Elon Musk, CEO of Tesla Motors Inc (NASDAQ:TSLA), joined Bloomberg Television’s Betty Liu following Tesla reporting net income that beat analysts’ estimates and projecting a 55 percent increase in vehicle deliveries. Tesla Motors Inc (NASDAQ:TSLA) CEO Musk discussed the company’s plans for a “gigafactory” to supply batteries, Model X SUV and fourth-quarter profit.
When asked about talks with Apple Inc. (NASDAQ:AAPL), Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk said “we had conversations with Apple. I can’t comment on whether those revolved around any kind of acquisition.”
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BETTY LIU: That’s right. He is on the phone for an exclusive interview. Elon Musk, the founder and CEO of Tesla Motors Inc (NASDAQ:TSLA). Elon, great to talk with you again.
ELON MUSK: Good to speak with you.
LIU: All right. And I know it’s been – it always is a marathon run before you release your results. I was listening in on the conference call. I know at one point you were a little bit maybe frustrated may be the word with how many questions you were getting over this giga battery factory. You’re going to have the details on that next week. How come you just didn’t – didn’t have some of those details or didn’t want to disclose those details in this call?
MUSK: Sure. There just wasn’t enough time to really get into the details of the Tesla Motors Inc (NASDAQ:TSLA) giga factory on this call, and we had a lot of – a lot to talk about with the rest of the business just talking about the fourth quarter results and expectations in the – in the near term for this year, whereas the giga factory is something that’s more of a long-term development over the next three years and kind of really deserves its own call. So we’re going to do that call and answer questions in as much detail as we can next week.
LIU: Elon, as much as I can, can you just clarity though a couple of points on that? Number one, are you going to be building this with partners?
MUSK: We – yes. We expect this to be done with a number of Tesla Motors Inc (NASDAQ:TSLA) partners, yeah.
LIU: And can you give a clue as to who they may be? Panasonic, Samsung?
MUSK: Well I think there’s a likelihood that Panasonic would be part of it, but that’s not 100 percent confirmed. But since they’re our main cell supplier for Tesla Motors Inc (NASDAQ:TSLA) right now, I think that – that seems like a pretty good likelihood.
LIU: Right, or a reasonable assumption there. And how are you going to pay for this, Elon?
MUSK: Well, I have to be careful what I say because Tesla Motors Inc (NASDAQ:TSLA) is obviously are a publicly-traded company. And so I think I can reiterate some of the things that I said on the earnings call, which is that – that we – we – we could pay for the giga factory in more than three years if we – we could pay for the giga factory from retained earnings if we allowed the timeframe to extend beyond three years. If we want the factory done in three years, we would probably need to raise some capital.
LIU: Okay. You would prefer debt equity?
MUSK: Yeah. I’d love to answer those questions, but I can’t.
LIU: Okay. I want to talk a little bit about the Tesla Motors Inc (NASDAQ:TSLA) Model X because one of the things you said on that call was that – that your best guess is that Model X demand is actually going to go exceed Model S demand. When I was out there in LA, Elon, I met several people who said that they were on the waiting list for the Model X. They’re excited to get those cars. But you’ve – you’ve said you were going to go into production with that in 2013. Then you went to 2014 and now it’s 2015. What’s going on there?
MUSK: Well, I think we needed to make sure that our house was in order with the Tesla Motors Inc (NASDAQ:TSLA) Model S, that we had really done things right with – with the S and dealt with the multiple market deployment. So going into North America in 2012, into Europe in late 2013, obviously going into Asia in 2014. And before adding the complexity of sort of whole new product line, I think it was important to get our geographic deployment done and make sure we’re delivering excellent service in all geographies.
And then with respect to X, I’m somewhat of a perfectionist when it comes to product design. So I totally take the blame for some of that delay being due to me personally and not being completely happy with the product.
LIU: Why? What bothered you?
MUSK: The – the hardest thing about the Tesla Motors Inc (NASDAQ:TSLA) X is achieving great form and great functionality. It’s easy to give up on one of those two. And it’s damn hard to make an SUV in particular that is beautiful and – and yet incredibly functional at the same time. It – it’s actually – it’s a harder design problem than the Model S. And I just don’t want to – want to come out with something where the – the production version is in any way worse than the prototype that was demonstrated to people. In fact, I really am quite insistent that whenever we go to production the production article is superior to anything we’ve demonstrated before.
LIU: But is it – is it going – is the actual car that’s going to be in production going to be very different from the prototype that you unveiled a few years ago?
MUSK: It’ll be better in – in a number of subtle ways. And I’m not – honestly I don’t know if most people were to actually even notice it, but it’s – I think it’s going to be better in a lot of ways, yeah.
LIU: And is any of the delays around the Tesla Motors Inc (NASDAQ:TSLA) Model X going to affect the – the really heart and soul of why you – why you did Tesla, Elon, which is the third generation car, the mass market car?
MUSK: No. I don’t think the – the X is affecting the third generation car. Three – three years is about as far as we could do the third generation car no matter what because we’re somewhat constrained by the creation and – and construction of the giga factory. So there’s kind of a natural rate of progression