Elon Musk Interview By Charlie Rose in 2009!!!

Elon Musk is here.

He is chief executive of two startup companies with bowl missions. He leads Tesla Motors, the electric car company that has attracted attention from both car enthusiasts and environmentalist as well. The company's powerful rochister, which can travel from zero to sixty in less than four seconds, is entirely powered by batteries. The company plans to break into the mainstream modo market

I am pleased to have him here at this table for the first time.

Welcome, Thank you, thanks for having me. I've been a big find of the show for a long time.

Let's just talk about you first, so that if the audience does not know growing up in South Africa. Yeah yeah, and why how how did you end up in Canada?

Well, I guess growing up in South Africa, I was actually it was very technology oriented and I taught myself how to program computers, mostly because I wanted to program games. And I when when I was about twelve, program sold my first game, and whenever I'd read about technology and great innovation, it's it was coming from from the United States, and.

So it was, you know, that's where I wanted to be.

And I tried to convince my parents to move move there, and uh, neither of them would They would have wahed. I tried my mother trying to find neither would would do it. My mother later moved back to initially Canada and then and then the US. And so when I was seventeen, as soon as I got my Canadian passport, three weeks later, I was in Canada.

So here you are, and you come to Canada and make it to the United States, and then you and and several other guys come together and create PayPal right and you sell it to eBay for one point whatever.

It was five billion dollars.

Yeah, so after PayPal, Uh that that gave me, you know, a fair bit of capital. And uh, there were there were there were three areas when as in college, there were three areas that I though would most affect the future of humanity and and those were the Internet, the transition to a sustainable energy and transportation sector. And the third was space exploration and particularly the extension of life

Me that's something that would be very important for the future.

And with the capital I got from the sale of PayPal, I was able to go into both those those areas. And uh and so hint hents uh SpaceX and and in the space and then in in the sustainable energy and transportation you've got Solar City and and Tesla.

We to talk about space exploration just for a moment.

How is it going in terms of creating the systems that will engage in space exploration, not just for governments and not just for NASA, but for private citizens as well.

Well.

You have to divide the efforts that are going on into what isn't an orbit class effort versus a sub orbital class effort, and there's really a very big difference. But the general public doesn't understand the difference between getting to space and getting to getting to orbit, and so it's important to make that distinction. To do a suborbital flight, you need a terminal velosity of around mark three. To get to orbit you need a terminal polosophy of mark

What are you doing? So we're in the we're in the in the in the orbit class.

And that's it's it's a lot more capital and and uh and and and that's really where you're sort of pushing the ragged edge of of what's what's physically possible.

And uh, last year we got to orbit uh with for the first.

Time with with our rocket and UH that was certainly a huge relief and a milestone.

And so what's the next step, You're gonna rocket into orbit?

Yeah, so next month we were putting a satellite for Malaysia into orbit uh and then from Malaysia form Formulasia Malasian satellite. And but in the rocket business, the rocket company does launch. It's not like the airline business. So you don't sell the rocket, you sell the launch. And and then later this year we'll be launching out big rocket from Cape Canaveral. That's the Falcon Mine and that's the one that's going to be servicing the space station among other things.

Is there a philosophy here that somehow the private sector can do a lot more than than it has done in in areas that seem because of them because of the size related reserved for government.

Yeah, definitely, the private sector is very good at at optimization and an innovation. I mean, private sector is generally better doing things than the government. Uh.

I think that's that's that's fair to say.

But you know, there are certain things that that that the government that that asks through to the government, like basic research and that sort of thing. But yeah, so as far as uh, space, the reason that there hasn't been a huge number of a big improvement in the space industry, I think it's because of it's very difficult for it is create a destruction process to to to coming to effect because it is such a significant amount of capital that's needed to start a rocket company, and

And your understanding came from sort of from this was not what you studied in college. Well, I studied physics, but I was studying physics and studying rocket science thing.

Yeah, No, it gives you the basics, It gives you the basics. Good framework, analytical framework. So, uh, but no, I picked it up along the way. But what is your core competent you think you? I think it's uh technology, technology, Yeah, yeah, technology.

Yeah.

If if, if something has to be designed and invented and then and you have to figure out how to ensure that the value of the thing you create is greater than the cost of the inputs, then that's that's probably my course skill.

Now bring me to the car. And I drove a car this afternoon. So far, so good, which was terrific. It's the Roadster. Yeah. Where does that stand you? Obviously I've been I've been in the Google parking lot. Yeah, you're seen a few that I've seen a few there. Yeah,

Yeah, you know, Yeah, zero to takes sixty times a three point nine Seguis and.

The roast is extraordinary.

When you think about the sports car, isn't there anything else that's out on the road today.

Yeah.

In fact, on the top gear test track, our standard roads to beats the Porsche GT three exactly, which is one that reference, and the roads total to even better.

Yeah.

But you've also said, in terms of where you want to go that that developing a high performer sports car is not what this is about.

Absolutely, it is about something else. And you want to develop a sedan. Yeah.

The whole purpose behind Tesla, the reason I've put so much of my time and money it's helping create the business is is we want to serve as a catalyst for accelerating the electric car revolution.

The price of gas.

At the pump does not reflect the true cost of gasoline because you have a consumption of.

A public good.

It's one of the most It's really a common problem economos. You have the same thing in fishing, where because there's no cost to fishing stocks, people just over fish and you have disaster that ensues. And here we're not paying for the cost of this year two concentration in the oceans and the atmospheres. We're not paying for all these the ancillary effects of the wars and all the other things at the gas prompt So you effectively have a subsidy taking place at the gas comp because of that.

Otherwise be this Suppose this, this is a hypothetical which it may or may not speak to the point.

But suppose fifteen.

Years ago, let's say Bill Clinton as president, who talked about the road to the twenty first cent fion and all of that.

Suppose he had said, I.

Believe so much unsustainable energy that I want to make a commitment and the federal government, using all of its resources, will develop an electric car with appropriate battery power that will change the face of automobile, the automobile industry in the world. Was that very doable? Bill Clinton was elected in nineteen ninety two, seventeen years ago.

Yeah, you could have made a reasonably good electric car around that time for a lot of investment.

And should that have been done, should the US government have made that kind of otherwise you will not be able to change the driving habits of Americans.

Was it a worthwhile expenditu or add that time, probably would have been a worthwhile expenditure.

But the thing that really helps electric cars is lithium my own right?

And when did that come around?

I mean, explain why our batteries has always been the great dilemma for developing an electric car.

Sure well, the energy contained with their battery is so much less than it's contained in gasoline that I mean, it's really almost it's hard to quite describe. Another way to put it is the Tesla battery pack in the roadstuff, which is the most advanced batory pack in the world. The common reference is to call what is actually a cell a battery, right, So a cell is the little single kin of chemicals. And then if you have multiple cells,

Which is obviously not as sports car? Right?

And the reason is because an electric motor is fundamentally super efficient at turning energy into motion.

So a good electric motor.

Such as the one that we have in the Tesla Roadster, is about ninety percent efficient at turning the Christie into motion, whereas a gasoline internal combustion engine is somewhere typically in the range of around seventeen or eighteen percent. Most of what it does is generate heat. So even though it's only two and a half gallons gasoline, that two and a half gallons of energy content goes really far compared with you know, if you had.

If that was okay, compared to the Priest, but also compared to the new GM volt, Right, how does it do in comparison with the volt?

The vault is a different architecture it uses.

It's a plug in hybrid architecture, so it's a I think about a forty miles or so battery back what they say, and then there's an engine with a generator that allows you to go beyond the forty miles, right, and whereas ours pure electric and the strategy that we've

And what I hope to do in this conversation with you is figure out what it is you've done, because you've got a fair amount of attention, so figure out why you're not further along than you are, or figure out why you are and what your expectations are to do when and where is the game for you.

I think it's taken a while for the industry to come around to this point, but I think it's it's largely at this point, it's it's it's almost become conventional wisdom that the future is electric cars. The only question is this interim period, of this transitional period. But if you look at the pace of battery improvement, it's clear that that's what I mean, it's inevitable the future will be entirely electric.

And the iron of all this conversation is that in the last year, a year before it's bankruptcy, General Motors had announced that the bold you know, it was.

The key to their future, right as an holm Bill company, right, yeah, exactly.

I mean one area of Christism I think that it is valid regarding Jim is have.

Them come to that conclusion.

By the way, well, they should have probably done a prius or something like that. But I think if you know, they had the e.

V one right right exactly, which didn't work, didn't work, but didn't make it for reasons I'm not clear, right, and you know as a marketing success.

Yeah, Chris Pain did a movie Who Killed the Electric Car about it, and it was sort of trying to.

Viiscia that issue.

But I think it's it's notable that in that movie it shows that the customers who had the EV one, the cause had to be taken away from them and crushed, and they held a candlelight vigil.

Right.

If you have people that really love a product to the degree that they're willing to hold a candle lit vigil for it, that that says, hey.

Maybe you should make an EV too. It certainly does say that. You know.

So the car that I drove today coached to two, I think, I mean, I think it was a roaster before this, this is right, second iteration of it.

Yeah, came came through production.

What year the first roaster number one, the first first production roster which was fully deplotment of transport.

Legal and all that sort of stuff at all the standards. Yeah, Yeah, it was Februar of last year, and that was my car. That was the car, your car meaning what the one?

Yeah, and so then you decided immediately to make improvements on that.

Yeah, yeah, absolutely it was. It was a little little rough going in the beginning, and we had some issues with some of the powertrain components. In fact, not that not the hard stuff, but the stuff that's sort of theoretically easier, and you know, we're able to fix those and get get production wrapped up, and now we're at the point where we're delivering about twenty to twenty five cars a week.

You know that Tata Motors obviously, you know, and I know take for a moment what he's doing in India. Yeah, developing a little sedan for twenty three hundred dollars none, right, right, right? Where do you put that in the whole equation of where the future of cars are?

Well, I think it's a good idea to have affordable cause.

You know, I think I think we're with the problem with with something something like like the Nana, which I think, by the way, I'll say a problem. I think it's a great idea. And Jack Russian is a gentleman. The skull and all of those are. Yeah, it's hard not to yeah, exactly. I think where it's going to come challenging the futures. As the price of gasoline rises, the cost of acquiring the car is much less of an issue than the cost of operating in that car, right, And uh, And I think oil.

Is inevitable, it's already moving back up. And you, yeah, do you have some assumptions in your own calculations as to where oil will level off.

I think it will exceed that the numbers we've seen last year one hundred and forty four. Oh yeah, sure, absolutely, I think we'll see it sort of approach two hundred dollars and beyond.

By twenty ten, eleven, twelve somewhere.

Now, I'd say, whenever the next boom is so as they say the next boom is four years from now, it'll be around that around that point.

Of all your businesses, which one do you care the most about?

Well, right now my time is split roughly evenly between Tesla and SpaceX, so it's I guess it would be pretty pretty even between the two. And that Solar City is doing great on its own, and the two co founders that are living to Peter Rve have done a phenomenal job and thankfully it requires very little my attention right now.

The reason to create a sports car a roaster as the first stage of this is because it attracts attention or what oh.

So good, great, great question.

So because I feel often misinterpret why we have created a sports car because they will say.

You know, the implication will be cars for rich guys, is that I saw the energy from.

Right exactly, And they would sort of like that that I feel that there was somehow a shortage of sports cars.

For rich guys or something like that.

And that was the part and not only if you're if any new technology is expensive when it starts out, and you can point pretty much anything. And and because the first thing that that you, the engineers are trying to do is make it work. And then when you made it work, make it work, then you optimize and new optimize and new optimized. And you look at the early days of computers or cell phones or almost anything,

So we had both a.

Volume problem and a new technology problem, and so that naturally that you have to reach scale. You have to reach scale, and you have to work the bugs out of the system, and so you've got to make it and you want to make mistakes at a small scale.

Okay, So how's that going. Reaching scale and being able to create a marketing, a business plan, they'll enable you to reach a large audience, you know, and create and continue the development of the technology.

They'll make it even more attractive. It's going really well. Actually, so it was. We had a few bumpy, bumpy years in the beginning, but at this point we're producing at a steady state of about an annualized production rate of about a thousand roads to sports cause a year. We unveiled at saidan a few months ago, which is a much more functional car, and it's a fifty thousand dollars car, so it's basically it's about half the price of the roads and.

The production run, say for the year twenty ten, for the roads, that will be about one thousand, and for the sedan.

The sedan is only coming out in two years.

Twenty eleven will be the first year, right, and what's the projection for that.

We're expecting to do twenty thousand units a year for the Sedan. It's always difficult to predict these things exactly, but our target is we'll produce a total of about one hundred thousand of them in about twenty thousand a year, and they're going to be many variations on that. We'll do an suv and we'll do you know, other things, and then we'll do our third generation platform beyond the.

Sedan.

The model of Sedan will be a sub thirty thousand dollar car. So we're trying to get to mass production as soon as we possibly can. And but that's both from the cars that we make ourselves as well as the cause we do in partnership with others, like the Dialer deal you may have read about.

And so how do you measure the odds of success personally?

I would say success for me for Tesla is that we've accelerated the advent of electric cars by at least five years.

That's at the goal to accelerate the advent of electric cars or to create a great electric car company.

I think the two are anonymous. I mean or I mean that you do one, you do the other.

Okay, Yeah, And why is it that it's happening by a guy who created a startup in two thousand and three, rather than a whole range of sort of industrial autombile companies around.

The world, not just here.

Theod is a successful car company and their own Chrysler right.

Well, disruptive technology like where you really have a big technology discontinuity, it tends to come from new companies. You know, you could ask the same question of why does Google come from Google?

Larry and Lari.

By the way, I've known Larry since before he got venture funding for for Google.

Man is he But is he an investor in Tesla? He is, Larry?

Answergar investors in Tesla and they drive them or don't drive? Yeah, they drive them?

Absolutely?

Uh it because some of the criticism that comes at you and the company now is that that you went out to seek a lot of external financing and did not reach your goals.

Well, we we're taken as longer to reach our goals.

But what was it raise one hundred million to raise forty or what was it?

What was the goal? Well?

I think it's you know, some of some of the stumbles were were silly mistakes we made ourselves.

Some of them were market externalities, and.

We were getting ready to raise or we're in the facets of raising about one hundred million dollars round. That began in sort of the summer of last year and then ran into uh, you know four or five hurricane.

An economic circumstance that took everything.

Yeah, and so so that that forced us to scale back our plans a little bit. We had to do a layoff, and we had to raise the money internally from existing investors. I had to put up a lot of the money personally, and uh think there was just no money and so that that was it was sort of a hair raising time for the company. But at this point we're actually in good shape. We expect to be profitable in the third quarter.

And that comes from the success of the roaster, yeah, and the roads.

Then we also have a power train supply business to Diamoner as well for the electric smart that we're doing with them.

Make the smart car an electric car.

Yeah, you know, the smart car was always intended to be an electric car, but they can never get they can never get the battery right. So a year and a half ago we met with Daimler and that I was trying to convince them to work with us. We actually, I mean we've really tried hard to work with a lot of different car companies and what happened, Well, I guess they think, well, this took the attitude of what, you know, what if some little startup in Silicon Valley know that that that.

We don't know or couldn't do, and what would.

You say to them, Well, we'd say, drive our car and look at our technology. And I don't know, it just never seemed to sort of sink in. But the diamer uh that put diamelet did. Actually, so I I went, I went through Stuttgart, went out on the way to India actually uh and met with the doctor Waver, the head of Global R and D and and and we had conversations.

Said, well, what does it take for us to to work together. We'd love to do something.

We'd love to do something with, you know, an affordable mass market car that you know we ourselves couldn't do right now because we don't have the cast of it. Yeah, and and and so I said, what about you know what what about electric smart?

And because the Smart was always intended.

To be an an electric car, and and and what would take for us to work together? And he said, well, if you could do a prototype that would that would really go a long way. So we did. We worked really hard. The power trying team led by JB. Stravel don awesome job. And forty days later when when when they came out to visit, we said here's the car, take a drive, and they really liked what they saw, and so what did they do?

Then?

Then they said, okay, well let's let's take it sort of another step further, and that they gave us a little little R and D contract and eventually got to the point where where we got a contract for to supply it thousand cars for them and then if we do well and that we'll we'll potentially go into you know, tens of thousands of cars.

So so that but this is a car.

That everyone could afford and and could hopefully come quite soon.

Do you have a profile of the people who you think will want to buy these roasters?

Yeah?

Absolutely, it's it's the kind of person who who likes the performance car.

Maybe they want a Porsche or you know.

You know Lamborghini or you know this car is actually faster than Lamborghini zero sixty.

Yeah, it's it's it's I think faster than almost almost anything anything I know of.

Yeah, I mean there's like things that the really sort of million dollars supercars. Obviously those will those will be like Frienzo exactly. But but it's it's pretty much faster than any normal, normal sports car, and.

And it's really easy to drive.

If you want a hyperformance car with a clean conscience, this is the only option. And the sedan is going to be for someone that wants a great sedan and also you know, clean conscience, and it's it's going to be cheap and operate.

Then.

Yeah, so you are, as you well know, a controversial guy as well.

I try to I try not to be controversial. Controversy it finds you.

It finds you because you think big. You're a software guy who has been successful in the private sector. Yeah, you know, and see no reason you can't do things that other people have not been able to do. No, a lot of how large the corporate enterpise create the best electric car or be put privately astronauts in space, which you say you will do in two years.

Well, yeah, it sort of depends on when NASA asked us to do that. If so, if NASA tunes on the access to do that this year, which we're hopeful that they will. The White House has a convened a panel on the future of human spaceflight that that panel is going to make their recommendations in a few months.

I hope though some of those recommendations will be favorable to.

SpaceX, because the alternative is, if SpaceX doesn't do it, we will be entirely dependent on the Russians to carry our astronauts to the space station after twenty ten, and billions of dollars will be spent on essentially a soul source situation to the Russians, which I think is outrageous.

And you haven't taken advantage of the opportunity to do in space yourself, have you?

No? I have not. Have you wanted to?

If it was if it was purely a matter of personal interest, I would I would have done it already.

Yeah, I mean I do want it, I want interested in that or no is expressed some interesting, some interesting.

Yes, Yeah, I would like to go at some point, but it's I'm also in the point where it's difficult for me to take personal risks.

I used to take a lot of personal risks of children.

I've got my kids and responsibilities for the companies as well, and so if I, if I do things for they have personal risk. At this point, I risked more than my own moment.

You've had.

How many trips do you have? One set of trips on one set of twins?

Yeah, they have the twins Smithy in New York.

Actually, so they like they like the car.

Yeah, yeah, they can't drive and they can't go on the road, so because it doesn't you know, it's not very kit friendly, but.

But you know, it's not very good friendly. You're right.

The Sedan will be ideal for them. So much success to you. Thank you for coming, thank you for joining us. See you next time.