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Elon Musk Talks At Tesla 2018 Shareholder’s Meeting [TRANSCRIPT]

Elon Musk gives an overview of the current situation at Tesla, then the whole Tesla team (but mostly Musk) answers questions submitted online and from the audience.

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Tesla Model 3 Launch Event

Elon Musk And His Team Talk At Tesla 2018 Shareholder's Meeting

Transcript

All right. I think we've got quite a lot of good news took that and look forward to sharing that with you and then taking questions from the audience. And yeah I'm just really proud of the TESL team for the compassing so much against incredible headwinds. And I just like to express a note of appreciation for all of our customers who bought our cars thankful for buying our product. Getting everything we can to make it as good as possible as fast as possible. You know I think this is good sound maybe a little cheesy but at Tesla we build our cars with love like we really care. I get a lot of other companies. There will be the walking department in the finance department and there's no soul. You know we're not perfect but we prepare our heart and soul into the part we really care. And the dedication that the team is spinning been incredible if you will of the brilliant working incredibly hard to to make the carts. It's very difficult to become a mass manufacturing car company. No one has succeeded in doing this in a very long time in the United States and even the ones that have only Ford is the only one that hasn't gone bankrupt. So it's super difficult. So in fact this year the American auto industry it's always worth bearing in mind that only two have not gone bankrupt and that's forded and Tesla. So it's it's it's insanely hard just staying alive. I just want to be clear it's really difficult.

And you know we've had people at Tesla who've sort of worked like 60 days straight like basically force them to go home. Like you got to go home and you're going to you're going to keel over. And they stuck back in it's like damn it we say go. So right. But the net result is despite the difficulties all lines all parts of the country production system have demonstrated a 500 carpet AK bloody or a 30 500 car per week okay body. So and then we just did a big set of upgrades and was building up the production lines again and I think it's it's more it's quite likely that we will achieve a 5000 car week by the end of this month. It's like this is like I'll tell you the most excruciating hellish several months I've maybe ever had and a lot of other people at Tesla. But I think we're getting the word we're doing well in market share. The blue line is the Tesla Model 3 we just became in May the best selling mid-sized premiums in the United States of any kind. So that's not of any kind and not just beating old internal combustion engine cars not just you know battery or hybrid or anything like that. And that's despite the fact that we still offer only one version of the car and we've got oil drivers coming out next month and we'll have the low cost that the shorter range battery low cost car at around the end of this year we are expecting to do it. So I also made huge progress in the reliability of the car. So in the beginning it was a bit bumpy.

And now as deliveries have risen with the quality and reliability the car has improved dramatically. So it's improved by a factor of maybe four or five since I started production and we're working on making that even better in place safety is a big deal for us. It's always tougher to achieve safety when you're building a new manufacturing line. So if you get a manufacturing line that's in steady state then you're going up to iron out the processes and make make it a lot easier to build the car as you're figuring things out. It takes a while to get there so far in 2018. However average industries are injuries per person are 6 percent below the industry average which is great because last year were a little bit above. And now we're still below. And then and that trend is continuing downward. So I think we've got a shot being maybe half the injuries per person of the auto industry. And you know that that's that's the goal we're striving for is to be half injury's per person. When you're building cars and you've got a huge number of people it's possible to be zero. We wish it could be easier. But we think being being twice as good as the average in the auto industry is a very achievable number and that's where we're working hard to achieve. It's worth noting that when the injuries the vast majority the injuries are repetitive stress injuries like back strain or restrain but by far the most common thing. So the way to address that is with better tooling and fixtures and rotating people through different roles so they're not always doing the same action. Those are boring to the same action over and over again.

So we go with we're making good progress on that and it's also with any even our current injury rate is half that of what it was when Toyota and GM were operating the plant. So that is often lost in a lot of the media articles. So if we achieve our goal will be a quarter of the injuries. When I was near me. So this is very it was when I was a super important thing to me because we were set over a great that two people who been in the car. I really care about this issue. So and supercharge expansion is going going really well. We're almost of a 10000 superchargers worldwide. And our goal is to get that to be able to go anywhere on earth using the Tesla Supercharger system. We're very excited about the next generation supercharger that is mostly finished in design and will go into production hopefully around the end of this year. So a supercharged generation three will be quite a dramatic improvement but we're going to see that announcement fall when it when it deploys which is hopefully later this year and then once we have that system in place then we're going to accelerate the supercharge extension even more so we've managed to do now at gigawatt hour of energy storage deployment worldwide. This is all the way through from the reign of Rameses the second of Egypt through today. So it's very impressive period of time. And in less than a year from now we will do another gigawatt. So that's a pretty massive set to the rate of the rate of a stationary source deployment is going to grow exponentially.

It's really I think for for many years to come the each incremental year will be about as much as all of the preceding years which is a crazy crazy growth rate. And it's it's also sort of production limited thing where we would actually be able to do more if we could produce more and we have facing a lot of batteries. So in fact next quarter at the Gigafactory we expect to make more Patrick capacity than all other Evie's combined worldwide including China. So I mean it's this is a really crazy amount of batteries. It's one of factories making we make more than all the other batteries on earth like really deserving but the Gigafactory sort of title it's really really nutty. We're going to try to have like maybe things get calmed down a bit like have more tours available for forget it because it's like Efik yes. It's like a two at least two hours to walk just to walk through all of the parts of a gig at this point just to walk through everything is take two hours it give you pause a lot. It's like good exercise. So that's pretty well. We have at first believe it we actually have a bunch of non Tesla employees sold out of customers. And the response has been very positive that that whole roof has solar and it just looks normal. It looks better than the roof that was there. So I have and I have it on and on on a house that I was at the little house across the road. They stand by Gene Wilder sort of like a Willy Wonka house.

And I was like to figure out how to have that go solar with that kind of run in running the Gene Wilder aesthetic which is I really like to put these on and on the on. And while those old house it still looks like it still has the same character which is great. And it's we're we're spending a lot of time just validating the solar roof because that needs to last at least 30 years ideally longer. And there's only so much accelerate certainly accelerated like testing that you do on a roof. So before we can deploy it to a large number of houses we need to make sure that it's that all elements of the roof are going to last for at least three decades. And ideally sort of half a century or more I bet that this is going to be a very big product. And it's also going to grow exponentially. And I think that you kind of want to have a thing where if you look around the neighborhood adding solar actually made the neighbor neighbor improved the aesthetics and feel of a neighborhood. I think that's a really big deal. We are we are not far from Q3 and I'm actually my CFO and joint counsel like you have to watch what words you use in these situations. But I think you know we it's really looking like we are going to have positive gap net income next quarter and as well as positive cash flow in Q3 and Q4. And we said before that do not expect to need to raise any incremental debt or equity where we've got some exciting products in the works.

The the model Y is really going to be something super special we're aiming to build model y approximately March next year and then go into production about Magor or two years from now maybe a little less than two years. But basically first half of 2020 for production model I'm assuming some of the 4 semi and roadster. So these products are shaping up. I think they would say mind Rose drug actually going to be even better than what was unveiled. We we've figured out ways to improve the range and functionality of the semi in particular the Roadster we went on Bell with the Roadster was the base model performance that's. It's going to have a space x option package. It's crazy. And I think that it's important for us to share with the roadster that an electric vehicle can outperform a gasoline car in every way. So that because guessing could still have sort of a halo effect and I think if we can show an electric car can outperform gasoline car in every way then we'd sort of get that halo effect of gasoline cars. And I think that's quite a powerful thing perceptually for for the general public. So these are just some questions that we got on Twitter. I guess it's a really insightful questions on on Twitter as well as some strange ones. But yes a first question is in from multi production line. We said before we really get focus on manufacturing technology for Tesla and we've made a lot of mistakes with the Model 3 production that we have. We recognize those mistakes and we're confident we know how to address them.

The factory that we are addressing them and and long term I think the the biggest competitive strength of Tesla is going to be a factory. This is this is sort of counterintuitive but it is going to be quite dramatic. I think the approach to automation that we're taking I think in some cases has worked in some cases not. But it's clear that that there are some elements of production which are really well suited to people doing it and some parts production that are really well suited to robotics and one of the big mistakes you made was trying to automate things that are super easy for a person to do. But super hard for a robot to do. And when you see it it looks super dumb you like wow. Why do we do that. So and then as you said it sort of makes sense to have set up for the initial production line which just has a relative bias towards towards people and then you automate the parts of the production system that are the most painful and difficult for people to do so the ones that result in repetitive stress injuries are mechanically difficult. But that's that's really a much better approach. And that's that's all we're going to do for dreadnaught factories wanting to it's much more sensible way to do things today. Well we actually have a test to match his executive team come up guys come up and Juvia you into about the Vetri cost of sure. So you know it's difficult for us to talk about specific cost numbers. That's always a difficult topic but we're we're still very confident that we have the best price and performance of anything out there in the world.

If there is something better I don't know about it. And we've looked as hard as we possibly can and we try and talk to every single battery start up every lab every large manufacturer we get quotes from them. We test cells from them. So if there's something better you know we're all ears. We'd love to find it but we haven't found it yet. So General Yeah yeah we're we're still pretty confident about the same direction where we think at the cell level probably we can do better than a hundred dollars per kilowatt hour. Maybe later this year depending upon what on commodity prices if commodity prices are roughly where they are today they will probably do better than a hundred dollars. Q What are the sell level and then with further improvements to the cell chemistry and the production process and more vertical integration on the cell side for example integrating the production of of cathode nano materials at the Gigafactory and then an approved design of the module and pack. We we think long term we can we can get below 100 kilowatt hour at the pack level which is really the key figure of merit for a car but long term meaning definitely less than two years. That's a long term anything. Yeah. Yes we do. We think we think we've come up with some pretty cool breakthroughs on this front. But on the energy density and cost of the of the battery pack and I think it's going to be pretty pretty great. When will the Gigafactory be completely bold. I think we'll keep building on the Gigafactory for at least four or five years.

It will be by far the biggest building in the world. It's not that far from being the biggest building in the world already. And based on the plans we know it might be is it might be twice as big as the next building the world. Hence the interesting tour. So it's yeah yeah it's it's about a third down right now. And yeah so it's really really really enormous and I think it's going quite well. There will be more Gigafactory in the future. We're close to announcing a combined vehicle and battery factory so future Gigafactory will include vehicle and battery pack and powertrain as a single integrated unit and we're close to announcing something in China that term a joint talk about that. But we want to make an announcement. Exactly. Maybe just talk about the preamble or something else because we're. Thanks alone. I didn't expect you to talk about this. So we are incredibly excited to build. First Tesla Gigafactory outside of the U.S. in China specifically. It's going to be in Shanghai and we have been holding discussions with the governments of various governments in China. Really great discussions great partners. We really look forward to working with them in the years to come. This is going to be you know the the next generation of Tesla factory we're super excited. The stuff that we are going to be put in there and the cars that we are going to be building in our factory is going to be incredible. So we get to announce something really all the details really really soon.

So I won't tell more but this is enough it particularly as we try to make cars more more affordable. It's scary porting to like production to at least the content level. And so having a Gigafactory a factory in North America one in China and then one in Europe will be seriously off. Those are the obvious three places for vehicle and battery Gigafactory. So probably things go I will be announcing details of the China Gigafactory as soon as next month. And then Europe Gigafactory maybe end of this year depending on how the Greenidge fare where to put it exactly. So probably toward the end of this year for the factory and ultimately we expect probably this 10 or 12 worldwide questions on the test semi we are going to do another revision of the test semi design business. We've learnt a lot and we think we can actually make it even better than what was unveiled and really have a range that is way beyond what people think most people in the industry think is possible. And we want to be a semi that works in Europe and North America and China and the rest of the world. You're convinced that that's one major factor in the works. And then another one works later this year. So yeah we've we've talked about this a few times but Tesla will absolutely recycle and we do recycle all of our spent cells modules and battery packs. So you know the discussion about you know this waste is sort of invented landfills is not correct. You know we would not do that. These are valuable materials in addition to its just the right thing to do.

So so we have current partner companies on every major continent where we have you know cars operating that we work with to do this today. And in addition we're developing internally more processes we're doing our NDA on how we can you know improve this recycling process to get more of the active materials back. And ultimately what we want is a closed loop right at the Gigafactory is that reuses the same recycled materials. You know this isn't impossible. We see a pathway to do it. But you know that's where we're headed with this. And you know today the you know we're on the way to do that. It's definitely something that will be a huge benefit in the long term to cost as we're able to reprocess more materials instead of actually having to mine new materials those are operability of strengthening interest costs working with the with interest companies and on some internal activities. But we're really confident of getting the cost of insurance for Model 3 to be at least 20 to 30 percent lower than say a BMW 3 Series or equivalent size sedans. So safety is definitely better and then we're working on the repair costs. We've made a lot of progress on that front. But the bottom line is that the the the insurance cost a total cost of ownership of all three should be significantly better than any other mid priced premium sedan yes there will be. We will definitely offer 35000 dollar version of the Model 3. And I think probably at the end of this year is where we should be to make the small battery pack and then get into kind of volume production of 35 conversion in Q1 next year.

So that's definitely where we will definitely honor that obligation and we would do so right now if it was physically possible. Yeah we're going to and hopefully next month offer a free trial people to try out auto pilot and see how it works. We're also making rapid progress rapid progress on autopilot technology. So the there's a new version of autopilot that's rolling out I think this week which I think is quite a significant improvement and I think what you'll see is that the reliability and capability of autopilot will increase exponentially over the next six to 12 months. It's really that the improvements are very very rapid that the length of time to wait for Model 3. If you if you're ordering one now will vary quite a bit depending upon what part of the world you in you're in and what configuration. So if for the existing configuration if you were to order now in the U.S. you probably would be waiting I'm guessing about three or four months if you are on the other hand if you want the right hand drive version you probably are waiting for over a year because when you took a bolt right hand drive version and ship it to other countries and complicate the car for other countries. So the wait is anywhere from three to 15 months proximately but for current configuration order now it's maybe about three or four months. There's actually quite a complicated answer. There are many lines to the Model Model 3 and some places it's there are several lines in some places there are. There's just one line and it depends what the cable the capacity of that line is.

So for General Assembly which is like putting the parts together at the end. We currently have two lines and are constructing a third the third line is dramatically better than lines 1 and 2. We started construction on that third line about two weeks ago and we are already putting the first car through that line. So it's really crazy fast. And that's part of what gives me confidence about the 5 Kapre week for Model 3. Currently the biggest constraint on output is General Assembly and we'll probably get to 5000 a week with the current 2 general assembly lines. But with the third one I'm confident that we can exceed 5000 per week and both test drives. We should build off of all 3 test drives starting the end of this month and I think we should have them in almost all stores in North America by the end of next month. We're rapidly expanding service centers by the end of next year over year probably see a doubling of service center capacity for OTEZLA and we're making major progress on the body shop fronts. It was quite a quite a big deal where we're creating Tesla Body Shop repair locations and we should have by the end of this month the at least the top 10 metro areas in the U.S. being able to be serviced by a Tesla Body Shop that this will be a dramatic improvement in the cost and time of water where in fact we think we might be able to do for a lot of them like same day body repair which is definitely possible.

So I think I think we want to aim for some number of butter appears to be same day whereas if we go to third parties best case it's about a week and some cases it's several weeks. So this is pretty exciting actually. We're basically just taking up a good service centers adding in an annex for repair and then priest ducking the parts. So you don't have to wait for parts for the factory yet but term yeah March this year I think we'll have something very exciting. Sure.

To take some questions from the audience. I think it's this lineup at the mikes and covert I wanted to ask is there going to be a time you know perhaps in the next and Tesla's going to produce compact and or subcompact vehicles. Such a huge segment and it seems like that would be necessary to fulfill the master plan. Pardue mandate. Yeah I think we'll do a compact car in less than five years. Hatum great projects you mentioned auto pilot progress Haswell. So when do you expect to fully enhance autopilot functionality like Fuller navigation switching freeways within the six month timeframe. I was just testing that last night at about 1:00 a.m. I think we might be able to release something in a couple of months that can do that. We've been pursuing two paths one really complicated path that I think isn't working that great. And then a simple path that I think will work pretty well. I mean I was able to drive last night go from highway onramp to highway off ramp using the simplified version of the control system. And I think with some further effort we can get that out in the next couple of months. It's on there again. So as far as Tess link is concerned with the Model 3. And to what degree of certainty will there be a consumer or a fleet lease option within the next three years on the Model 3. Is that something that you guys already have in the plans in the works or is there room for ancillary business. We do.

We will offer leasing on Model 3 and probably end of this year or early next. Because it does have a slight impact on the capital usage of Tesla we know in terms of fleet stuff I think we think people can still buy a lot of Model 3s and then operate them as a fleet like people do for Model S as an XS or taxis. Some may be happy to support that a simple follow up to that just kind of the understood thing if I purchase a whole fleet and then Tesla comes in and says All right we're going to start leasing direct to the consumer or having a commercial option that might not work out so well for me. But that that's why I'm asking is it anything commercial happening that you have in the works in the next two years. Well we don't really think right now we're just focused on revving up. Actually a Model 3 and a big ship you can get their cars because they've been waiting for a couple of years and work. I really think much about incremental incremental demand generation because as it is even getting to 5 K cars per week we would it would take us almost two years to produce enough cars to satisfy those that are put down a thousand no deposit. So yeah we need to kind of ramp to 5 K and then next year ramp to 10k a week and get the right hand drive version done. And I'll get the car for Europe and Asia and you know and then we'll think about other things once you've done all those things right. Gwynne shotwell have SpaceX mentioned that Tesla automobiles might use in some way the Starlink satellite network.

I was wondering if you might elaborate on that opportunity and when that might take place it's possible I think it probably will be this only thing is more meant for trust like like fixed terrestrial homes and businesses and that kind of thing. For mobile it might be possible to use the Sonning system effectively if you had a repeater ground base repeater system or the stalling terminal is about the size of a sort of small medium sized pizza. So I'm not sure you'd want to put them on the roof of the Tesla maybe but I think probably just using what's like to use just Wi-Fi in the cellular network most likely a name is Stephen Singleton. And my question is how is Tesla engaging regarding virtual power stations with governments and territories in countries that may have weak power infrastructures to provide clean energy to more of the world's citizens. Yeah I think we'll have a lot more to say about that when we announced generation 3 of the superchargers because that will we'll be doing much more of an integrated solar battery system with the Superchargers. So today only a few of the supercharger systems have solar and battery systems but long term we want to have almost all of them have that. And the nice thing is that if you got like a solar powered kind of like a solar powered carport area and Tesla batteries then even if you need to be connected to the grid. So it's sort of like even proof against like a zombie apocalypse would still work is always on to near the supercharger I suppose. But yeah. And it'll be able to work anywhere even if there's not good power infrastructure.

And like a virtual power plant if that's kind of what you were alluding to you know we do have a really cool project in Australia where we're actually networking together up to 50000 individual homes with power walls. So each one of those homes has its own battery they can still serve as like a backup power source if the utility totally goes out or if there's a storm but when things are working normally all those houses can talk together and then we can talk to the utility and treat them as sort of one big distributed power plant. So that's a really cool project that has benefits across the whole grid for the homeowners for a lot of people. And you know we're building that out right now and we'll probably be expanding that same model. We have a small demo in the US and we'll be expanding worldwide and we're also going to get a quiet on Puerto Rico. I think we have I think good test as well or battery projects and solar projects and Perico than everyone else combined so it's making a big difference there doing our best to. I this potential for kind of a virtual grid in Puerto Rico as well rather than rebuilding a legacy of oil and gas based energy generation halon. I also think boring boneheaded questions are not cool. Supposedly this is where the more interesting about model lessons 21 five best purchase ever. Thank you. You guys nailed design nail performance. The one thing I always get from friends and family because I do the drive down to L.A. a lot is the supercharging time.

I know you mentioned you guys work on supercharging 3. I assume it's going to be a bit faster. Just curious do you guys see room for kind of orders magnitude improvement and charging time or are we kind of reaching a plateau with current battery chemistry and technology. I wouldn't say that this is the order of magnitude improvement but I think a factor of 3 or 4 is possible. Now the it won't be applicable to all battery chemistries. So 2012 chemistry can take the charge rate of carnt chemistry but I wish you could wish we could but we just had to make a bunch of improvements to increase the charge rate. The key I think figured out is that the ratio of drivetime to charge time should be at least on the order of like 6 to 1 if not a 221 at the point at which you're driving say ten times as much as you're charging then the natural sort of Cuban need to take a break unless you that enormous Blätter is if there's something Paramount I'm you you a road roadtrip at say 9:00 a.m. typically by around noon you want to stop at the restroom and grab a bite to eat a cup of coffee. And and if you want to get back to your car and have it be ready to go. So but that's where the like you say that that's like maybe half an hour. That's kind of like the minimum threshold for the car to be ready to go when you when you come back from a break. And then when you get to the point where it's late say 10 to one where maybe it's only 15 20 minutes or so on the road 15 minutes.

Then the car is ready to go away before you're ready to go. And for some of the long distance if you get say a model S D. It could you can drive nonstop from L.A. to San Francisco if you drive carefully. That's that's a long drive. So we think this a potential that certainly we're offering the full range improvements down the road where we'll go we'll be able to offer cars with ranges in excess of 400 miles. Thanks. Hi my name is Dr. Catherine Bennett Kent and I'm with people for the Ethical Treatment of Animals. I have a question regarding your use of leather in your shifting and steering wheel. Gearshift or gearshift. I don't think has any stereo does or does do. Like I said I will say this. But wait are you still using leather in some of your components. So we do Model S X and 3. Currently we have the only Leather's on the steering wheel rim and people have asked kind of off menu. We do replace thought for people that are needed fully the second car say. Our concern is that you know we're obviously facing an environmental crisis and animal agriculture as we all know is one of the main contributors particularly leather production and we're really pleased to see that you have introduced non leather seating options and that's a really fantastic step towards your goal of sustainability. We would really like you to take the next step and eliminate all the components. Yeah.

You know I think Section 3 there maybe the first vehicles in production to kind of go non leather and at least in all of our seating and our trim and we're actively working on replacing the steering wheel as well we want to make sure that the experience is as good if not better. Yeah just to add to that. So there are some existing premium being like this appliance ultra Swade and Alkan tyres if I'm Pantene correctly they use by other luxury cars like Ferrari. So yeah we would really like to see Tesla step up as well. Yeah we are offering some of that as process technically said on the website that you can actually have a TUSSLER that has zero leather whatsoever including on the steering wheel. It's a little difficult because we do it in small quantities at the design studio. So it's challenging to do it to that scale. But what model why for example what what will not have any leather in it including the steering wheel even if it does Mr.. When do you expect significant battery advances to allow Tesla to pack twice as much energy into each of the batteries without increasing the size or weight twice as much as Trickey but we can certainly see a path to a 2 by about a 30 percent improvement maybe a 40 percent improvement in energy in the same size battery back. That's technology we are confident does work and it just needs to be scaled up and made very reliable. But 30 to 40 cents definitely definitely doable long term probably doable long term by other people's standards. Protest at what we think probably two to three years to get about a 30 percent improvement in metric energy density and yeah maybe 6 years or something.

Six to eight years to get to a doubling. It's highly dependent on making lithium for that really big jump lithium anode is the key. Just play it playing out your game on the end. I started a company called Tesla tractions just like Charlestons is basically a vacation version of visiting Superchargers. I know that you read about this a while ago saying that it was a good idea if you ever decide to go through with it. Obviously I do not want to be in a position of competition with you. So how could someone like me help the mission and where it shouldn't be a Tesla. What we do know is that focus right now is getting through the critical stuff like especially the military production ramp and then smoothing out the production process to make the car affordable. Getting the low cost battery pack or small battery pack into production so that there's a kind of critical fundamental things to really the survival of the company. And then we do kind of like the fun and frivolous things like the bad Joy to the experience. Maybe later this year I think was like doing sort of fun story things in the car like you know these are acts that you know there's like a lot of these rigs lot the Model S next. And three that are quite fun if in fact it once they discovered they're put in the Easter egg box which you just tap that has a logo on the screen and then wait for about 30 seconds and it opens the right box. My name is Bense Gerber. I'm looking into Teslim multiple ways. Obviously I'm a stockholder.

I have a solar solar panel on my roof and I also have a model 3 reservation from March 30 first of 2016 Ready for configuring but I would really really really like to have an all wheel drive. Can you give an order of magnitude to guess how long I'd have to wait for that. Oh you should receive configuration email within the next week or so. Yeah we start we start production with Bell Drive. We're actually taking the same approach on overdrive this month and we expect to scale it up in July and August and be in high volume production of all wheel drive by September for sure. I have a tour planned for September 1 month tour. All right well make sure you get any sense I make it. Yes you are. Thank you. I got my first model lesson in 2013 and have an X in a 3. Now I love the product. I feel like I'll always be one of the first to try to try one of your new products. And I was just wondering is there any chance in the future that we'll be able to text commands to our car like my car at this temperature come pick me up. You know that type of stuff. We're going to keep enhancing the Tesla app on the phone and to be able to you know log home just tap the summon button and your car will come find you wherever you are and it really wanted to learn what you can you can change temps right now from the app. But we want to learn what you are most likely what do you like.

Basically if there was a great chauffeur in charge of the car what would that person do anticipating your needs and knowing what you'd want. So it's sort of like an in an intuitive trusty steed but just always knows what your what you want ideally and then you can easily just that as needed. So you won't be as close like a mind meld with a car as possible. Oh hi my name is Kevin. I have two of them although since 13 and my question is about autopilot and the use of Lleida they all know that Tesla probably still the company alone. They're not using Lleida way a lot of vendors using it. So as autonomous driving is close to reality I think inevitably there will be a showdown on the approach. Will it be more superior. So what do you think when that time will be. Well I think I think lateral will be seen as what light out tends to drive companies to do is to go to a local maximum in terms of autopilot capability autonomous driving capability and Lytro ends up being somewhat of a crutch. It's it's it's helpful to get almost there but if you're lie on it you will never get actually get there. It's my thing. So you have to make vision work extremely well in order to achieve true self driving. Once you've made vision work extremely well Leider is really unnecessary it's not really adding anything.

We do have sophisticated sonar like ultrasonic sensors around the vehicle for airfield and we do have a forward radar system which is useful for detecting objects even in fog of snow rain like low visibility conditions where you can't see what's going on. And that's also a case where LIDAR is ineffective because LIDAR is an act of active photon generator in the visible spectrum. This doesn't make sense to me because you have a mass amount of incoming photons in the visible spectrum normally. So if you're to active photon generation 400 to 700 nanometers it's the wrong wavelength or on that orders wrong wrong wavelength you really want to be aiming for something that's around four millimetre wave length because that is a collision penetrating where to time Tesla Model S owners and also stockholder's. Question about J.B every ICC filing has always included J.B as a key man and he was suddenly dropped off in the Q1 filing so a little concerned about J.B really an accidental slur and I don't know you know that was the case. And is there a reason why the intent was to make it more generic. The risk factor there was no intended or unintended implication behind I'm sorry one last one which is that Tesla Energy Storage business is still running double digit gross margins negative. It looks like even though you've managed to deliver a lot more megawatt hours. Can you talk about the pathway to getting a profit out of that business please. Yeah well what about that. Sure yeah definitely we expect our storage business to go in significantly positive. And our goal is to have the same level of gross margin as the automotive business and as our volume scale then we have more bar walls out there and our manufacturing efficiencies come and we definitely expect that you'd see a big change in a positive trend in that every quarter into 2019.

For us it is certainly about the same gross margin level as in the cars which is sort of a 20 to 30 percent gross margin for all of the energy products it's that's certainly it was during that as you ramp up production. It ends up being a net gain of just as was model 3 and model s next but probably later this year or certainly early next we should be in the 20 to 30 percent gross margin level for energy storage. Hi thanks. Fresh shot on the conference call by the way. And my question was just surrounding as as a long term investor I hate to say this but I feel like my trust in Tesla's timelines sort of eroded a little bit with the Model 3 ramp so shrike keep discounting things on a long time or are you guys have you learned anything about this. I think I do have an issue with time it's been true so so in my brother's years like I have a condition that my brother used to like when we're catching the bus to school. He would lie to me about the time and he always always says like it was like earlier than it actually was. And I get there slightly after that and they were actually able to catch the bus. So I know this is something I'm trying to get better at. I sort of naturally optimistic person which which I've probably done. Cars were rockets. I was not. But I try to recalibrate these estimates Yeah I recalibrate as much as possible. Yeah. I mean I probably put some sandbag on future dates.

That's probably wise but I could have stayed to say when I think it can occur but then I'm typically optimistic about these things but maybe less hopefully less optimistic over time. So yeah like pretty much always happens but I'm not exactly on the timeframe. Hey Yellam we have we're about 50 minutes over one hour. You want to take maybe a couple more maybe a couple more questions for each day. Hello Mr. Musk My name is Alex Perez. I really like your jacket today. And so it kind of got me thinking. Has Tesla ever thought about going into the motorcycle business. Yeah I actually straight ride motorcycles when I was a kid and I still think dirt biking for like eight years is thing. And then I had a road bike until I was 17 and was almost killed by a truck. So we're not going to do more cycles Mr. Musk. My name is Sonia and my mom has a model 3 and my dad has a model S and I have one chair. So I've noticed that whenever my mom is like kind of going a little bit too fast like a bike approaching a car at a stop sign the Tesla beeps pretty loudly to kind of warn like hey you're going to hit that. I was wondering like are you guys thinking about developing a mode where you like drivers could choose to turn it on and then if a Tesla detected that it was approaching something quickly or was going to crash it would gradually slow down a little bit. So best case scenario if the driver takes control it doesn't really matter.

Worst case scenario and they crash it decelerates so it's not as bad. It does actually have this automatic emergency braking. And I think what we're seeing is like it is sort of like a last minute kind of dramatic slowdown maybe slow down sooner but less dramatically. And that that is that is something that will occur with the latest versions of autopilot. So it will if it will decrease speed proportionate to the confidence level. What we want to do that in a way that's not annoying to people like cars slowing down a lot but it's it's really delicate balance between not knowing people so they want to send it off. But also being safe for the pilot I think it's is going to be really quite quite dramatic in the next several months. Yeah the system is intended to change speed proportional to its confidence in going forward but does so we had to improve the sophistication of the autopilot neural net and the heuristics that go with it. So it just didn't annoy the hell out of people because there are many times where the court thinks it slow down but actually not not really. And that would distract people crazy. So I do think what you're getting at is something that you will see play out with the versions out there get deploying later this year including the one that's coming out this week. I guys just want to personally thank Ilan J.B. Franz Depok and have you back Tim Emily Vinnie. Andrew the people at Tesla who I don't know by name. The proud owner of an early 2012 model s very different than Model 3 that my dad recently got his first new car.

He's pretty perplexed and amazed by it. I actually drove that from New Jersey to Richmond probably could have skipped supercharging entirely charge the car for I think it was maybe about 20 minutes and continue the trip and the car was actually telling me that I was ready to go before I was done eating the sandwich. I picked up. I just want to ask a quick question. Sure possibility. Get a business card for the guy to your left because I wanted to tell him about a company. This man's been working on disruptive technology that you're already indirectly using and wanted an opportunity to speak with you about it further. Thanks. All right thanks. Yeah. So they take a business card and always looking to investigate everything she's in the car. If you're wondering anyway haven't been good at educating people on it is that the Model S and X especially in Model S has improved very dramatically from 2012. So we're arguably on Version 3 or 4 of the Model S right now so it's really a gigantic improvement in Model S today versus model of 2012 when you first started production. I really encourage anyone who's going to early Model S to test drive the car version. I think you'll be blown away by how how much improved. All right I think that might be the last question. I will soon be driving around in my three kids too. You mentioned that during production people first and automation later slowly kind of considerations. To do otherwise. Then you started the production. Can you talk about that. I think we're just overconfident about the degree of automation that was possible.

And we did rely quite a bit on Tier 1. What makes me actually automation integrators and a couple of those things really didn't work out at all. And now we're we're really going to internalize all Tier 1 factory systems at Tesla will will have a lot of suppliers but they'll be the Tier 2 and Tier 3 level. All right thanks very much for coming.