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Shit Elon Says - Transcript - An Interview with Elon Musk

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Yeah, I think certainly safety's really important. I think it's particularly important when there's the potential for mass destruction. Ya know, it's - I think AI is something that is risky at the civilization level, not merely at the individual risk level, and that's why it really demands a lot of safety research. "That's why I've committed to fund $10 million worth of AI safety research, and I'll probably do more." I think that's just the beginning.

[Question about Texas.] I'm in Texas? [Sometimes it takes three times to get laws changed.] I hope it's only twice. [Question about auto dealers.] Right, absolutely. Really, all we're saying at Tesla is that we want to be able to sell our cars directly to consumers in Texas. I think this is directly in line with the ethos of Texas. In fact, restricting what consumers can do, in terms of buying direct, is extremely un-Texan. It's very weird that it even exists. I mean, if you think of something like Michael Dell's company Dell Direct. Dell started his company in Texas selling direct to consumers. If the same laws had existed for computers as it does for cars then Dell wouldn't exist, or it would be in some other state. It really - I think it's something on the books that most Texans aren't even aware of, that is fundamentally un-Texan and needs to be changed. The law currently says that in order to sell a car in Texas you have to sell through a franchised dealer, but this exists only for alcohol and cars, which is weird. Probably that shouldn't exist either, but it's just weird that it's cars. What the - ya know. We can sell direct in every other country in the world, and every state in the United States except for about half a dozen. We're just asking for essentially a modification of the law to allow for us to sell direct to consumers.

[Question about percentage of car sales.] Yeah, I don't think we're a huge threat to the car dealers. Yeah, we might grow from 0.1% to 1% perhaps, or 2%, but it's not something that I think is fundamentally a threat to the car dealers and the problem is that the incumbent car dealers have a conflict of interest. They make all their money from selling gasoline cars. For them to then tout the advantages of an electric car when most of their money is coming from gasoline cars - it's a conflict of interest. They're not going to do that. So, if we were to go through them, we'd fail.

[Other companies are getting into electric cars.] Yeah, but they always - electric cars sales in the United States are very low. [The auto dealers will get into electric cars much more.] In the long term yes. We've actually struck compromises in a number of other states where we've allowed to open - let's take the state of New York for example, we're allowed to have up to five stores in the state of New York. So, if we were to do something like that proportionally in Texas, maybe we'd have - because Texas is a bigger state - seven stores. Then say, after seven stores, at that point, we'd have to go to franchises or something like that. [So you're willing to entertain that to start.] Yeah, absolutely. [More traditional franchises eventually.] Yeah. We'd certainly consider that down the road but I can certainly say that anyone who's been a huge jerk to us thus far is not going to be one of those franchisees. [Jerks need not apply?] "No, if they've been punching us in the face, they shouldn't expect we're going to be their friend."

[Question about sales and charging stations.] I think there's a couple of points that are worth clarifying. For Tesla, sales and demand are two different things. The way that sales is measured is in terms of deliveries. Whereas, for the rest of the car industry, because the cars aren't ordered in advance, demand and deliveries are the same thing. Their cars are out on the lot - they're not built to order, they're out on the lot. So, it's extremely common for people to misunderstand demand and sales for Tesla. Accounting for Tesla sales is how many cars we deliver but the measure of demand is how many cars have been ordered. We have far more cars ordered than we can deliver, right now. We're trying to solve that problem by ramping up our production. It's important to note that the demand for our cars significantly exceeds our production capacity, currently. [Is that why you won't reveal monthly sales numbers?] Yes. Maybe at some point this will become clear, but because Tesla is like a different animal than the rest car industry, the numbers mean different things. People look at our deliveries, or sales, and take that as a proxy for demand. Whereas the actual proxy for demand is how many unfulfilled ordered do we have? It's more like the aircraft business where they'll have an order backlog. Right now, the wait time for a Tesla, if you order one, is anywhere from three to five months. [What would you like it to be?] A month? If we can get it down to low single digit weeks, I think that's ideal.

[Question about electric cars contributing to the Texas budget.] Well, there certainly are taxes on electricity generation. There's registration fees and that kind of thing. [But not gas taxes.] Well, gas taxes can't be very high because the price of gas in Texas is real low. It's like super-cheap. [.. but electric car owners should contribute their share.] Yeah, sure they should. Maybe there should be, at some point, some increased tax on electric gas or something like that to match that of gasoline cars, but I can't imagine - like I said - that there's very much revenue generated from Texans on gasoline, given the low price of gasoline.

[What will be different this time, to last time?] I think there's a lot more awareness. There actually are a lot of Tesla customers in Texas. [1500 Tesla cars sold in Texas last year.] Yeah, but still, there's a lot of supporters, and I think there's a lot more awareness in the Texas state legislature this time than there was last time. We are being out-lobbied by the car dealers association by, probably, 10 to 1. [He who has the biggest lobby team wins.] Well, I certainly hope not, but yeah, it's certainly crazy. The Texas Auto Dealers Association has really pulled out all the stops. They've said they'll spend all it takes to win. I think they're outspending us at least 10 to 1, maybe more, but at the end of the day I think we have the people of Texas on our side, because all we're trying to do is give people in Texas the right to choose how they buy their car. Why should they be denied that right? [But you don't want to do business with jerks?] Who does? [I have to.] That's most unfortunate. [Was putting your battery planet in Nevada, not Texas, punishment for jerks?] It wasn't punishment. It certainly wasn't helpful, but it wasn't punishment, no. We are actually still strongly considering the long term - and please, I hope this doesn't become some huge news article - but we are considering, in the long, future vehicle and battery plants and Texas would certainly be a strong contender for those.

[Question about SpaceX business in Texas.] Yeah, I've been doing business in Texas for 13 years - when we established the rocket development facility in McGregor, near Waco. That's worked out really well for us. It's the most advanced rocket development facility in the world at this point. It's something the people of Texas are very proud about. We're establishing the first commercial orbital launch site in the world at Boca Chica near Brownsville. So I think - I mean, I love Texas. I come here a lot. Certainly a big big fan.

[Question about rocket landing attempt.] I think, within the space community, certainly, it was I think well understood. The mission was completely successful in delivering cargo to the space station, which was the primary mission, and I would consider partly successful in trying to do something that's never been attempted before - which is to land a rocket stage successfully. Every other rocket in the world, the rocket stage is basically smashed into the atmosphere, explode and then further explode when they hit the ocean, or the steppes of Kazakhstan or something like that - if it's a Russian rocket. There's a whole industry collecting rocket parts out there in Kazakhstan. They have a launch site in Plesetsk as well. Basically, the Siberian steppes collectively. But all the other rockets, like the European rockets and the Boeing and Lockheed rockets, all of their stages basically just smash bits and land somewhere at the bottom of the ocean. What we were trying to do was to land our rocket stage - because it's a very difficult thing. This thing is coming in from hypersonic velocity. It's got to multiple relights of the main engine. It's got attitude control thrusters. It's got slosh baffles. It's got these hypersonic grid fins. This is extremely difficult.

[So it's about sustainability.] Well, yeah. In the rocket industry, this is considered sort of crazy, and very unlikely to succeed. Certainly very unlikely to succeed. As it turns out, we were able to actually hit the drone ship. It was sort of at higher velocity landing than - yeah. It's what we call a RUD - a rapid unscheduled disassembly. It's a technical term. I think we've got a decent chance of landing it intact on one of the later missions this year. [But you're going to try again soon.] Yeah, in about three or four weeks we've got another flight. This is actually a tougher reentry condition - it's coming in hotter and faster than the last flight, so that does throw a little bit more - it makes it a little trickier, but we've got 50% more hydraulic fluid, which was the - we ran out of hydraulic fluid last time. So I think we may fail the landing again, but hopefully for a different reason. [So you weren't put off?] I expected it to fail. Yeah yeah, I said we've got a best of 50% chance and even that I said I'm kinda making that up. Ya know, I said I don't really know.

[Question about Boca Chica incentives from state and local.] We haven't actually received that money yet. [How important were those incentives?] Well, I mean, I think the way to look at it is more like you're a landlord and you're looking for anchor tenants. You're trying to make the decision of if we try to bring this company or this facility to Texas, is it going to be a net gain for the state or is it not? Sometimes you'll be right about that, sometimes wrong. It's important to structure any incentives such that it's a guaranteed win for the state. In the case of the incentives for the Boca Chica facility, we have to repay that money [if you don't meet certain benchmarks]. Yes. [Job creation.] Yes. [Economic impact.] Yes. A lot of them are directly tied. So we create the job, then we get on a per-job basis some incentive. [Would you have come anyway?] Umm... no, I think we would not have come. "No, we wouldn't have come because it would have been quite rude to not have offered incentives." It more like - what I mean is, a state has to show that it really wants a company to be there. Ultimately, SpaceX will spend hundreds of millions of dollars on that facility. Vastly in excess of what the incentives would be. So, how much do the incentives really make a difference in the grand scheme of things? Not that big of a difference but it's sort of like, it's - you don't feel welcome. It doesn't feel like this state really cares unless it does something. There's got to be a little bit of skin in the game. There's got to be some contribution. Ya know, that's all it really is.

[Could opening direct sales to Tesla open it for others? Isn't that what the auto dealers are afraid of?] Sure. I think, first of all it's like - I think when thinking about these things, we need to say what is right? What is the origin of this law - why is there this restriction at all? The restriction actually originates from when a bunch of the big car companies tried to get back their franchises and engaged in nefarious behavior to do that - particularly Ford under Jack Nasser. They put all these pressure tactics on the car dealer - on the franchisees, to sell the franchises back to the car company. Then, the reaction from the franchisees, who had bought and paid for their franchises and who had invested all this money - their cause was just and they went with their just cause to the legislature and they said, look, if we abort our franchise and we've invested our time and money to build this franchise it is not right for the franchiser to then engage in pressure tactics to then force us to sell it back them at a fire sale price. Obviously, that would be - their cause was just. But now they're taking legislation that was meant for a just cause and then applying it to an unjust cause, which is to say that a company that has never granted them a franchise must be forced to grant them a franchise. This is not right. [Should it be a Tesla-only bill?] No, I don't think it should be a Tesla-only bill. That wouldn't be fair. It should be, perhaps, limited to new technology vehicles or limited to a certain number of stores or something like that. I don't think it should be just for Tesla, but nor should it erode the franchise that they've bought and paid for and put a lot of time into. That wouldn't be right either. It should just be that if somebody hasn't granted them a franchise, they shouldn't be forced to grant them a franchise. It'd be like if Apple came here and wanted to sell computers then with the same legislation they'd have to like, give out Apple franchised stores or something. That wouldn't make any sense.

[What has happened to the dealerships in other states?] They've alive and well. [No doom?] No, basically, in more than 40 out of 50 states that we sell cars the dealers are doing fine. Nobody's in trouble or.. No terrible thing has happened to the dealers in any of the other states. We currently sell in over 30 countries and these franchise restrictions don't exist in any of those countries, and the dealers are fine there too. Yeah, absolutely, and there's plenty of examples where there are franchise restaurants and company owned restaurants or a mixture of franchise and company owned. Like McDonalds has a mixture of company owned and franchised next door. It works fine. So, I think it's a pretty reasonable thing to ask that if we want to sell direct that we have the right to do so and that consumers in Texas have the right to choose how they want to buy their car.

I know we're running short on time, but there is one announcement that I'd like to make. This is the transportation forum. We're going to create a Hyperloop test facility. I don't know if people have read about - it's kind of a new mode of transport. [You release a whitepaper in 2013.] Yeah. In order to help things along we're going to create a Hyperloop test track. Something that's maybe on the order of a five mile loop. Texas in the leading candidate. [Does the state have to not be a jerk?] There's no quid pro quo here. It certainly would be nice. It would be appreciated. [When?] We're just figuring that out. I was just discussing it with some members of my team last night, who are pretty excited about doing this. [How much will it cost?] I actually don't know, but we're not asking for any money from the state. [Entirely funded by you?] Yeah. Yeah, but if somebody wants to chip in, I won't stop them. This would be kind of a sub-scale track and the thing we were talking about last night - it's not fully formed, we're just sort of figuring it out - is to have a test facility where different teams from university or even little companies that people form, could use this test track to validate their ideas on designing the pod system for the Hyperloop. The test track is an expensive capital item, so if we can build the test track and then offer that for use by companies or the teams of students to try out their pod design. Something that we might end up doing - or, at least it sounded good last night, after a couple of drinks - [Your management style is okay with me.] Shoot from the hip. There's this really awesome competition called Formula SAE where students groups work together to design and build a race car and then they race it at the end of the season and whoever builds the best race car wins. [Like an adult soapbox derby.] Yeah, but it's pretty sophisticated. Some of our best engineers have come from that program and really learnt who to do great engineering as a result of that. So I think it could be kind of fun to have some sort of Formula SAE thing for the Hyperloop. People could compete on, say, who could make the pod go the fastest. Maybe compete on other dimensions. I think that could be pretty fun. We're going to talk to the Formula SAE organizers and see if they think this would be good. [Texas is the leading candidate.] Yeah.

Thank you.

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