← Elon Musk Thinking
Elon Musk Thinking
Part 2: Elon Musk Story - Tesla Podcast!
02:00:18
Part 2: Elon Musk Story - Tesla Podcast! #ElonMusk Source: Tesla Elon Musk is the CEO of the company X, Tesla, Neuralink, SpaceX and the Boring Company. Follow me on X https://x.com/Astronautman627?t=RFQEunSF2NwRkCOBc6PkkQ&s=09
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- [00:01]
Grainger Announcer
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- [00:31]
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- [01:00]
Elon Musk
Latest interview of Elon Musk. Yeah, be called X, but it would be the most valuable company in the world. On the other hand now that's not all good though. On the other hand then a lot of super talented people would have stayed because PayPal got acquired by ebay not long after. Like there was like the PayPal coup at the end of 2000. Eighteen months later it was acquired by ebay. So and then you know, if you think of the companies that came out of PayPal, the so called PayPal mafia, YouTube, you know, Steve and Chad created YouTube, Jerry Stomplemon created Yelp, you know, Peter created Palantir and a bunch of other things. David Sachs created his company and Reid Hoffman created LinkedIn.
- [02:12]
Interviewer 1
It's almost like all that market cap still exists but now it's allocated on all these other tech companies instead of x.com?
- [02:20]
Elon Musk
Yeah, so in retrospect, I don't know, sometimes it's maybe a good thing that x wasn't or PayPal wasn't, didn't achieve those things because all these other companies would have at least been delayed or may not have existed.
- [02:37]
Interviewer 2
There's definitely been kind of a resurgence in interest as we get into kind of cryptographic, you know, money in Bitcoin and all that of like interest in this idea, you know. And it's interesting, like software hasn't eaten the banking industry yet. Software's eaten a lot of industries. There's some that it just hasn't.
- [02:53]
Elon Musk
And banking still there, you know, Stripes. Stripes eating them slowly. But they're doing a pretty good job. The banks are in trouble. If it's not Stripe, it'd be somebody else.
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Interviewer 1
And you love code, but you don't seem to be as bullish on Bitcoin. Do you have any. Could you break down? Like why? Because you're talking about this big database that's more secure for faster transactions. It seems like Bitcoin's hitting at least some of those.
- [03:23]
Elon Musk
I'm neither here nor there on Bitcoin. Yeah, yeah.
- [03:30]
Interviewer 2
What do you think when you read like Satoshi's white paper for the first time? We were like, oh, it's pretty interesting.
- [03:36]
Elon Musk
All right, that was pretty clever. It's just like the things. This always gets like the crypto people angry. But. There are transactions that are not within the balance of the law and those and there are obviously many laws, different countries and normally cash is used for these transactions. But in order for illegal transactions to occur, the cash must also be used for legal transactions. You need an illegal to legal bridge. That's where crypto comes in.
- [04:29]
Interviewer 3
So is it kind of the darknet stuff?
- [04:32]
Elon Musk
It can't be entirely dark because otherwise how do you buy normal stuff? And cash these days is just much rarer. It's hard, it's increasingly difficult to use cash. Some places you can't use cash at all. So there's a forcing function for transactions that are illegal, quasi legal and in some cases legal. But it's got to be both legal and illegal. It doesn't count. Otherwise. Otherwise you simply. It can't just be transactions within an illegal economy because how do you buy like food in a house or something? You know, you must have a legal to illegal bridge. So where I see crypto as effectively as a replacement for cash, but not as a replacement for as a primary. I do not see crypto being the primary database. So now this is sometimes taken being like I'm being judgmental about crypto and it's actually, I think there's a lot of things that are illegal that shouldn't be illegal. But you know, so it's not as though I think that sometimes governments just have too many laws about the should have so many things that are illegal.
- [05:50]
Interviewer 3
Didn't you say like on Mars there'd be less laws?
- [05:53]
Elon Musk
Hopefully, yeah.
- [05:55]
Interviewer 4
You so propose a direct democracy on Mars.
- [05:58]
Elon Musk
I think probably that's the best. I mean probably it's the best thing.
- [06:06]
Interviewer 2
Mars Technocracy.
- [06:08]
Elon Musk
The Mars Technocracy.
- [06:10]
Interviewer 1
And you want to make laws super short and simple, right?
- [06:13]
Elon Musk
Well, yeah, I mean like, if people can't understand laws, then how do you. Then what's usually going to happen is some special interest is going to bamboozle the public with long laws.
- [06:23]
Interviewer 2
Yep.
- [06:24]
Elon Musk
And then the law is like reading the slows, like the size of Lord of the Rings, but a very boring version of it.
- [06:31]
Interviewer 2
Like, the dealership thing is just crazy to me. You know, like, America is supposed to be competitive, free market.
- [06:37]
Elon Musk
It's weird, right? Yeah, absolutely. So anyway, just like, you want to keep the lore short and give them some kind of sunset period so they don't just stay there forever. Otherwise just accumulate over time and just eventually it'll be unwieldy. So the laws should have some time frame associated with them. They automatically go away. So I mean, it's just keep law short to avoid trickery and sort of special interests ultimately does not benefit the public. And then I think direct democracy is less susceptible to corruption than representative democracy. So, you know, corruption just being like, to what degree is this action being taken that do not serve the general. The interests of the population, you know, do not result in a net increase in population happiness as a whole. So that's why I think probably direct is better. And then have things in real time. So if you want to vote on something, you can vote on it real fast. Probably, I would say, make it easier to get rid of laws than to put them in because these things tend to have a lot of inertia and so have a bias towards having laws go away and not be there. You know, so, like, Maybe it takes 60% to put a law in place, but 40% to remove it like that. Yeah, let's try it, you know, see what happens.
- [08:28]
Interviewer 3
The bills are extremely long that they pass. No one reads them.
- [08:32]
Interviewer 4
Yeah.
- [08:33]
Elon Musk
Hardly anyone in Congress has read the bill. And if. Even if they've read the bill, if you quiz them on the details, they wouldn't know it.
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Interviewer 3
They'll find their page.
- [08:41]
Elon Musk
Yeah. They're like, tell me what's. Yeah, this. There was no idea.
- [08:45]
Interviewer 1
Seems kind of alarming that that's like the status quo and everyone just accepts it.
- [08:49]
Elon Musk
But yeah, these laws tend to be written by industry groups as well. So they'll write the law and then. And then interact with congressional staff. But most of the work will be done by the industry groups. And so they're going to write laws that entrench their position.
- [09:13]
Interviewer 1
It's like the players buying the ref, like you were saying earlier.
- [09:16]
Elon Musk
That exact. Right. So you get the regulatory capture of the. Exactly.
- [09:21]
Grainger Announcer
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- [09:52]
Elon Musk
Pro savings days are on at Lowes. Get up to 35% off. Select major appliances. Plus Mylo's Pro Rewards members get an additional 5% off when you buy five or more. Select GE Whirlpool and Electrolux Kitchen or laundry. Major appliances. Lowe's. We help you save. Valid through 123 discount. Valid to my Lowe's Pro Rewards members only. Exclusions and other restrictions apply. Selection varies by location while supplies last. See associate or lowe's.com for details. Loyalty program subject to terms and conditions. Visit Lowes.com terms for details. Subject to change. Yeah, the players shouldn't be paying the ref salary type of thing. Well, the ref shouldn't be thinking I'm gonna retire and get paid by the players. So it's kind of amazing that it works as well as it does given all these issues. So yeah, so then PayPal, I ended up getting malaria and anyway, in 2012. One, two. Yeah, 2001.
- [10:57]
Interviewer 2
Yeah. Tell us about this, the malaria thing.
- [11:00]
Interviewer 5
That was. You went on vacation, right?
- [11:02]
Elon Musk
Yeah, we're in South Africa with Kimball actually. Yeah, it's crazy. And then came back and had like a near death case of malaria.
- [11:09]
Interviewer 6
Yeah, we lived, grew up in South Africa. We, we'd go to the Bushvel all the time to the what you guys call safari and you just reached out a house in the bush. So you used to go there every. Every few weeks or so. I don't think we ever took malaria tablets.
- [11:24]
Elon Musk
We didn't have malaria in those days. I think there was a drought and then a flood and then suddenly there were mosquitoes.
- [11:29]
Interviewer 6
Yeah, right, like. And so we were, we were told to. And we did take malaria tablets. You took you to them as well. And, and when he got back the was in Stanford and they couldn't figure out what was wrong with him. Our uncle who's a doctor in South Africa, he has malaria and it's like, no, no, he doesn't have malaria. We checked. So check again. Malaria kind of hides in the body.
- [11:53]
Elon Musk
And then that's why? They wouldn't believe it.
- [11:56]
Interviewer 2
So this was after PayPal got started.
- [11:59]
Elon Musk
Oh, this is 2001. So sort of after the PayPal coup. So I was on the PayPal board and I was providing sort of product advice and whatnot. But in December, late December 2000, went on a trip to South Africa. Came back January, early January 2001, and I had a severe case of malaria, almost died. I sat next to his bed for about five days, yellow tubes going in.
- [12:31]
Interviewer 5
And out of him.
- [12:32]
Elon Musk
Just that early morning till late at night, just waiting to see. And then they said to me, get some, some pyjamas for him. And the closest store was some like, Dress for Less or something. So I just got him some pyjamas. And then, then the next thing, after five days, he woke up and he says, so there's bunnies on my pajamas.
- [12:56]
Interviewer 4
I think they were bunnies or ducks.
- [12:58]
Elon Musk
Or something, because that was what I could get. And I knew he was.
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Interviewer 3
Pretend you were sleepy. I mean, like, you're, it affected your brain that, that harshly?
- [13:07]
Elon Musk
Yeah, no, it was bad. Yeah, it was really bad.
- [13:10]
Interviewer 2
So that changed your perspective. How did it, like, influence you after that?
- [13:15]
Elon Musk
I don't know. I, I, I don't think it changed me that much, would you say? I don't think it changed you too. No, I don't think it did. Recovered and went back to.
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Interviewer 5
Yeah, but how many times you been on?
- [13:29]
Elon Musk
I lost like £50, though. It was great.
- [13:33]
Interviewer 5
No more vacations, though.
- [13:35]
Elon Musk
Well, yeah, it was, it took me like almost six months to get back to normal, so. And then in 2001, I was thinking about, you know, what to do next. And. I thought the, you know, this is like, okay, sustainable energy, like basically electric cars, solar, space. And then a friend of mine asked me, you know, so what are you gonna do next? I said, well, you know, I would love to do something in space, but I don't think anything, there's anything that a private individual could do in space. But at least I'm gonna go on the NASA website and find out when people are going to Mars. And I go on the NASA website and it's nowhere to be found. And I so like, well, this is pretty weird. And then I discovered that it was actually a NASA policy not to talk about it. Really? Yeah, at the time.
- [14:40]
Interviewer 5
Why was that, do you think?
- [14:42]
Elon Musk
What I was told is that when George Bush the first was when he was elected, he said he asked NASA to put together a plan to send people to Mars in 90 days. They came back with a plan and it was $500 billion and it says, well, this is like political suicide. So then after that, talk of manned missions to Mars were ban. That's what I sold. So anyway, so it's like, well, you know, maybe there's something that can be done here to get the public excited about going to Mars. And if I get the public excited, then they will vote NASA to have more funding. And so the original idea for SpaceX was just to have a philanthropic mission to Mars.
- [15:39]
Interviewer 6
Yeah, Actually just started as a graphic of a, of a pot plant. You just need to get the pot plant to Mars. You know, it was like an inspiration.
- [15:47]
Elon Musk
Sure.
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Interviewer 6
Just as a way to prove to the world that it could be done.
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Elon Musk
Yeah. So the mission was called Mars Oasis. There was seasoned dehydrated nutrient gel that would hydrate upon landing. You get this great picture of green plants, red background, like first sort of life as we know it on Mars. And the. You can also learn a lot about what does it take to keep plants alive and have a little miniature greenhouse on surface of Mars. So that's what I initially pursued as a way to basically increase NASA's budget. It wasn't let's create a space company. It was how do we get NASA's budget increased so we can go send people to Mars? And trying to figure out how to get this thing launched. And the rockets, the European and US Rockets were too expensive and I couldn't afford them. So I went to Russia to try to buy some ICBMs in 2001, literally. And they kept raising the price on me and it was being quite difficult. And I said I could afford to pay like, I don't know, $9 million for an ICBM, but not 20. Because I figured we need to do two of these missions because odds are good that one would fail and then it could have a negative impact potentially. So that was pretty weird being in Moscow trying to buy ICBMs in 2001. That's amazing.
- [17:27]
Interviewer 4
How do you negotiate to buy an ICBM?
- [17:30]
Elon Musk
Yeah, I call up the military and say, well, you know, they got to get rid of these things anyway because of the arms reduction treaties. So it's like if, listen, if you're going to throw it away, I'll buy. Take it off your hands. You know, they have to. It was like SS18. It was the biggest nuclear missile in the Russian fleet. And. But anyway, they decommission these things, so why not just tell me then instead? And then every time I talk to them, the price would go up and I'm like this is not good because even if once we do a deal we're probably going to get shafted afterwards too. This is the pre deal shafting. Well it's like what's going to be afterwards? You know, after I've given the money then it's not going to be good. So so that I yeah so and then I started looking into it as why Rockets Cost so much My shopping style is more stay at home than try in store. So my Amex Blue Cash Everyday card is my go to accessory. When I shop it's easy to earn by getting 3% cash back on US online retail purchases.
- [18:54]
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- [18:57]
Elon Musk
So go ahead, add to cart and.
- [18:58]
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- [19:02]
Elon Musk
On the Blue Cash every day card.
- [19:04]
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- [19:09]
Elon Musk
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- [19:15]
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- [19:17]
Elon Musk
Gold's 4 times membership rewards points at restaurants worldwide. Wherever you dine, points are piling up. So bring your friends along for your next course. Because it's not all about the posts, it's about the company and the memories. How can Gold from Amex sweeten your next food moment? Learn more@americanexpress.com Explore Gold terms and Points Cap apply There's nothing fundamental about why they should cost so much. If you add up the materials, it's not like the raw materials cost that much. It really just needs to figure out a smart way to get the materials in that shape. And then we need to make rockets reusable. So like any form of transport, if it's not reusable, it's extremely expensive. If cars were single use and you needed a round trip, bought a car for $20,000, then your round trip will cost you $40,000. That's true. That's crazy. So the same thing is true for aircraft and boats and rockets and everything. So the rockets were expensive even as expendable things, but then they were also not reusable. So there's no way we're gonna have a city on Mars unless we can have reusable, low cost, reliable rockets. That's fundamentally the issue. So I came to the conclusion that even if this Mars Oasis mission was successful, it would still not result in the go. It would not materially further the goal of being a multi planet species because the rocket technology was not good enough and it was not getting better. In fact, it was arguably Getting worse. So. So the real thing that needed to be solved here is reusable rocketry and lowering the cost of access to space. And that's like, okay, well I'm going to try to do that. So SpaceX started in early 2002. Basically. I was living in Palo Alto at the time, but most of the engineering expertise was in Southern California. So that's why I moved to la.
- [21:41]
Interviewer 2
Did you ever have any like even inkling of imagination that you could be doing, you know, dozen launches a year and being contracted with NASA? Is that even like I thought that was?
- [21:52]
Elon Musk
I know, I thought we had, you know, 10% chance of success or something like that.
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Interviewer 4
You ended up being chief engineer, right? Because like no one wanted to give up their secure jobs with ULI and.
- [22:03]
Elon Musk
Something at the beginning. Exactly. I actually tried to hire. Basically there have been a number of attempts at doing a private rocket company or commercial rocket company and they're all failed effectively. And, and that's to the degree that it was like a joke in the aerospace industry, like, how do you make a large portion large fortune in the rock? You know, start with a. Yeah, how do you. How do you make a small fortune in the rock industry? Start with a large one. I'm pretty sure it's going to be small business. Yeah, they told me that jokes so many times. Just jump to the punchline, you know. So the. Yeah, it was very hard to recruit people because I had not built any physical hardware before, so. And I kept being called Internet guy for the longest time, for ages. Finally for the first 10 years they calling me Internet guy or basically an Internet entrepreneur slash fool. He's trying to start a rocket company. What if an idiot. That was generally how it went. So it was quite hard to recruit people. And especially if somebody's got like a secure job at Boeing or Lockheed or something like that, then trying to recruit them to be chief engineer of a startup rocket company was hopeless. So basically nobody who was good was willing to join and there was no point in hiring somebody who wasn't good. I ended up being chief engineer, you know, which is. The first three launches failed and probably if I'd been better then we would have gotten to orbit sooner. So it took me a while to learn all these things from books or books and talking to people.
- [24:13]
Interviewer 3
Did you go to Utah and talk to anybody like at. At Orbital?
- [24:18]
Elon Musk
Oh yeah, visited atk. Orbital is Dulles, Virginia. So yeah, I visited atk, visited Orbital and Orbital had had a success with the solid rocket based Pegasus, but they'd also gotten like an 8 launch deal from DARPA. So okay, if you're starting off with basically an 8 launch seal from DARPA, that's a good situation. We did not have a launch deal from anyone. And Pegasus is a, I mean there's some clever engineering with Pegasus but fundamentally I think launching rockets from planes is not sensible. It sounds like it would be a good idea, but it's not. And then even Orbital went away from doing that with their. As soon as you get past certain size they went to ground launch.
- [25:19]
Interviewer 3
Yeah, I was reading somewhere that atk well thy call Morton Thickhole. They, they were doing snow cats, they were doing ski lifts and they sold that to the man who made the DeLorean.
- [25:29]
Elon Musk
He really.
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Interviewer 3
Yeah, I just read that in their Wikipedia. I'm like oh that's fascinating. What I come around.
- [25:38]
Elon Musk
So yeah, right. So yeah. So we got SpaceX going and that was very difficult. We got the Falcon 1 rocket built. It was very simple. It's the simplest overall rocket that's liquid fueled. So it had the potential for reusability, for useful reusability. And then yeah, we had three failures. Finally got to orbit at the end of 2008. So that was incredible.
- [26:25]
Interviewer 6
Going down to Kwajalon and watching.
- [26:28]
Elon Musk
They wrote it like a blog for a while.
- [26:29]
Interviewer 6
Yeah, I actually still have it up there. It's an old blogging platform that Google still keeps Alive. It's called Quashrockets.blogspot.com I think it's going.
- [26:41]
Interviewer 5
To get a lot of traffic soon.
- [26:43]
Interviewer 6
Yeah, totally.
- [26:43]
Elon Musk
Send it, check it out.
- [26:44]
Interviewer 6
It's all there. It's photos and photos of. There was one photo of Elon picking up a satellite. We launched the rocket and the rocket exploded which was very, very, very sad. Everyone's super sad. People were pouring their.
- [26:59]
Interviewer 2
Get that Amex gold cart ready. I'm way too tired to cook tonight.
- [27:03]
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- [27:11]
Elon Musk
Five guys. Either of those sound good? Yes. Which one?
- [27:16]
Interviewer 3
Both pay with the gold card to.
- [27:18]
Grainger Announcer
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- [27:30]
If you're the purchasing manager at a manufacturing plant, you know having a trusted partner makes all the difference. That's why hands down, you count on Grainger for auto reordering. With on time restocks, your team will have the cut resistant gloves they need at the start of their shift and you can end your day knowing they've got safety well in hand. Call 1-800-granger. Click granger.com or just stop by Granger for the ones who get it done.
- [27:59]
Interviewer 6
Heart and soul into the rocket and the satellite was I think in the US Navy.
- [28:07]
Elon Musk
Air Force Academy.
- [28:08]
Interviewer 6
Air Force Academy. And it, it was thrown out of the rocket and fell through the roof of the hangar.
- [28:15]
Elon Musk
Well, not. This is like where you really think exactly.
- [28:20]
Interviewer 6
It's like a, like a, like a.
- [28:21]
Elon Musk
Stand up tent, small tool shed.
- [28:23]
Interviewer 6
Yeah.
- [28:23]
Interviewer 3
Wasn't supposed to do that.
- [28:24]
Elon Musk
Like the size, maybe the size of this room. I mean the rocket had. This is the first launch failure. So the, it had a. There's a cracked aluminum B nut on that cracked during, during liftoff and created. So the engine, there was an engine fire. This wouldn't have been the end of the world, but there was. One of the helium lines was steel mesh overwrapped with a Kevlar sleeve and it melted the sleeve and so we lost pressure, pneumatic pressure, which caused the engine valves to close. So about 30 seconds after lift off, the engine shot itself off due to the engine fire. And then it went ballistic and basically smashed in the rocks just a couple hundred feet offshore. And when it was quite a big explosion, actually in an explosion, the satellite which was in a fairing, went through the fairing on a ballistic arc back onto the island, smashed through the tool shed roof and onto the floor in pretty reasonable condition. Like it wasn't totally gnarled.
- [29:53]
Interviewer 5
Reuse it.
- [29:54]
Elon Musk
So we gave them back their satellite. So like we didn't lose your satellite. It may need some repair. It was so improbable that the satellite would come back. We had a couple more failures after that. Yeah. 2008 was a particularly difficult year because we had the third failure in 2008. The Tesla financing round collapsed.
- [30:24]
Interviewer 6
Such a nightmare.
- [30:25]
Elon Musk
And I got divorced.
- [30:26]
Interviewer 6
And I think 2008 was bad year. Really, really bad.
- [30:33]
Elon Musk
Yeah.
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Interviewer 6
That year.
- [30:36]
Elon Musk
Yeah. I don't think anyone could. I think 2018, I think 2018 was worse.
- [30:42]
Interviewer 3
What's up with eight?
- [30:43]
Interviewer 5
Well, with the Model 3 ramp.
- [30:44]
Elon Musk
Right.
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Interviewer 6
Oh, there were so many things that happened in 2018.
- [30:47]
Elon Musk
So much drama. It's insane.
- [30:48]
Interviewer 7
Yeah.
- [30:51]
Elon Musk
So, yeah. So. In 2002, starting SpaceX moved down to LA and it was just pretty fun in the beginning. Generally startups are pretty fun in the beginning. And then you go through the chasm of doom.
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Interviewer 6
Chasm of doom.
- [31:24]
Interviewer 2
The trough of sorrow.
- [31:25]
Elon Musk
Trough of sorrow, exactly. It's rough despair. Yeah. It's usually always like everyone's like super optimistic and excited for first year or so, and then things start to go awry and there's usually many years of grief before there's finally day dawns. So, yeah, so like 2002, and then about in 2003 is when. Rosen and JV Straubel called me up and said, hey, we want to have lunch. I want to say Harold Rosen, I think that's his name, but he really had, he was a pioneer in space technology and electric vehicles, which, you know, our crossover. And he'd done something called Rosen Motors, which is like sort of an electric vehicle company and. But he'd also been pioneer in geostationary satellites. So he called me up and said, hey, let's have lunch. We're at like lunch at Smith and Wolensky or something in el Segundo where SpaceX started. And so Straubel and Rosenler were talking about space stuff and then started talking about electric cars. And I said, oh yeah, you know, so I was going to be working on electric car technology at Stanford and Jinjevi said, you know, we should take a drive in the T0 from AC propulsion. And I was like, yeah, you know, because the timing is like. Lithium ion batteries was really like the critical breakthrough needed for compelling electric cars. And so I was like, okay, I'll go try out their T0, which had specs similar to the what we eventually brought to market as Tesla Roadster. So then I, so yeah, so I got, I got a ride in the T0 and then I tried to convince Alaka Kony and Tom Gauge to commercialize the T0. Now the T0 and there's like lots of stuff online about didn't have doors or a roof, so clearly you need to add those things or any safety systems. And it was very unreliable because it was just like sort of a proof of concept, basically.
- [34:19]
Interviewer 2
I heard it was basically like canned assembled. You guys really had trouble scaling it.
- [34:26]
Elon Musk
I mean, it literally didn't have doors or a roof or any airbags or an effective cooling system for the battery. And it was not safe and it was very unreliable breakdown. It needed to be babied by an engineer or you can use it. So. But nonetheless it did get like 0 to 60, I think under, you know, under 4 seconds, 250 mile range.
- [34:57]
Interviewer 2
It was enough to convince you that it was possible.
- [35:00]
Elon Musk
I mean, I, I knew it was possible because if you go from the energy density of lead acid to.
- [35:09]
Interviewer 6
To.
- [35:10]
Elon Musk
Lithium ion, you've got about a 4x energy density improvement. So if you've got, if you've got say a 60 mile range with lead acid, you're going to have about a 250 mile.
- [35:18]
Grainger Announcer
If you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Grainger for the ones who get it done.
- [35:48]
If you're the purchasing manager at a manufacturing plant, you know having a trusted partner makes all the difference. That's why hands down, you count on Grainger for auto reordering with on time restocks, your team will have the cut resistant gloves they need at the start of their shift. And you can end your day knowing they've got safety well in hand. Call 1-800-granger. Click granger.com or just stop by Granger for the ones who get it done.
- [36:17]
Elon Musk
Range with with lithium ion with the same weight. So but it was, it was cool to see it in action with, with AC propulsion. And I, so I tried hard to convince those guys. Like I really pestered them a lot to going to, to commercialize the, the T0 and they just did not want to do it. Weirdly the thing they wanted to make was an Electric Scion. And I'm like, you guys, Nobody's gonna pay $70,000 for an electric scion, okay? That was their idea. $70,000 for electric scion. I'm like this not gonna work. Okay. You will sell like 14 of these things, you know. And I'm like, I kid, you know, I have like the email trails at least. Yeah, I mean I think they're still around so in fact. But I even say, listen, I, even though I think this is the dumbest idea ever, I, I will, I will, hey, I'll fund 1/10 of it if you can find nine other people. And I think the only other person I could find here was Sergey, Sergey Brin. So it's like, okay, Sergey and I are the only ones willing to do this, I think. And so they didn't actually get it off the ground. But I said it's gonna fail, but at least it's something. And so then eventually I was kind of like, listen, if you guys are not going to commercialize the T0. Do you mind if I do it? And they're like, no, that'll be totally fine. Like, okay. So then I was going to. It's like, okay, so go do this with JV and we'll go create a commercial version of the T0. And then Gage and Koconi said, well, you know, there's some other people who also want to do it. Do you want to maybe team up with them? He said there were two other groups that wanted to do it. And I was like, okay, sure. You know, maybe this is a way that I can have my cake and eat it too, you know.
- [38:37]
Interviewer 6
Never works out.
- [38:38]
Elon Musk
God damn. Try to have your cake and eat it too, doesn't it?
- [38:43]
Interviewer 6
This one's going to be easy.
- [38:45]
Elon Musk
No, I mean, well, I didn't think it would be easy, but it was like, I thought maybe I can allocate like 20 to 30 hours a week and just work on product engineering and then other people can do that stuff. And I don't even like doing that stuff anyway, so that didn't work out. So then Tom Gage said, He said there were two teams, but I only ever met one. And that was Everhard, Toppening and Wright. But like, the thing that really bugs me about them is like, they Everhart in particular, the worst guy I've ever worked with. And I want to make a note of this. He is literally the worst person I've ever worked with. And I've worked with some real douchebags.
- [39:33]
Interviewer 2
Okay?
- [39:35]
Elon Musk
So to be number one takes a lot. It's not easy. His version of the story is that out of the blue, he pitched me on funding his electric car company and he convinced me to do it. Totally false. Okay. I was like, I'm creating an electric car company. It's like the Engage said, well, maybe you could team up. It's like, okay, well, that might be worth doing. And so the company ended up being basically five people. This is right Toppening, Ever Hard, Straubl and myself. And so it was the five of us. And Topping always tries to write, write right out of the history books because they had a huge battle and they made me choose which one was going to be CEO, right? Or ever Hard. And I talked to jv. I was like, which one? Because I really did not want to be CEO, so. And they're like, okay, well, both have issues, but maybe Wright has bigger issues than Toppening. That's what JV said. So maybe, you know, less revivals. I was like, okay, fine, I gotta make A choice here because the two of them would not. They would not. They refused to be in the same building. So I was like, a lot of drama. Teza has so much drama. And I was like, okay. You know, it's not like I said, like, you know, you know, less retrievals. So it's like I said, you're right. Sorry. You know, not that I didn't think he had good points, but I gotta, if I gotta pick one, and I adore. I was trying not to be CEO. I gotta make this rocket company work. So then made, you know, it was like, right, you know, it's like had to leave then. Anyway, so we've got the. Basically we jammed AC propulsion, powertrain and battery pack into a Lotus Elise with the first prototype being like, really just jammed it in. You know, In retrospect, this was not a good idea because the car ended up weighing like 60% more than in lease or on that order. And we didn't have enough volume to put the battery pack. And we had to meet all. We invalidated all of the crash tests because the weight distribution was different, it was heavier. So none of the crash tests were valid anymore. We had to redo the airbags. The, the air conditioner ran off a belt fan, so we didn't have a belt fan. So we had to have a new air conditioning system. So we had to change the H vac system. And so basically in the end, only about like, I think 6 or 7% of the parts ended up being in common with Elise, so. And we went through a lot of trouble trying to shoehorn everything in there. And I mean, it's a cute car, but it's 10% too small. And, and then the cost ended up being crazy. And. Yeah, and then, yeah, there was, there was an audit of the costs of the production cost of the roadster by one of the investors that joined in 2007.
- [43:34]
Grainger Announcer
And if you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER Click grainger.com or just stop by Grainger for the ones who get it done.
- [44:06]
If you're the purchasing manager at a manufacturing plant, you know, having a trusted partner makes all the difference, that's why hands down, you count on Grainger for auto reordering. With on time restocks, your team will have the cut resistant gloves they need at the start of their shift. And you can end your day knowing they've got safety well in hand. Call 1-800-GRAINGER click granger.com or just stop by Granger for the ones who get it done.
- [44:35]
Elon Musk
And then they called me up and said, hey, the numbers that Martin is telling you that everyone's telling you about the roadster are totally false.
- [44:44]
Interviewer 3
Oh boy.
- [44:45]
Elon Musk
And I was like, what do you mean? He said, no, we just didn't order it. It's more than twice of what he's saying. Yeah, it's like we would have to sell this car for a quarter million dollars in order to make, to not lose money. Like this is insane. So anyway, then he, we obviously had to fire Eberhard. There was no choice about that. Yeah. And then it turned out he not only had he misled me directly, he'd instructed others to also lie. Yes. When I say like somebody is like the worst person I've ever worked with, it's pretty bad. So. But SpaceX also hadn't gotten to orbit that time. So I was like, man, so they're not so like, okay. I asked, what is the name Harris? Remember the guy blanking on the name?
- [45:49]
Interviewer 6
We brought in a CEO.
- [45:50]
Elon Musk
It was interim.
- [45:53]
Interviewer 6
Yeah, he ran like a manufacturing company. I mean he seemed pretty smart. The problem that I found with Tesla was we were startup in Silicon Valley building a car that was really manufacturing, materials engineering. It's really like all the talent was for you think there was probably talent, you know, in Detroit or Japan, but if you took any of those guys in to run Tesla, they would run it like a car company and then it would be destroyed.
- [46:26]
Elon Musk
Well, they had no idea. You couldn't take somebody who's running a giant race.
- [46:28]
Interviewer 6
You could not take someone from a massive company culture and have them do a startup. And yet you couldn't find anyone in Silicon Valley who knew, who knew enough about making cars. And so we kind of found a middle of the road. He was an expert in manufacturing, ex.
- [46:43]
Elon Musk
CEO of Flextronics was an investor and he agreed to just join as interim CEO. And this is 2007. Yeah, but I mean, Tesla was a.
- [46:55]
Interviewer 6
Company you tried so hard not to be CEO of.
- [47:01]
Elon Musk
Yes, but the thing is this is misinterpreted. If I say that it's most interpreted, it's like I somehow don't love Tesla, which I do. It's just like trying not to go insane with work.
- [47:12]
Interviewer 6
Yeah, you can. Being CEO of a real startup is 80 hours a week. Being CEO of two is 160 hours a week. And there's only 169 hours or something of sleep, 168 hours a week. So, like, you just can't physically do it.
- [47:28]
Elon Musk
Yeah, I mean, pain level is extreme, so that's. Yeah. Anyway, I tried quite hard not to be to, but had to be. No choice that Ortel would die. So. Yeah, Eberhard was fired in July 2007. And at the time we didn't know he'd instructed other people to lie, so we thought he was just, you know, it wasn't as bad, but once he left the building, then it turned out, no, he'd actually orchestrated a massive deception, which is quite bad. So. Yeah, well, he also said he came up with the name of Tesla Motors, which is false. That was created by a guy in 95. And moreover, he knows this because we went to great length. We had to buy the trademark.
- [48:29]
Interviewer 6
Yeah, exactly.
- [48:29]
Elon Musk
So he can come up with the name. It was a trademark in 95. So it was like a whole bullshit backstory of it. But the guy. We almost had to change the name of the company because the guy who owned Tesla Motors wouldn't communicate with us. And so eventually we sent the nicest guy in the company, now who's weirdly Martin's best friend, which I don't understand, but Mark Tarpenning, super nice guy. I like Martin a lot, actually. You can't not like Mark. It's impossible. He's super nice guy. So we sent Mark to go sit on the guy's doorstep and not leave until he. Until he agreed to at least negotiate with us or something. He talked to us and then we ended up buying the trademark for $75,000.
- [49:21]
Interviewer 4
Good deal.
- [49:23]
Elon Musk
Yeah.
- [49:25]
Interviewer 4
Was he the one who owned the domain too?
- [49:27]
Elon Musk
No, that was a whole different nightmare. But no, the domain guy. That took us 10 years to buy that tesla.com domain, man. And it was a. It is, I think, still like a networking engineer at Juniper. So. Yeah, that was. And that cost us like $10 million. Yeah, that was crazy.
- [49:53]
Interviewer 6
Like, just. The guy just held out.
- [49:56]
Interviewer 5
Was he just sitting on the domain or was he using it for something?
- [49:58]
Elon Musk
It was impossible to. No, he wasn't using it for anything.
- [50:02]
Interviewer 7
Just holding the name.
- [50:03]
Interviewer 5
It's like Twitter handle Falcon Heavy is.
- [50:08]
Elon Musk
We're fighting for that one. Yeah. So, man, that was. Took us ages to buy the Tesla economy, but we were going to have to change the name to be something else. And actually the lead candidate was Faraday as the name because Faraday invented the electric motor and then Tesla perfected the electric motor with the AC induction motor. So is if we couldn't do Tesla, we would do Faraday. And then ironically a competitor was later created called Faraday.
- [50:45]
Interviewer 7
Yes. A startup.
- [50:47]
Elon Musk
Yeah.
- [50:47]
Interviewer 7
From China, right?
- [50:49]
Elon Musk
Yeah, yeah, yeah.
- [50:52]
Interviewer 5
So did you guys have a Faraday logo or anything? Were you that far down?
- [50:56]
Elon Musk
No, we didn't really even have a Tesla logo until later because there's nothing to sell or anything. So in the end the Tesla logo and the Tesla font was done by me working with basically a little firm. That's why the Tesla and SpaceX, there's some similarities between the fonts and that's because. Just done by the same people. Yeah, I spent a lot of time on The Tesla and SpaceX fonts. Little things. That's cool. Yeah, sure, sure. Excellent. All right, awesome.
- [51:53]
Grainger Announcer
If you're an H vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Granger for the ones who get it done.
- [52:23]
If you're the purchasing manager at a manufacturing plant, you know having a trusted partner makes all the difference. That's why hands down, you count on Grainger for auto reordering with on time restocks, your team will have the cut resistant gloves they need at the start of their shift and you can end your day knowing they've got safety well in hand. Call 1-1-800-granger click granger.com or just stop by Granger for the ones who get it done.
- [52:57]
Elon Musk
It would be much easier if the world was flat or if you're, if you're in a flat situation. As soon as things are not flat and you've got the, the world has undulations and curves and, and then your, the car can be at any kind of, at any kind of angle and then if you accelerate or brake, it's actually going to tip a little bit. Yeah, you've got sort of pitch and yaw compensation. That's where it gets really tricky.
- [53:21]
Interviewer 2
Yeah, I mean they're doing just amazing work. It literally just Blows my mind every time. Like there's an update. Like you think it's like, wow, I can't believe it's this good. And then it just gets better.
- [53:33]
Interviewer 5
Like the big one was the faster lane changes. You push the turn signals like, like immediately. It's really awesome.
- [53:40]
Interviewer 2
That's so satisfying. Yeah, I was kind of just like before, I was like, okay, it's not that good, but it feels good because like, I can't believe a computer's doing this. Then we got the faster ones and I was like, oh my God, it was so bad before, you know?
- [53:55]
Interviewer 5
Yeah.
- [53:56]
Elon Musk
I mean, it'll be able to just do crazy maneuvers like, like a high speed chase technically, because you don't always want to bias the thing to be conservative in any actions that it takes. But there's quite a significant foundational rewrite in the Tesla autopilot system that's almost complete as well.
- [54:20]
Interviewer 2
Yeah, and what part of the system, like perception, like planning or just like.
- [54:29]
Elon Musk
Instead of having planning, perception, image recognition, all be separate, they're being combined. So. Yeah, I don't even understand. The sort of neural net is absorbing more and more of the problem. Right. Beyond simply the. Is this is if you see an image, is this a car or not or what? You know, it's kind of. What do you do from that? 3D labeling is the next big thing where the car can go through a scene with eight cameras and kind of paint, paint a path and then you can label the path in 3D. This is probably two or three order of magnitude improvement in labeling efficiency and labeling accuracy. 2, 3 orders of improvement in labeling efficiency and significant improvement in labeling accuracy. As opposed to having to label individual frames from eight cameras at 36 frames a second. You just drive through the scene, rebuild that scene as a 3D thing with. It's just like there might be a thousand frames that were used to create that scene and then you can label all at once.
- [56:02]
Interviewer 1
Is that related to the dojo thing you mentioned at the Autonomy day?
- [56:05]
Interviewer 2
No, dojo is for learning, for training. The neural net. That's like when you're trying to build the neural net that you ship into the car. Dojo speeds that up by hardware accelerating it.
- [56:15]
Elon Musk
Yeah, exactly.
- [56:17]
Interviewer 2
Are you guys. Is that up and running yet or no?
- [56:20]
Elon Musk
It might be. We might have the first one at the end of this year, but next year, I think it's very likely next year, maybe this year. But it's essentially meant to absorb massive amounts of video input and then train against vast amounts of data so that it can be used in the inference engine in the car. It's just like a human really. It's like how long does it take you to learn a subject versus do a subject? You know, it's like hard to learn say calculus, but once you learnt it then you can, you know, integrate something fast or something. It's like, it's a, it's really the same basic thing.
- [57:04]
Interviewer 2
Yeah, I mean that'll just really tighten the feedback loop. Like at some point it just gets impossible to catch you guys. The rest of the people haven't even really started the rest of the auto industry and the feedback loop is just getting so tight with autopilot now. It's just like, makes it a lot easier.
- [57:21]
Elon Musk
I think they will catch up eventually or at least they will catch up to where Tesla is now. I don't know things like for example, we're talking about maps and directions and how today computer based navigation is considered trivial. But back in 95 it was not trivial. It was considered very hard. And the compute power you had was tiny. So the code had to be super tight. It couldn't have fluffy code if you, you know, trying to execute something on like a 386, you know, like very, very puny amount of memory and compute. So, so now it's. But, but now maps and directions are, are easy. I think at some point in the future it might be a decade or something, then autonomy will, will seem easy.
- [58:20]
Interviewer 2
Yeah, I mean it'll obviously be commoditized.
- [58:22]
Elon Musk
In the long term. Yes, it will seem easy in 10 years, but there will be a long stretch there where there'll be vast differences between cars. Well, the auto industry is used to slow rates of improvement. So you know, it's this not really a car yet that matches the original Model S. Maybe you could like take 2012.
- [58:55]
Interviewer 5
Yeah.
- [58:56]
Interviewer 2
If you look at like the EPA ratings, it literally is just all below.
- [59:00]
Elon Musk
Yeah. So that was 2012 and it's 2020. So it's, it's still like pretty hard to get a car. Let's say that's there's something. There's not a car available at the price of the Model S that has the capabilities of the Model S of 2012.
- [59:18]
Interviewer 2
It's kind of exactly what you were talking about with the Elise where you're like, oh, we'll just put a battery in the Elise and that kind of showed you like, okay, we really need a ground up electric design and the.
- [59:27]
Elon Musk
Rest of the industry hasn't done that. The sort of founding principles of Tesla were basically Completely wrong. The premise going in is like, it's not going to be that hard. You know, we'll just take the Lotus Elise, you know, nice lightweight car, and we'll take AC propulsion's drive unit technology and we'll put them together and we'll have an electric car and it'll be great. Sounds pretty easy. Yeah. Except the AC propulsion technology could not be industrialized. Like, it was like basically handcrafted electronics with an analog motor controller. And so depending if there was hot or cold, your car would respond differently or not at all. And the motors were hand wound. It was just like, it was impossible. It cannot scale this technology. You could have like finicky, individually made, super expensive prototypes, but you could. We ended up using none of the AC propulsion technology. So something that looks cool and works well at an individual prototype level does not necessarily scale. And then the, like I said it was like maybe 7% of the parts of the original roadster were in common with the Lotus Elise. It would have been way easier if we started from a blank slate. It would have been a better car. But I think the real test of any given startup is how well does it respond to adversity and adapt and just figure it out, you know. So like most things are just when they start out, they're just, they don't make a lot of sense. But then as long as you adapt quickly, then you can make the company work. And, you know, if you say like sort of confinity, you know, doing palm pallet tokens with an infrared port made no sense, but they adapted quickly to online payments. You know, that was key. And yeah, edx.com was originally going to buy it off way more than it could chew by trying to do all the banking services. And that also focused on payments. It's like if we do all these banking things, we're going to need a banking license. Banking license is going to slow us down. We just focus on payments. We can just get a payment license from the state and it's just like 50 bucks or something. You can be a money transmitter, literally. So you just gotta adapt quickly.
- [62:07]
Interviewer 2
You kind of need to be naive, though. If you had known as much about manufacturing, you might not have done it.
- [62:15]
Elon Musk
Yeah, yeah, this would have been. It would have been difficult to. I guess if you know the outcome is going to be good in the end. Sure. It sort of depends on how much foreknowledge do you have about it. Manufacturing is insanely difficult. It's under appreciated in its difficulty.
- [62:37]
Interviewer 6
Yeah, no, that's totally true.
- [62:38]
Elon Musk
Yeah, even making the roadster, which peak made around 600 roadsters in a year. But call it like 10 a week or something like that. 10 or 12 a week. So if two got made in a day, that was a big day. And Tesla's making over a thousand cars a day. Now.
- [63:04]
Interviewer 6
What I find amazing is from start to finish a car is made in 48 hours.
- [63:09]
Elon Musk
Yeah. Depending on what counts. Start to finish for you.
- [63:11]
Interviewer 6
Yeah, it depends but, but you can see the rolled aluminum in one section of the factory and you can see the cars coming out the other end and it really is astounding. And cars have been built for a long time but, but this is just astounding. It's still when you, you don't appreciate when you're driving a car how much goes into the level of detail, the 10,000 parts that come together, the shaping of everything.
- [63:32]
Elon Musk
10,000 unique parts.
- [63:33]
Interviewer 6
Unique parts.
- [63:34]
Elon Musk
Wow. Pack alone is several thousand cells.
- [63:37]
Interviewer 6
And it all comes together with people that are skilled but you know, skills are changing as, as things become a little bit, there's more, there's more autonomy, but it's not, it's not. Autonomy is not perfect. So you, you do need to have a lot of people there and, and these cars have to be perfect. I mean it's just, just, yeah.
- [63:59]
Elon Musk
Given how much complexity there is in a car, it's remarkable. They cost as they do. There's so much that's in a car.
- [64:08]
Interviewer 5
So what sort of processes did you remove like you know, first principles type thing approach from the Elise to like the Model S. Was it a massive jump there?
- [64:19]
Grainger Announcer
If you're an H vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first product problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Grainger for the ones who get it done.
- [64:49]
If you're the purchasing manager at a manufacturing plant, you know having a trusted partner makes all the difference. That's why hands down, you count on Grainger for auto reordering. With on time restocks, your team will have the cut resistant gloves they need at the start of their shift and you can end your day knowing they've got safety well in hand. Call 1-800-GRAINGER click granger.com or just stop by Granger for the ones who get it done.
- [65:18]
Elon Musk
Yeah, it's gigantic. Tesla never made a car, made a full car before. Lotus made the non powertrain portion of the Roadster and then Tesla built the battery pack, motor power electronics charger and then put it all together at the end. And the final assembly was actually at an old Ford dealership in Menlo Park. That was. You can see some of the stuff in Revenge of the Electric Car. Yeah, I've seen. Great movie.
- [65:55]
Interviewer 5
Yeah, it's great.
- [65:56]
Interviewer 2
It just gives you crazy perspective and look back on it.
- [65:58]
Elon Musk
Crazy.
- [65:59]
Interviewer 5
We need a third one.
- [66:01]
Elon Musk
Yeah, I mean the idea of having a car like a car assembly, tiny plant in Menlo park of all places. And that was just because we managed to sublease the Ford dealership closed down and we managed to get this deal from Stanford because the Stanford's going to redevelop it. And we figured they'd probably take way longer than they expected to redevelop it. So we said, well, you're not bringing it to anyone. Can we pay you like 50 cents a square foot and you can kick us out whenever you want. And it was actually a huge dealership and it had enough room to do final assembly of the cars. So we just did a final assembly of the cars there. Oh, amazing. Yeah. And one of the most absurd places to build cars on Earth is Menlor.
- [66:49]
Interviewer 5
So no test track or anything, just the road outside or something?
- [66:51]
Elon Musk
Yeah, well, we'd actually, the early roasters were very unreliable, so we generally put about 50 miles of just normal driving. Just drive around the Bay Area with somebody following. You must have got crazy looks from people. Right?
- [67:07]
Interviewer 5
It's like, what is that?
- [67:08]
Elon Musk
Yeah, but we put 50 miles in each one of those cars because they just have a lot of things that break down in the first 50 miles, so. And then, yeah, battery production was in San Carlos. Yeah. So man, that was. There's just a lot of detail and then all that. But going from the roadster to Model S was a massive leap because the, the Model S is quite a sophisticated sedan where we, Tesla built the whole thing as opposed to just building a powertrain and. Yeah. So, you know, competing against like Mercedes, BMW, Audi type thing. So that was a massive leap of difficulty. We did get the Nummi plant, but really that just meant we got a box. Yeah. Because they struck the plant. Of all the good equipment, the only equipment that Toad and GM left behind was the stuff that, that they could not use anywhere else. So they only left the most chunky, broken pieces of equipment behind. We managed to use some of it, but yeah, in the paint job. I mean, some of the things were literally not even worth the scrap value. So it was like, not worth it to call a scrap metal dealer.
- [68:33]
Interviewer 5
What'd you do with it then?
- [68:36]
Elon Musk
We made a lot of those things work.
- [68:37]
Interviewer 5
Oh, you did?
- [68:38]
Elon Musk
Yeah. Plastic injection molding machines, and we made them work. Wow. And the paint robots, we mostly made those work. But the assembly, the body production line had to be made new because there was just nothing. So the body production line for Model S was created from scratch. Yeah. And worked out, but it was very difficult. It was also in the beginning, the. The top suppliers would not work with us or we would get like their D team because, like, who wants, you know, if. If they like they got all these customers, like, they got, you know, the big car companies, they got like Toyota or they got, you know, I unw. Ford as customers and a startup who. Now you're in the flyest position. Which team are you going to assign to this startup that everyone says is going bankrupt? You're going to assign the interns and rejects. Okay. It's not going to be your top team.
- [69:38]
Interviewer 5
We have the same thing with.
- [69:38]
Elon Musk
Our top team's going to go to, like, Toyota, you know, your big customers. Top team. So we'll get the worst team usually at the supplier company, if the supplier would even work with us.
- [69:48]
Interviewer 2
You think that influenced you to vertically integrate more?
- [69:50]
Elon Musk
It was vertically integrate or die. Makes sense. Yeah. We tried outsourcing. The battery production originally was going to be made at this place that made, I think, barbecue grills in Thailand.
- [70:05]
Interviewer 7
I read that story.
- [70:08]
Elon Musk
Yeah. And I was like, man, they have no idea how to make a baby battery. And I was like, this is crazy. We're moving it to. Back to our headquarters in St Carlos and we're just going to make it here because basically there's a massive amount of work going from a prototype to production. And so you need a fast feedback loop with engineering. And if that feedback loop is all the way out in Thailand, it's just no way. It's not like if you have an existing production line that you already know how to make it in volume, that you can move, but you cannot create a production line that never existed that's super far away from where the engineers are. It's gonna. It's ready before disaster. And also the cells were coming from Japan. So they go from Japan, they go to Thailand, they go through customs, they'd be waiting. Then they'd Be going to a battery pack. Then that battery pack would be sent to England, then Lotus. These are all things that got changed. But the supply chain, like, let's say there's been a problem with the cells. You'd only find this plan. Your exchange was so long that you'd only find out that it didn't work five months later.
- [71:17]
Interviewer 2
Yikes.
- [71:19]
Elon Musk
Yeah. And then you have five months of scrap inventory. So this is a recipe for a disaster. So that that got moved to San Carlos, cells shipped directly to San Carlos, put it in a module, figure out why the module's not working, fix it, put into a pack. The original reason why the roaster battery pack had, I think it was like 16 sort of blades, was if modules. If one of them didn't work, you could pull it out and put another one in. Because that happened. Then we. Then. Yeah. So you don't really need modules, in my view. Should just go from cell to pack at this point. But yeah, it was a very difficult thing going from Roadster to Model S.
- [72:10]
Interviewer 2
The fact that, like the Model 3 still has modules is kind of vestigial.
- [72:13]
Elon Musk
It's vestigial, yeah. Because the modules in the Model 3 are not actually interchangeable. So there's no point in having modules, really. You should just have a pack.
- [72:27]
Interviewer 5
Was that done to just save cost.
- [72:29]
Elon Musk
Then, or some other reason? It started off because it's not a sensible reason. The reason that there were sales modules and pack goes back to the early Roadster days where we'd make a module, that module would have problems. And so then you could swap out a module. It's like a server rack. The idea was like, if you have a bunch of servers in a server room and one of the servers flakes out, you can pull it out and put another one in without having to replace. So you could replace a small fraction of the pack instead of the whole pack. Then that concept just carried forward into Model s, x and 3, but without the. But the original logic no longer exists because the modules are not interchangeable. You can't just swap out a module. But these things just have a lot of inertia. So we really want to move to. No such thing as a module. There's just cells and pack.
- [73:35]
Interviewer 5
Yeah, because, I mean, initially they had the battery swap facility at Harris Range. I mean, and then the Model 3, I don't think it had that capability that you could actually swap the whole pack out quickly.
- [73:45]
Elon Musk
Right.
- [73:46]
Interviewer 5
Or I don't know.
- [73:47]
Elon Musk
It does not.
- [73:47]
Interviewer 5
Yeah.
- [73:47]
Elon Musk
Right. SNX still have the ability to do a fast pack. Swap. But things essentially evolved in the same direction that phones evolved. You know, for a long time, phones had swappable battery packs, and now basically nobody, almost nobody, makes a phone with a swappable battery pack. Definitely. As soon as the range gets past a certain point, then I agree. Yeah, it doesn't make sense. But this was far from clear at the time of designing the Model S. So we went to a lot of trouble to make the S and X pack capable of a fast swap with quick disconnects and bolts coming in only from the bottom and that kind of thing. And then we did that demo. We swapped out two packs faster than somebody could pull a gas tank.
- [74:29]
Interviewer 5
That's amazing.
- [74:30]
Interviewer 2
It's kind of ridiculous to me, like, taking the battery out of your car just in, you know, Harris Ranch, and they put a new battery in, and you come back, it was kind of like, it's good. That supercharging got a lot better.
- [74:43]
Elon Musk
Yeah, it was just way better to increase the range of the pack and have better, faster charging. So. But this debate, which seems obvious in retrospect, was not obvious at the time, definitely. And back then, I think at least a lot of phones had swappable packs because this would have been designed in. We had the first prototype out in 2010 for the Model S. So back in 2010, let's say the thought process going into this in 2009 would have been a time when, I don't know, maybe most phones had solvable packs or something like that. You know, the iPhone was like, 2007 or something. IPhone One. And. Yeah, so then it didn't make sense. But, you know, companies have a lot of momentum, so the SNX pack is still a swappable pack. It was, like, too much trouble to change the Design. And Model 3 still has modules, even though it shouldn't have modules. What you'll see in any given product is that the errors in the structure of an organization will manifest themselves in the product. So that's where we have a module team. So we have modules. Like, wait a second, just combine the module team with the pack team, and then there won't be modules. So generally, the. The errors in the organization manifest themselves in the product. You can see where the organizational boundaries are. And then you often get a box in a box. It's like, wait, why does this thing have two boxes? Well, because this team wanted to have an enclosure, and this team wanted to have an enclosure, and so they have an enclosure on an enclosure. This is still the case with. What a silly thing. But that's actually the case with the Model 3. Model 3 battery pack has a top enclosure and the car also has an underbody. Yep. What's the point of that? That doesn't make any sense because the pack team wanted to have an enclosed battery pack and the body team wanted to have an enclosed body. Yeah, it makes sense but you don't need two. So yeah, awesome. This is all this and putting the top cover on the battery pack is a big pain in the neck as mass and cost and stuff. So that should definitely go away in the future. Lots of brackets on brackets, that kind of thing.
- [77:28]
Interviewer 5
So you survived the production hell of the Model 3, which was pretty intense.
- [77:34]
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- [78:34]
Elon Musk
I mean that was like stupendously difficult and I mean I think it's sort of Tesla. I don't know if this is accurate enough, but I think it might be accurate. Is the first company car company to reach volume production I think on an 80, 80 or 90 years or something like that in the U.S. that's wow. Yeah.
- [78:59]
Interviewer 3
And it's a harder time to do it for sure.
- [79:01]
Elon Musk
Yeah. The complexity of like what people. The regulatory requirements and the minimum expectations for a car at this point are dramatically more than they were 80 or 90 years ago.
- [79:12]
Interviewer 3
And the place you chose to do it too.
- [79:16]
Elon Musk
Yeah, so that was. It was a super difficult one. I mean there's lots of car company startups but that's doing the prototype is the easy part. Building the production system is 100 times harder. So I mean that's where you see, the things fail. There have been over the course of the last century, probably thousands of car company startups, most of which people have never heard about. Occasionally we'll hear about some, something like a DeLorean or a Tucker. Most of them, there's not even a footnote. And it's because of the difficulty of production. And here's a real important point that is not well appreciated. This is a point that should be advanced by short sellers, but I've not seen it articulated, but it should be. The incumbent car companies make most of their money from selling spare parts to their existing fleet at high margins. And they'll sell the new cars either at de facto zero margin or even at a loss. It's kind of like printers and cartridges or razors and blades. You sell the razor at a loss, sell rates of profit, solar printer, less seller quadrants of profit, or video game consoles. You know, the actual cost of say an Xbox is $600. We can buy it for 3 or $400 because they make it up on in the games that are bought. So this is. So if you're a new company, you do not have a fleet, so you have no fleet with which to subsidize the, the sale of your new cars. This is the, this is the primary reason there has not been a successful car company startup in the United States. This is the primary reason. So because the incumbent car companies have 80% of their fleet outside of warranty or something like that, maybe it's 70%, but approximately, like if a car lasts for, say 20 years or something like that, the warranty is for four years, then it's 80% out of warranty. So even if they stopped selling new cars, they would still the profit would increase.
- [81:46]
Interviewer 2
So according to Edmunds, dealerships make 20% of their revenue, but 50% of their profits on service.
- [81:53]
Elon Musk
Yeah, exactly. So and the car companies themselves will often make more than 100% of their profit on selling spare parts. Wow. Yeah. So if the point which they're making, say 110% of the profit from selling spare parts, it means that they're actually selling the new cars out of loss. So this is a very difficult thing to overcome. In order to overcome it, the.
- [82:23]
Interviewer 5
A.
- [82:23]
Elon Musk
Car has to be significantly more compelling than other vehicles, such that people are willing to pay a premium and that you can actually be positive cash flow, aspirationally profitable selling new cars, not simply selling spare parts to the fleet. So for Tesla's fleet is probably 10% of Tesla's fleet or something less than 20%. Is out of warranty, whereas 80% of the other car makers is out of warranty. So this makes it very difficult. Also, electric cars need much less servicing, so that's another difficult thing. So this is the main, this should be the main argument advanced, I think, for why a new car company cannot be successful. The main one. And so, yeah, then like I said, in order for that car to have car company to have any chance, it must be compelling enough that people will pay for you. Otherwise there's no chance. And I think there's actually in order for a car company to be successful, it has to succeed on two, on two fundamental technology discontinuities, one being electrification and the other one being autonomy. I think even pure electrification by itself is not enough. So you can. Since the moving production line, there have been two major technology step changes being electrification and autonomy. And the combination of those two is the only, that's the only opening for a new car company to make it.
- [84:10]
Interviewer 2
Yeah, makes sense. I mean, without autonomy, you'd probably have to wait for EVs to reach price parity. With, with autonomy you can drive many more miles and bridge that gap easier.
- [84:22]
Interviewer 1
And it's like, well, Tesla's moat in some ways, or not moat I guess, but like Tesla's advantage in many ways is bigger because like these are two such different technologies that are happening at once that you've been working on while nobody else has. So it's like that much harder to replicate now that it's been accomplished almost.
- [84:40]
Elon Musk
It's very hard for. It's very hard for any new car company to enter the market. They have to make a very compelling product, meaning they have to have some significant technology advancements in the electricity drive, drivetrain and the battery pack and just generally with the car itself. And then the autonomy has to be very compelling. Autonomy in and of itself is enormous. So both of those things a company must be successful in doing or they will end up in the cemetery. So that's the real challenge of it.
- [85:29]
Interviewer 5
Yeah, well, even with like the, I mean, the software updates, I mean that's something that no other manufacturer can really even get, right. They can't do it over the air. You have to take your car in to, you know, because it doesn't work.
- [85:39]
Elon Musk
Right.
- [85:39]
Interviewer 5
So that's a core component of providing updates. Instead of getting your revenue now from the dealership and spare parts and stuff, you can actually send software as a service. You know, we actually did a whole podcast on this.
- [85:52]
Elon Musk
Well, our goal is to minimize service costs, whereas the other car companies, this Is I wouldn't say the goal is to maximize service costs, but it's certainly not to minimize it.
- [86:03]
Interviewer 6
Well, car companies also have two different businesses as the dealerships where their business is actually just service. And I don't think it's anyone's surprise that people don't like going to their dealer. I mean it's like it's because their incentives are actually not aligned with the customer's incentives. Their goal is to bring you back as often as possible.
- [86:29]
Elon Musk
Yeah, the dealerships incentives are also misaligned with the car companies during the warranty period because the car company has to pay for the service during warranty. So it's. So they have a conflict of economic, conflict of interests. Yeah, the car companies cover the warranty costs, but the dealership makes profit on the servicing. So they want to maximize servicing even during the warranty period.
- [87:03]
Interviewer 2
It's almost like the economic factors you just mentioned have created complacency where there is no innovation. But because nobody can just start a car company.
- [87:14]
Elon Musk
Right. I mean it's like Schumpetta's creative destruction. There's like innovation tends to come from new entrants to an industry. So if an industry has formed an oligopoly or something like that, then the forcing function is weak for innovation because innovation tends to come from new entrants. Yeah, this is the problem with rockets. There's not a lot of new entrants. So innovation forcing function is weak.
- [87:51]
Interviewer 3
But it's encouraging to see a rocket booster land and everyone is like, wow, we can innovate maybe.
- [87:57]
Elon Musk
Yeah. It's actually been surprising how little innovation has been on the. And despite SpaceX showing reusable rockets landing and reflying these rockets many times the they're like come on, you know, just copy it or something.
- [88:14]
Interviewer 5
The same with Tesla. I mean yeah, tech works, just do the same thing.
- [88:18]
Interviewer 4
Didn't like Chinese space companies started putting grid fins on their rockets.
- [88:22]
Elon Musk
I think there's some change rocks that have launched with grid fins. Although you can really use any kind.
- [88:28]
Interviewer 1
Of fin.
- [88:31]
Elon Musk
Grid fins just more predictable across a wide range of speeds. So from hypersonic through supersonic, transonic, subsonic, it's quite easy to predict the behavior of a grid fin. And the center of pressure of a grid fin doesn't change that much. Whereas if you have a fin fin like a wing looking thing that you'll see quite a big change in where the center of pressure is across a wide mock regime, either one would work. The shuttle didn't have grid fins.
- [89:10]
Interviewer 4
What do you think About Rocket Lab's approach of trying to use a helicopter to recover the first stage.
- [89:18]
Elon Musk
Yeah, I think that's going to be harder than it seems.
- [89:21]
Interviewer 3
Yeah, I think so.
- [89:24]
Elon Musk
But their booster is quite small. So the issue with helicopters is you run into a max load problem. Like the lifting capability of helicopter is not that great and that lifting capability drops with altitude and then the range of helicopters was not that great. So. So then you end up having to have the helicopter on a ship and then if in bad, in heavy weather conditions you can't take off. So you have to be your weather constraints at the launch point and the catch point end up limiting your launch availability. And then you got to. It's dangerous. You've got somebody in a helicopter with a pilot trying to catch this thing coming out of the sky.
- [90:17]
Interviewer 3
It doesn't sound too sane.
- [90:19]
Elon Musk
There's certainly the potential for somebody, you know something to go wrong. Whereas if you have a drone ship, there's, you know, if it smashes into the drone ship, it's not a big deal. But smashing into helicopter, that's a big deal. Yeah. So, you know, overall I've been, you know, that's it. I've been pretty impressed with Rocket Lab and they're making it go of it and they're gonna do reusability which is important. It's fundamental.
- [90:55]
Interviewer 2
Do you guys still see yourself doing that city to city travel in 30 minutes one day?
- [90:59]
Interviewer 5
That would be awesome.
- [91:00]
Elon Musk
I want to do. Yeah, I think that can for sure can be done. Yeah, for sure it can be done. It is loud. It's really a noise is the biggest.
- [91:12]
Grainger Announcer
If you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Grainger for the ones who get it done. If you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first part problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER click granger.com or just stop by Granger for the ones who get it done.
- [92:12]
Elon Musk
Concern there worth taking off and landing when it comes in for landing. That sonic boom is loud. It's like. Yeah, there's actually two sonic booms so it sounds like somebody just discharged a double barrel shotgun in your backyard. So it's not like it's breaking windows or anything, but it's like it'd be pretty annoying if it's happening on a regular basis. That's basically what it amounts to. So. So then you have to do it offshore. So I think we'll do. But can it be done? Definitely. And it's the fastest way to get anywhere based on known physics, so. And I think the economics can be made to work as well so that it would be competitive with international air travel.
- [93:07]
Interviewer 3
That'd be exciting.
- [93:10]
Elon Musk
Wow, I can't wait for that.
- [93:11]
Interviewer 7
I travel a lot. Like to Asia. Like minimum like 12 hour to 14 hours.
- [93:18]
Interviewer 3
Will you try to keep most of the launches around the equator just. Or would it matter? Like.
- [93:24]
Elon Musk
It doesn't matter a ton. It matters if you're going east to. If you launch east, you have the advantage of the Earth's rotation. The closer you are to the equator, the more you can take advantage of Earth rotation. If you fly west, you're actually counteracting Earth's rotation. So your delta velocity that you need is higher, but you can go in either direction. I think one of our upcoming launches is actually retrograde flight, so it's going to go against the Earth's rotation.
- [94:03]
Interviewer 3
That'll be fun to watch.
- [94:05]
Elon Musk
Yeah.
- [94:06]
Interviewer 4
But if Starship is going to launch so many times a day, how are you going to produce all these Raptors? Because we've been touring the SpaceX factory in Orthon and you're making them by hand, right? Are you going to automate any of this?
- [94:19]
Elon Musk
Yeah, I wouldn't say it's being made by hand. Being assembled by hand maybe, but yeah.
- [94:24]
Interviewer 4
That'S what I mean.
- [94:26]
Elon Musk
We have a lot of metal printers with a whole.
- [94:29]
Interviewer 5
Yeah, that's incredible.
- [94:29]
Interviewer 2
3D printers are crazy.
- [94:31]
Interviewer 5
3D metal printing, wow.
- [94:32]
Elon Musk
Yeah. Love it. I mean I think SpaceX is pushing the envelope for metal printing more than anyone else. At least that's what the splash tell us. We also have a foundry, so we do casting of exotic parts for a Raptor. We have a lot of CNC machines. It's a very complicated engine to build. Merlin looks like a toy relative to Raptor, Very simple. But we're gonna make a lot of raptors and starships.
- [95:06]
Interviewer 3
So are they all gonna be made in the States then?
- [95:09]
Elon Musk
Yes.
- [95:09]
Interviewer 3
Okay. They'd have to be.
- [95:11]
Elon Musk
They have to be. Yeah, yeah. We can get simple ingredients from outside the U.S. but other than that, we're not, we're not allowed to transmit any sort of. NASA.
- [95:23]
Interviewer 3
Yeah, NASA, yeah, yeah.
- [95:26]
Elon Musk
Anything that like, is a sophisticated element of a rocket engine. We're not allowed to transfer out the earth or. Yeah, rockety stuff is the weapons technology. So.
- [95:37]
Interviewer 3
So just a starship, when it's assembled, will fly there and come back.
- [95:44]
Elon Musk
So technically there's a lot of rockets at the bottom of the ocean and they have. This is true.
- [95:53]
Interviewer 1
So if your city to city rocket travel works, does that mean Tesla doesn't need to build an electric airplane?
- [96:01]
Elon Musk
Man, bowling. Electric airplane has a lot of difficulty associated with that.
- [96:06]
Interviewer 1
Or what about the VTOL jet?
- [96:09]
Elon Musk
It's a lot of difficulty associated with that. I gotta make sure. Well, it takes a massive amount of effort to do any one of these things, so you can't do them all. It's not possible. Say how you allocate the resources, what's the best thing to do? Making a VTOL jet can definitely be done. Doing electric aircraft for sure. I mean, all transport will go electric. Except for rockets. Yeah, everything.
- [96:42]
Interviewer 1
I guess why it seems exciting is because if Tesla's leading in energy density and battery technology, then the logical next step is like, if somebody's going to build an electric airplane, it's the company with the best, lightest, most efficient batteries. Right.
- [96:56]
Elon Musk
Yeah, it's not, it's just, it's hard. It's an entirely different regulatory regime. Like there's. There aren't any car companies that are also aircraft companies, so why don't they just make aircraft? Yeah.
- [97:10]
Interviewer 2
Actually, you know, it's kind of funny, there was like some conspiracy theories on Twitter because on Instagram, Tesla's category it said automotive. And then somehow aircraft and boats got added bolts.
- [97:23]
Interviewer 1
Like at the cybertruck event. They changed cybertruck.
- [97:26]
Interviewer 2
They're making a boat or an airplane.
- [97:28]
Interviewer 3
This is like your Wikipedia.
- [97:32]
Elon Musk
I think it's incredibly hard to bring an aircraft to production and meet all of the regulatory requirements worldwide. It's a very difficult thing. So it's not like something that could just be done. We would have to not do a bunch of other things. It's not like there's like a ton of unallocated resources that tell someone like, oh, what should we do now? It's like a Constant resource starvation. So then it's like, why don't you do this other thing? Okay, well, we're starving for resources. Then what will you not do?
- [98:09]
Interviewer 1
Well, it seems like that's what's so exciting is now that the business has kind of taken this next step, the resource like starve is kind of changing or hopefully slowly changing.
- [98:19]
Interviewer 2
I mean, an airplane, like maybe another car or something.
- [98:23]
Elon Musk
It's not.
- [98:24]
Interviewer 1
Yeah, not necessarily in airplanes, but I'm just in general, it's. It seems like the financial health means you can spend more on R and D, you can invest more.
- [98:30]
Elon Musk
Like, that's not how it works. It's not like if you just had more money, you could spend it effectively in R and D. If there was a factory producing excellent engineers, that would be true. Where is this factory? Doesn't exist. So it's incredibly difficult to find the right talent, integrate them into an organization and have it work effectively. It's not a money thing. It's just hard to find. This is a short, A small number of people, you know, more engineers especially. There's just a fundamental limitation on exceptional engineers. There's just not that many.
- [99:15]
Interviewer 2
So given like these constraints and all the things you have to do, could you tell us like a little bit about your thinking on how you prioritize.
- [99:25]
Elon Musk
And the prioritize. Prioritizing has usually been out of desperation, not choice. It's not like, oh, let's sit back and how should we spend these resources? This damn thing isn't going to work. If we don't make it work, we're going to go bankrupt, you know, and then. So we better make it work. I mean, the Model 3 program, there were so many mistakes that were made with Model 3 program that the entire company had to be devoted to fixing the Model 3 production system. So we took everyone off solar, almost everyone off battery pack, power wall, power pack and that kind of thing. Anyone who is working on, you know, roadster, semi, everyone. Yeah. Stop doing that work on Model 3 or there won't be any Tesla.
- [100:26]
Interviewer 2
Yeah, it's kind of amazing. You really bet the whole company to get to this next level. But, you know, I mean, I have a Model 3. I couldn't afford a Model S. So, like, I'm very thankful that you guys decided to bet the whole company there was no choice.
- [100:39]
Elon Musk
It's like either you got to get to volume. It's a chicken and egg situation. You can't make the car at an affordable price unless you have high volume. Unless you have high volume, you can't get an affordable price. So now what do you do? Yeah, how do you bootstrap this thing? You basically just got to take a giant flying leap at high volume and hope you get to the, you know, grab a cliff ledge with your fingertips. Yeah, it seems like it's like an Indiana Jones where he's like running down the thing and there's. Because that's the. Here's what it actually feels like. It's like that, what? Temple of Doom, whatever. Where it's like there's a damn boulder chasing you down. Okay, Arrows shoot and there's a big hole in the ground.
- [101:20]
Interviewer 3
Can you make that game?
- [101:21]
Elon Musk
And you're going to jump across the hole in the ground, and if you slow down, the boulder's going to crush you. This is what it feels like. It's like, I wonder what you'll do. Boulder, hole in the ground, and then jump across. Or you're dying. So that's basically. Or, you know, the situation. You know, like, at this point, maybe we could say, like, okay, what shall we do at this point? You know, the biggest problem we have to solve right now is having production on each continent because it's insane to be making cars in California, shipping them to Europe and Asia. This is. I mean, as it is, making cars in the Bay Area is pretty absurd. And then you also got to ship those cars half around the world. So you got all this finished goods inventory on the water. That's very high capital carrying cost. And you can finance part of it, but not all of it. So, you know, then you got the transport costs, you got tariffs, you got, you know, every time a car gets loaded or unloaded, there's some potential for damage. It's not zero, you know, so it just creates a lot of cost and then it's hard to manage. And the factory complexity in California is amplified because you've got several different regulatory regimes. So you're building. It seems like you're building Model 3, but you're actually building several versions of a Model 3, depending upon whether it's going to China, Japan, Australia, Europe. Then you got goddamn right hand drive. Okay? It's like every now everything's going to go, oh, yeah, some random bureaucratic decision 100 years ago. Right hand drive, left hand drive. This is a mega pain in the ass. Yeah, absolutely. And all these different languages, you know, can't have, like warning labels in English if they don't speak English. It's like, I don't know what it means. So stickers all over the place for, you know, languages or Whatever it is. And that's all in one factory. So the complexity amplifies the difficulty of manufacturing. And then you kind of get into the cycle where in the first month in the quarter, or let's say first six weeks in the quarter, you build cars for Europe and Asia and you get them on the boats. And then for the next say three weeks, you build cars for the east coast of the US or North America. And then the final three weeks you bought cars for the west coast. So the deliveries early in the quarter look very, very low and they spike exponentially at the end because basically all the cars arrive at the customers at the end of the quarter. And they were like, then we'll have these conversations, we've got to get out of this wave. And they're like, well, they'll punish us very badly if we, we get out of the way because the financials will look horrible.
- [104:44]
Interviewer 6
Yeah.
- [104:45]
Elon Musk
So then we end up, okay, we'll do the wave again.
- [104:50]
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- [105:51]
Elon Musk
And so that, so now we've got a factory in Shanghai that should, that'll go a long way towards alleviating the complexity and the cost. You know, we'll have far fewer goods that we need to finance that are on boats. Once we get the factory going in Berlin, Brandenburg, technically, just close to Berlin, then this massively reduces the complexity of production and reduces the fundamental cost of the vehicle. So this will really de stress the company a lot.
- [106:31]
Interviewer 2
So local production will break the wave.
- [106:34]
Elon Musk
Local production will break the wave. I mean, just like We've had number of times that headlights have come up as an issue. It's crazy. We've had to ship cars to Europe many times where the supplier of the headlights for the EU headlights couldn't match rate or made them wrong or something. And then. So we may have to make cars with US headlights, ship them to Europe, then ship a bunch of EU headlights to Europe, change them in the port, because they're not allowed to exit the port until they have the EU headline.
- [107:07]
Interviewer 2
Oh, my God.
- [107:07]
Interviewer 3
So that was the port problems we would see.
- [107:09]
Elon Musk
That's one of the many port problems.
- [107:11]
Interviewer 5
Wow.
- [107:15]
Elon Musk
First year, quarter last year was a tragedy of errors. Not a comedy, but a tragedy. Belgium went on strike and you're like, what do you mean Belgium's on strike? I'm like, yeah. A lot of corners were coming into Zerb Bridge and. And like, okay, now what do we do? Nothing. Just cars are stuck because. Okay. But they. Then they're scheduled to go off strike and this other day and like. Okay, so then we can move things. Great. Anyway, there's just so many. So many things. And cars got stuck in the port of Shanghai because they had the wrong sticker.
- [108:03]
Interviewer 2
Oh, my God.
- [108:05]
Elon Musk
Yeah.
- [108:05]
Interviewer 7
They put the wrong stuff.
- [108:06]
Interviewer 3
Did the sticker, man.
- [108:07]
Interviewer 7
Yeah, I know, I know. It's better off, like, just made it in China.
- [108:14]
Elon Musk
Absolutely. For sure. Like, totally agree.
- [108:16]
Interviewer 7
You don't have to spend like two weeks, three weeks on the ocean, go there and roll sticker, and you have to wait and replace.
- [108:24]
Interviewer 2
People don't appreciate Giga Shanghai yet completely.
- [108:27]
Interviewer 7
Not until recently.
- [108:29]
Interviewer 2
Not yet. I don't think people have realized it.
- [108:32]
Elon Musk
It's extremely important. Yeah. Yeah. And these, like, shipping times are like, like, like technically it's possible. If everything goes right, you can get the car there in two weeks. But the ships don't. Don't leave every single day. And then you also have to queue. You can't just instantly load the cars. So the cars, you have to, like, send like 2,000 cars to a lot in, like, you know, Port Oakland or Port of San Francisco, accumulate the cars, then they get moved to another place. Then they get loaded onto the ship one at a time. Oh, my gosh. And then finally the ship leaves. And then, like, sometimes the ship has problems. Yes. And like the storms or something.
- [109:13]
Interviewer 7
Storm and custom.
- [109:15]
Elon Musk
Yeah. Like, it's hard to go through everything. There's so much drama.
- [109:20]
Interviewer 7
There's so many ways to go wrong.
- [109:21]
Elon Musk
Yeah. Then like, the ship's engine broke down. It's like, stuck somewhere. Yeah.
- [109:29]
Interviewer 7
But it's great, like, right now, like everything roll off the production line, go directly to the. It's wonderful. So I have another question. It's like from your perspective, how do Chinese public perceive ev?
- [109:45]
Elon Musk
Well, China is very pro ev and it's the biggest EV market in the world. I think it's like half of all the evs are made and bought in China. Yeah, something like that right now. Yeah. Yeah. So China sort of subsidies for evs have dropped conservatively. So that did cause a reduction a lot. Yeah. But it. The EV incentives were very high in China.
- [110:14]
Interviewer 6
Yeah.
- [110:15]
Elon Musk
And now they're much less, like a third of what they used to be or. Or less. Yes. So the. So that's caused some decline in demand, as one would expect. But still China is still the biggest market for EVs in the world, so I think they're very positively received. Wow, that's great. Yeah.
- [110:35]
Interviewer 5
So talking about the incentives, because you. I know the, the price. There was a small price reduction.
- [110:40]
Elon Musk
Right.
- [110:40]
Interviewer 5
In the Chinese model three. And then. But then the subsidies were the balance. So it's actually not, it's not any impact on Tesla and the profit, right?
- [110:53]
Elon Musk
No, I don't think so. Well, I think the. Obviously depending on what percentage of the car is made in China, the parts that are made in China are not subject to a change tariff. So that's certainly helpful. We also save on logistics and generally we found that locally sourced parts in China cost less than in the, you know, in the US or Europe. So this is all pretty helpful. Also, the Tesla got added to the purchase tax exemption, which, which all the other. This is. I'm not sure if you, like, realize just how much of an uphill battle Tesla's had to sell cars in China. It's been a, you know, really, we had basically no access to any of the subsidies and we paid a tariff and we had to ship the cars over and every single thing was set against Tesla. And still we made progress and did decently well. So I think that there will be much better, a much better situation with local production not having to do shipping and tariffs and being able to have lower cost, local sourcing of components. So it makes a big difference, I think.
- [112:13]
Interviewer 3
Is that your victory dance when you broke Granite Dancer?
- [112:17]
Elon Musk
That was great. It's a big deal.
- [112:19]
Interviewer 3
It is a big deal.
- [112:20]
Elon Musk
Huge. Yeah. Just in terms of just fundamental economics, it kind of makes sense that making cars on the continent where there are bought, will be a lot more efficient than making them in California and traveling around the world. Yeah.
- [112:38]
Interviewer 1
And you can get paid for the cars before Paying your suppliers, which seems to not be the case if you're shipping around the world. And that could be a huge like friction on the whole kind of cash flow situation or it has been for sure.
- [112:48]
Elon Musk
It will sure make a big difference on cash flow because yeah, there's just no way to get the cars, especially to Europe, but even China to get them to customers before we have to pay suppliers. So if you're a rapidly growing company, it's night and day. If you get paid by your customers before you have to pay your suppliers like night and day. Because then the faster you grow, the better your cash pot cash position is. But if it's the other way around where you have to pay your suppliers before you get paid for customers, get paid by customers, then the faster you grow, the faster your cash position drops.
- [113:32]
Interviewer 7
Yes. Because you're going to spend more money.
- [113:34]
Elon Musk
To make it growth actually causes you to auger into the ground in a situation like that now tells you we had a mixture of both things where we had a lot of customers in, in say in California and that's fast. For sure we would get paid by customers faster than we would have to pay suppliers. But then for cars going to Europe and Asia it's the other way around. So we would have to pay suppliers before we got paid by customers. Now we could offset some of that with the asset backed line, which was pretty helpful, but only some of it, not all of it. So the fundamental financial health for sure improves dramatically by just having, just having a factory on the continent. Okay. We're not talking next door, but it's just how many ocean. Like especially Europe was logistically super hard because we're on the west coast. If we're on the east coast then China would be much harder. But if you're on the west coast, you're a metrotor because you got to go through the Panama Canal or even worse around Tierra del Fuego. Because sometimes the Panama Canal get backed up and you're like this frigging ship is going to the Antarctic. It's like you just go to the end and it's stormy as hell. So you got to send a ship around Chile or you can. Kidding. You know, in, in the middle of crazy storms and then back up all the way and then like, you know, it's so fun. Oh my God, so logistic nightmare. So yeah, it'd be be great to just have, have it not get on a boat and, and crush the Pacific in Atlantic and that kind of thing.
- [115:30]
Interviewer 4
So maybe similar to Vincent's question Ole. What's the biggest advantage in choosing Berlin? Compared to other European countries?
- [115:37]
Elon Musk
Berlin has the best nightclubs. That's true.
- [115:41]
Interviewer 4
Have you been?
- [115:44]
Elon Musk
I went to Bergheim once.
- [115:45]
Interviewer 4
Really?
- [115:46]
Elon Musk
Yeah.
- [115:46]
Interviewer 5
Yeah.
- [115:46]
Interviewer 4
Holy shit. That's cool.
- [115:50]
Elon Musk
Yeah. Several years ago. Well, I don't know, I mean.
- [116:00]
Interviewer 1
We.
- [116:00]
Elon Musk
Looked at a lot of different locations and I mean, sort of, I don't know, we could have put it in a lot of locations. We needed to move quickly. And actually this place, you know, it's like whatever, 30 minutes to the outskirts of Berlin. Technically in Ranenberg, it actually was a place location that BMW was going to put a plant there. So a ton of the environmental work and all of the permits and stuff had already been done. And then for some reason BMW chose a different location. But there's like, I guess something on the order of a year's work worth of environmental paperwork and stuff that's been done on that location for an order plant. Awesome. So that made it one of the quickest places to get going and generally the government, local and state government was very supportive. So I went there and it's like, okay, this seems like some pretty good vibes, this place. So there's a lovely part of this lovely place and there's an opportunity for like it's close enough to Berlin that young people could still, you know, live in an apartment in Berlin and commute to the factory. It's right. There's a train station. They're actually going to move the train station. It's a small train station but they're going to move the train station to where you can literally get off the train and be right at the Giga Berlin. Wow, that's great. That's great. That's perfect. You can literally just pop right off and you don't walk, you don't need a bicycle. So then it's like, okay, this is pretty cool. And you know, so, so young people could be in Berlin apartment and still, you know, could Berlin. But if you want to have more of a family situation backyard, there's you know, affordable housing available with, you know, houses with yards and stuff that aren't too extensive. Yeah. So it seems like a good combination of factors. Yeah, a lot of talent in the area. So it sounds cool to giggle in. It does sound like some cool nightclub I think.
- [118:35]
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- [119:34]
Elon Musk
We have a cool nightclub that was called that people like. Yeah, that sounds good. Shanghai too. It sounds pretty cool.
- [119:43]
Interviewer 5
We should party.
- [119:44]
Interviewer 7
Giga.
- [119:44]
Interviewer 1
Shanghai.
- [119:44]
Elon Musk
Yeah, yeah, yeah. Like a rave cave in the.
- [119:49]
Interviewer 4
There's a lot of space around the factory side. Yeah, but you should have like your own nightclub.
- [119:53]
Elon Musk
Yeah, I think that'll be. Who doesn't know? Who doesn't. We should do that. I feel like I'd go for sure work at a company that's good at the nightclub. That sounds way more fun.
- [120:07]
Interviewer 4
Didn't you want to put a roller coaster into the Fremont factory?
- [120:09]
Elon Musk
Yes, still going to do that. I mean I think that would be pretty fun to do. I think we can just like do. Yeah, just basically have like we just need a rail that can support like a modified. Modified Tesla's and then. Yeah.
- [120:27]
Interviewer 5
Can you imagine a plaid. Yeah, just like zip around the factory in like 5 seconds.
- [120:34]
Interviewer 2
Doors would be booked for months.
- [120:36]
Interviewer 5
Yeah, we should get in right now. Awesome.
- [120:41]
Elon Musk
Yeah, we kind of actually in various parts of the factory we have vehicle conveyance systems. They just don't move that fast but they're kind of like roller coasters that move slowly.
- [120:48]
Interviewer 1
You can speed them up.
- [120:49]
Elon Musk
Yeah, you can speed them up exactly. So yeah. But yeah, we're all feeling pretty, you know, tempt fate or anything but feeling pretty good about where things are headed. And I think there's a lot of good things model Y coming out this year and some exciting announcements about batteries. A lot of progress in autopilot. So Bolin Giga Berlin and then making progress on some of the new vehicle developments. And the solar roof, solar glass roof. Getting that rolled out.
- [121:36]
Interviewer 2
The cybertruck got received really well, I think.
- [121:39]
Elon Musk
Yeah.
- [121:39]
Interviewer 5
Did you expect that many orders?
- [121:43]
Elon Musk
Not. No, not really.
- [121:49]
Interviewer 6
When I first saw the Cybertruck in Franz's design studio. I mean, Elon had told me that this was a daring design. Although I think you're the most excited about this design than any design.
- [122:02]
Elon Musk
Yeah, I think it's our best product ever.
- [122:03]
Interviewer 6
Yeah. And I saw it. I was just taken aback. And not. Not by the design so much by the pure aggression that the truck, you stand in front of it, you're like, okay, I'm afraid, you know, it really is like a badass truck.
- [122:18]
Elon Musk
Well, it seems like, like the lot of reasons why people buy pickup trucks, you know, in the US is like, because it's like the most badass truck, you know, like. Like which one is the toughest truck. And it's like, what's tougher than a truck? A tank. Like, a tank from the future.
- [122:39]
Interviewer 4
So it's like my niece in Cochrane.
- [122:41]
Elon Musk
Which is near Calgary. She's a dirt bike rider champion.
- [122:45]
Interviewer 4
And already five cyber trucks were ordered just the day.
- [122:49]
Interviewer 6
Five cyber trucks, just in case the first four are busy.
- [122:56]
Elon Musk
Yeah, she's def. Yeah, absolutely.
- [123:01]
Interviewer 4
They just love it.
- [123:03]
Elon Musk
Yeah, yeah, It's. It's literally like, how do you out top a truck? You just make a futuristic arm personnel carrier, and that's tougher than a truck.
- [123:11]
Interviewer 2
And I feel like autonomy will pro be very, like, mature by the time.
- [123:14]
Elon Musk
It ships too, for sure.
- [123:16]
Interviewer 5
So. So how many cybertruck orders do we have right here?
- [123:18]
Interviewer 7
Raise your hand.
- [123:19]
Elon Musk
I got one, two.
- [123:22]
Interviewer 5
I ordered three.
- [123:26]
Elon Musk
I mean, it's gonna be pretty special and not look like other things, so, you know.
- [123:31]
Interviewer 7
Yeah, it looks so cool. Like, the first time I show it to my son, it's like, daddy, this is something from Alien. This is his first impression.
- [123:41]
Elon Musk
Yeah.
- [123:42]
Interviewer 7
Yes, it is.
- [123:43]
Elon Musk
That's. That's how it was designed. It was. It's like, what's the, you know, let's make a future futuristic armored personnel carrier, you know? And so the inspiration board was like, literally like, you know, Blade Runner, you know, like sort of Mad Max, Back to the Future, you know, aliens.
- [124:05]
Interviewer 7
Aliens.
- [124:06]
Elon Musk
You know, like. Yeah, so that's why it looks like that.
- [124:13]
Interviewer 7
Like, the pre order number is amazing.
- [124:15]
Interviewer 5
Well, it's got to be over like 400,000 now, right?
- [124:18]
Interviewer 2
I think it was just so risky and it just like, at first people were like. Even people who like, were hardcore fans were like, oh, when I first rolled out. And then people are like, wait a minute. Like, this is kind of amazing. I want this.
- [124:33]
Interviewer 5
You could see it, like there was like, in person. You could see it happening really fast. Growing the reaction and then the processing then you're seeing all the features and then the range and the price. Those are the compelling things that really, like, just hit everybody, really.
- [124:46]
Interviewer 2
40,000 was the biggest shock. I was like, oh, people are going to be buying.
- [124:49]
Interviewer 5
And that range too, like, it's just.
- [124:51]
Interviewer 7
Actually the 69, 500 miles with 2.9 seconds. Like, come on, dude, you have to get it. No way.
- [125:01]
Interviewer 5
Yeah.
- [125:03]
Interviewer 3
Mead loved it too, right?
- [125:05]
Elon Musk
He did, actually, yeah. This is one of the last things he said, actually.
- [125:08]
Interviewer 4
Did he ever drive in it and.
- [125:10]
Elon Musk
No, he saw pictures of it, but I think he was not. Obviously he died recently, so he didn't. He saw pictures and he said, yeah, that's great. And he says, send us a note. Like, he loves it, you know, that's wonderful. Yeah. So. But, you know, you want to have these things that inspire people. It feels different. Not like everything else is like the same. It's like variations on the same theme. You want to have something different, but you say, like, how many? I wasn't sure if nobody would buy it or a lot of people would buy it. You know, I don't know. But, you know, I just told team, like, listen, if nobody wants to buy this, we can always make one that looks like the other trucks. That's not like, yeah, yeah.
- [125:52]
Interviewer 6
You know, you just try it and yeah, like, okay.
- [125:55]
Elon Musk
It was a, you know, could say, okay, it was a weird failure. But now. Well, now we'll make one light looks just like the others. And there you go.
- [126:03]
Interviewer 1
So it seems to have captured the whole world, though, like elevated Tesla and the cultural zeitgeist in a way that, like, is so exciting. Like, the Travis Scott music video already happened. Like, that was. So I was waiting for the first music video and I was like, advertising.
- [126:17]
Elon Musk
Yeah.
- [126:18]
Interviewer 1
So awesome.
- [126:19]
Elon Musk
Really cool. Yeah. It's going to be hard to make that, by the way. So it's not because it's a different architecture. It's an exoskeleton architecture. So there isn't any cars out there that have an exoskeleton architecture. So you got to rethink how all the internals of the car are done so that you can use the external shell as a load bearing structure instead of just basically thin sheet metal that is effectively just there for aerodynamic reasons. So you could take the external, what's called a class surfaces of most cars and still drive around it, lose almost no structural value. They usually go very, very thin sheet metal. So it's all endoskeleton. There'll be some challenges building that.
- [127:15]
Interviewer 3
It's a Starships 3. It's a Starships.
- [127:18]
Elon Musk
Yeah, you can use the same steel as the ship.
- [127:21]
Interviewer 5
I'd love one of those limited quantity ones.
- [127:24]
Interviewer 3
Oh, I know. Like Tim had shout out it out.
- [127:26]
Interviewer 5
Yeah, Tim had asked about that everyday astronaut.
- [127:29]
Elon Musk
Yeah, he's a cool guy. He is a cool guy. He really knows what he's talking about.
- [127:33]
Interviewer 5
Yeah, he does.
- [127:35]
Elon Musk
So. Yeah. So there's a lot of, you know, a lot of good things. Undoubtedly be some, you know, setbacks along the way, but it's, it's looking, looking pretty good.
- [127:48]
Interviewer 5
Should we do some closing thoughts?
- [127:49]
Interviewer 2
You know, I just remember when I got my Model 3, it was like a difficult time in my life and it made it easier and you know, you don't have to buy gas. Car drives you around, just makes your life better. All of our lives in these little ways, like all this struggle, you do it, you know, it, it really makes things better and just makes you hopeful and inspired and you know, I just can't thank you and the whole Tesla team and enough for, for all the love you put into the car. You know, every day it's just happy because I have a Model 3 that's cool.
- [128:25]
Elon Musk
I'm glad you like it. That's our goal. Our goal is to, you know, maximize. We make people like really touch people's heart for the product. And it's like I think too many of these companies out there that design these things, whether it is sort of a spreadsheet and sort of marketing surveys and that kind of thing, without saying, do you love it?
- [128:47]
Interviewer 6
You know, do you love it?
- [128:48]
Elon Musk
Do you actually like the product that you're making?
- [128:50]
Interviewer 2
It touched my heart very much.
- [128:52]
Elon Musk
Right.
- [128:54]
Interviewer 7
I like thank you for this chance, like doing interview with all of us. And as a shareholder and Model 3 owner, I remember like one time you tweak about your money is first in and will be last out. Yeah, I was really touched to see that tweak. I think it's like years ago.
- [129:14]
Elon Musk
Sure.
- [129:14]
Interviewer 7
Like right after one of the shareholder meeting, I was like, like which CEO would do this? You know, and like after I bought my mortgage, Model three, I more believe to the company. Like I order a Model Y and then two cybers truck, Porsche fans before and then right now, like he was.
- [129:35]
Interviewer 2
Gonna get a take on until he saw the range.
- [129:38]
Elon Musk
Yeah, I, I was thinking to get.
- [129:39]
Interviewer 7
A take on, like, why not like give it a try. But sure, when you look at the spec, the, the range turn me off.
- [129:46]
Elon Musk
Like, yeah, it's obsolete already.
- [129:49]
Interviewer 7
201, like who's gonna buy for 150k. Just not talk about money, just talk about range itself. The spec, it's like it's not there yet. So with like 150k plus like nobody gonna buy it.
- [130:05]
Interviewer 5
Yeah.
- [130:06]
Interviewer 7
So thank you, Elon, and absolutely. Thank you very much.
- [130:09]
Elon Musk
Well, yeah, thanks you guys for your support. This really makes difference.
- [130:14]
Interviewer 4
Yeah. I mean, I don't own Tesla, so I hope, hopefully I will.
- [130:19]
Interviewer 5
You ordered a cyber truck, though.
- [130:20]
Interviewer 4
Yeah, I mean, yeah, true.
- [130:22]
Interviewer 5
And your shareholders.
- [130:23]
Elon Musk
Are you still in college?
- [130:24]
Interviewer 4
Yeah. So, yeah, I got a save up, but I will buy one and I've got a cyber truck, like you said. But like I've made, I've made so many great memories just like through these cars. Like I've met all you guys through Tesla and this is like amazing. Just like with kind of community just is created through products that you love and I think that really means a lot. Like, I don't. I've. I think I've never seen people being so excited about a product before. Like having this whole family feeling is really cool. Thank you so much.
- [130:59]
Elon Musk
You're most welcome. Thank you.
- [131:01]
Interviewer 1
Yeah. I just want to say congrats, first of all, because I feel like this has been, it's kind of like a feel good moment for Tesla. All that's happening. Yeah, obviously. Thank you. Because, like, you've inspired all of us. And I think there's not many things in the world that like people get pumped about that are positive about the future. Like, I really feel like we need that now. And so Tesla, like bringing us all together has been really awesome and really much needed, I think.
- [131:23]
Elon Musk
Great. This is really cool.
- [131:26]
Interviewer 3
I think I'd have to agree with what Gali said. Just where Tesla is going, you have a car that's actually making a difference with the clean energy, changing the earth, cleaning things up. I mean, it made me excited to see. And you're so efficient and you can. You actually get things the way you do it, you just, I don't know, you get it done and, and I trust you and I trust the company and I. And it's, it's. I don't know, such a passion. It's amazing. I don't know, I love. Don't get the words out.
- [131:53]
Elon Musk
We're sometimes a little late, but we get things, we get it done in the end.
- [131:56]
Interviewer 3
Yeah. Yeah.
- [131:57]
Interviewer 5
Always deliver.
- [131:58]
Elon Musk
Yes.
- [132:00]
Interviewer 5
Thank you.
- [132:01]
Elon Musk
You're welcome. Thanks for your support.
- [132:04]
Interviewer 5
Well, I just want to say, like, how I described this podcast, it kind of just grew out grassroots. Right.
- [132:11]
Elon Musk
And.
- [132:17]
Grainger Announcer
Thanks for listening. See you in the next episode.
- [132:21]
If you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Grainger for the ones who get it done.
- [132:51]
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