, well, everything sort of runs on Linux. You know, we don't open source the application code, so.
Okay. You mentioned something about a beta for the Autopilot. How does someone get in to become a beta tester for Autopilot?
You have to be on the early access program.
Oh, okay. All right. Thank you.
All right.
Thank you.
Yeah.
Yeah. Thank you, Mr. Musk. My name is Awele Ndili. I am a shareholder. I am an owner as well of a Model S. First of all, on behalf of the Bay Area Model S owners, I wanna say a big thank you for the Mountain View Supercharger that just opened.
All right.
This afternoon.
Yeah.
My question specifically has to do with the Autosteer portion of the Autopilot. I think it's the most anticipated aspect of version 1.0. Could you shed a little bit of light on the timeline for that? Are you getting some resistance from the government? Is there some hurdles, or is it something that is coming for sure?
Yeah.
Approximately when?
Yeah. I'm actually testing several builds of the Autosteer functionality every week.
Yeah, okay.
There's You know, so we're, we make sort of improvements. Most weeks it gets better. Some weeks it gets worse. It's, it's a bit tricky because, like, when you do the I mean, this is a very difficult thing to take over steering. And you, and we have to also consider, like, well, what happens if there's a hardware problem, if some hardware system fails in the vehicle or there's a CAN bus communication error or, you know, there's just the debugging of a huge range of issues is very difficult. We currently only have a forward camera and a forward radar and the ultrasonics. There's a limited amount of redundancy on the sensor front.
I mean, for forward collision we, you know, we have the radar and the camera to provide some level of redundancy and the ultrasonics, but there's only one computer. In fact, there's a whole bunch of computers in series that are doing this. If any one of those computers fails, then the Autosteer functionality would fail. You know, that being said, I mean, I'm cautiously optimistic that we'll have Autosteer functionality out to early access customers by the end of this month.
Oh, fantastic.
Yeah.
That's wonderful. Yeah. There's no issue with the government that we have to worry about?
There's no issue with the government.
Awesome.
Importantly, this is not an abdication of responsibility for steering.
Yeah.
It is simply meant as a driver assistance feature.
Yeah.
Like I said, it's basically, it's a lot like Autopilot for aircraft.
A pilot still has responsibility for flying the plane, but being able to engage Autopilot just reduces the pilot's workload substantially.
Yeah. Well, thank you very much. That's excellent news. Thank you.
Elon, we're at about the three o'clock mark, so we'll let you decide how many more questions you wanna take. I just wanted to give you that time advisory.
All right. I'll probably take another maybe four questions or so. Yeah. Thanks.
Great. Hi, Elon. My name is Stephanie Downs, and I'm with People for the Ethical Treatment of Animals. We're a shareholder of Tesla's, and I have a question concerning your use of leather in your car interiors. As an innovator, Tesla has changed the public's perception of electric cars, and you've shown the industry that sustainable technology can be cool. We've heard a lot today about the environmental destruction of animal agriculture, so I'm not going to mention any of rest of that other than I'd like to mention that regardless of anyone's dietary choices, in the actual production of leather, which requires that cow skin has to be converted into a material that will not rot, it has to be treated with massive amounts of toxic chemicals, including formaldehyde, cyanide, and coal tar derivatives.
The same as not all electric cars are created equal, neither are all synthetic materials, and there are wonderful vegan, environmental-friendly leathers that are currently being produced, some of which are even made from recycled bottles.
Okay.
What I'd like to ask from you, these materials are available, and if we can connect Tesla with organizations that are producing these materials that are vegan, environmentally friendly, cost-effective, would you at least consider them?
Yeah, absolutely.
Okay.
If you can give your information to Jeff Evanson who's.
Okay.
Right there, then we'll look into it, yeah.
Thank you very much.
All right.
Hello, my name's David. I'm a shareholder.
Great shirt.
I have a question for you. Thank you. I'm surprised more aren't wearing them. My question for you is I'm a nurse. I don't get snow days, and I live in the northern, upper part of the U.S. The Model 3 is more in my budget. The Model 3 specifically, but future cars, are they going to be mostly or all of them, dual motor?
I think for the Model 3, the standard, the base version of the Model 3 would be single motor. It would still have very good traction control. Like, in fact, even before we were shipping the dual motor, our highest sales per capita in the world just when all we had was a rear motor, were in Norway. Our [audio distortion], the person who as an individual, who bought the most number of Model Ss or most number of Teslas, because he bought a bunch of Roadsters before that, lived in, lives in Narvik, which is above the Arctic Circle.
It's real important to emphasize that even a rear wheel drive Tesla, as long as it has the right tires, it has amazing traction on snow and ice. I think in order to keep the car as affordable as possible, the standard version of the car would have a single motor, but we would offer a dual motor as an option.
All right. Excellent. Thank you.
All right.
Hi, my name is Bob Weiner. I'm a Tesla stockholder, also a SolarCity stockholder, and going for the trifecta. My question, I hope it's not inappropriate, but I'm curious if you have any thoughts about when you would take SpaceX public, particularly after you retrieve your rocket successfully on the next try, I hope.
Sure. Well, yeah, because SpaceX's goals are very long term, certainly longer term than the, say, the stock market typically. You know, it's like the feedback cycle in the stock market tends to be quarterly and, like, maybe they can handle a few years max. If you're talking about something really long term, like trying to build a city on Mars, and then you end up sacrificing profitability for a really long time in order to get there and build the technology necessary to do so, I think it would be not super loved by the public markets, you know. What I expect with SpaceX is that we'll probably go public once we have regular flights to Mars. Yeah. I'll try to answer a few more questions.
I know I'm supposed to have, like, a board meeting after this or something. Let's go, we'll go to 3:15 if you guys don't mind. Go for it. All right.
Hi. Satoshi Mizu from L.A. My question is on the Gigafactory. You said by 2020 that you're gonna have more or less 500 units produced, but that was before you announced the Powerwall and Powerpack. Is that included in your calculation? 'Cause you're already supply constrained with the demand.
Right.
Even with the Model 3, I think that'll create bigger demand. Well, have you calculated that, or is it lower demand on the Powerpacks or?
Yeah. The Gigafactory is, as currently designed, is intended to produce about 50 GWh at the pack level and about 35 GWh at the cell level. We'll be pulling in cells from other parts of the world as well. That should allow for 500,000 cars to be produced per year, plus have 15 GWh left over for stationary. The way it's looking, the demand for stationary is higher than expected, we are looking at potentially expanding the output capability of the Gigafactory to meet the higher demand for stationary.
Thank you.
Hi, Elon. Thank you very much for the Supercharger here downstairs. I think it's not just for owners, it's actually for shareholders. It's gonna sell a lot of cars as people see that going in and out of Google and places like that. My questions are around safety, and one is, you know, Model S, of course, set a new bar for sedans. What should we expect for Model X? Because all the other SUVs have, like, high center of gravity, and rollover is a problem.
Those types of things. What should we expect there? The second question is, have you guys thought of, you know, as you log miles in Autopilot, and you have the statistics of lower accidents, that I'm sure is gonna come true, whether we're gonna be able to get, like, lower insurance rates from companies?
Sorry, I missed the second-
The second question is, as you log more Autopilot miles.
Oh, yeah.
On Model S and other cars, whether you're gonna be able to use that or how we can use that to get lower insurance rates from insurance companies.
Yeah. Well, yeah, I think we should be able to, I think as we can show statistics on accidents and so forth, I think it should translate to lower insurance rates. We'll have to work with insurance companies to make sure that they are properly factoring in the actual accident rate of the Model S and the X 'cause our injury rate is substantially lower than, I think maybe any car on the road. Certainly it's, if it's not the lowest, it's certainly one of the lowest. I forgot, like, an important announcement. At 2:00 P.M. today, we did our billionth mile for Tesla. Yeah.
How's Model X looking in terms of safety?
Sorry, how's what?
How's Model X looking in terms of safety and rollover?
Model X, I think, will have the lowest probability of injury of any sedan. I mean, the tests haven't been completed yet, but it, I think it's headed towards having the lowest probability of injury of any SUV. Certainly the low center of gravity with the battery pack and the floor pan is incredibly helpful 'cause the rollover susceptibility is extremely low. It's very difficult to get the Model X to roll over. We've completed our internal almost all of our internal crash tests, and it's shaping up to be five-star in every category and every subcategory, like the Model S.
That's great.
It's, yeah. In fact, I think probably safety is not something we emphasize enough about the Model S and the X 'cause a lot of people, you know, sort of they'll hear five-star and they'll think, "Oh, okay, well, aren't, like, most cars five-star?" Well, that's actually not the case. Only about 1% of cars are five-star in every category and subcategory. Like, if you see five-star, most of the time they've sort of rounded up their GPA there. It's only about 1% are five-star in every subcategory. The actual calculation safety is a statistical figure which you can access on the DOT website, but is not something that they like to promote. It's there.
At least last time I checked, the Model S actually had the lowest probability of injury of any car ever tested. This is extremely important, and not well appreciated. There isn't a safer car. It's really, if you care about safety of yourself and your family and friends, this is the best choice.
Keith Lambert, shareholder. On the announcement of the Powerwall, there was a mention about the Zero Emission Vehicle credits, and the question was unanswered. It relates to the swap down in Harris Ranch and the ability to make an appointment or get a phone number to make the appointment so you can do the swap. As far as the expansion of the Superchargers, what is the lifetime of free charging per vehicle, and what is the accounting for it when you sell a car?
Yeah, we have the, basically the, L.A. to San Francisco, pack swap capability in place, and I believe, all Model S owners in the sort of California, you know, area have been invited at this point to try it out. What we're seeing is just a very low take rate for the, for the pack swap station. We did an initial round of invitations, where we did basically like 200 invitations. I think there were a total of four or five people that wanted to do that. They all did it just once. Like, okay, it's clearly not very popular.
Then we said, "Okay, well, let's expand that invitation to all customers." I would expect that that sample, that initial sample group is, that all customers roughly behave like that initial sample group. It's just people don't care about pack swap. The Superchargers are fast enough that if you're driving from L.A. to San Francisco and you start a trip at 9:00 A.M., by the time you get to, say, noon, you wanna stop and you wanna, you know, stretch your legs, hit the restroom, grab a bite to eat, grab a coffee and be on your way. By that time, the car is charged and ready to go. It's free. It's like, why would you do the pack swap? It doesn't make much sense.
We built the pack swap into the car because we weren't sure if people would want to choose the pack swap or not. We thought people would prefer Supercharging, we weren't sure. That's why we built a pack swap capability in. You know, based on what we're seeing here, it's unlikely to be something that's worth expanding in the future unless something changes. For the Superchargers, as we said in the initial press release, the Superchargers are free. It's basically free long distance for life, forever. Free long distance forever is what the Superchargers are providing. Now there are a few people who are, like, quite aggressively using it for local Supercharging.
We will sort of send them just a reminder note that it's cool to do this occasionally, but it's meant to be a long distance thing. It is free long distance forever. It's basically built into the cost of the car. Based on what we're seeing in terms of the economics, it looks quite supportable. Of course, we've gone super fast with these Superchargers. You know, most of the Superchargers do not yet have solar and a battery backup. Over time, we're gonna put solar over every Supercharger where it's possible to do so. If it's not possible to do so, make sure that we're purchasing power that is generated in a renewable manner, so that the entire Supercharger network is powered by sunlight.
Hi, my name is Ilya Sutskever, shareholder. I'd like you to say a few words about the Autopilot, specifically do you expect the timeline for when the Autopilot will be a full go-to-sleep-in-the-car solution given the rate in which you see it being developed and given what you know about how quickly regulation and laws can change to accommodate that?
Well, I think from a technical feasibility standpoint, I mean, I think it'll be technically possible in approximately three years. I suspect we'll be able to achieve that in about three years. Now, it will take some period of time after that for regulators to accept that it's okay to, you know, just go to sleep in the car. So I would imagine it's something like two years, maybe three years. Anywhere from one to three years. I don't really know 'cause it's not really something I control.
After it's shown to work, and we can compile a great deal of evidence statistically to compare what the computer would've done versus a person over billions of miles, and we can show with a very high confidence interval that it's cool for the computer to drive you home. Yeah, technically, likely in three years, one to three years after that before regulators approve it. Again, that's, but is not something in my control. Might vary by country and by state within various countries. That's the rough timing. That's my best guess right now.
It is interesting, like what I've found, you know, with both narrow and deep AI is that with each passing year, my estimate for when it happens gets closer. This is, you know, both interesting and alarming. Like it's exciting and alarming.
Hi, my name is Kelvin Yoke and I'm a shareholder. I'm also a member of the IEEE Microwave Symposium, which takes place in San Francisco next year. One of our main missions is to encourage young engineers and university students to get involved with engineering. What we've been seeing recently is the kind of a drop off in interest among diverse groups as well as women in engineering, which starts around middle school range. I was wondering if you could comment on any activities that Tesla is participating in or conducting in terms of helping education and inspiring young people to get involved with engineering.
I mean, we do cool products that require engineering. Hopefully, that's a reason like people think, oh, I think, you know, maybe they'd like to work for Tesla. Tesla's kind of an engineering-centric company, maybe that would encourage them to do engineering. I mean, it is super important that Tesla stay focused on the goal of accelerating the advent of sustainable transport and sustainable energy. There are a lot of things that we could do that would be all these awesome social goods, but if we divide our energies over many social goods, we risk accomplishing none of them. We've gotta stay focused on this fundamental good that we're trying to achieve as the primary thing.
You know, once we sort of are over the hump, in particular once we have like a mass market affordable electric car that's great, then I think we can start to try to do other things. We really need to stay focused on that goal for now.
Thank you. Are you presently participating in any university-related research or involving institutions of learning in your product development?
Yeah, I mean, we have relations with a number of universities and a number of research groups, particularly as it relates to improving battery cell chemistry. I'd certainly encourage groups that are making advancements in any technology that improves cars, electric cars or autonomous driving to get in touch with Tesla and see if there's some way to work together.
I would also like to thank you and invite you to speak at our conference next year also. Thank you very much.
All right. Thanks. All right. I think we'll do the last question.
Yeah.
Wait, was that the last question?
You've gone well over the time you had planned on.
Okay.
You're late for your next-