Anty with design.
You know, as you think about the big problems in the world that you were addressing, do you start with a particular product in mind, like there could be this model s there could be this Falcon nine, and then think how do I get there? Or do you start with saying there's something broken in the world, and I'm gonna fix it, and I'm going to commit to do it, even if I don't know how I get there.
Sure, So let's see, is that on?
Yeah, it seems to be good in a case of Tesla's SpaceX and Solar City and actually will.
So the PayPal and the before that.
It really stemmed from when I was in college and just trying to think what would most affect the future in a in a very likely to be a positive way, So that the three areas where I was quite sure it would be positive were sustainable energy, Internet, and making life multiplanetary. And then there were a couple other areas where maybe a question mark like AI and writing, genetics and lesson, yeah, rewriting, rewriting next just.
Three and four might come, you.
Know, potentially negative consequences, hopefully positive.
But so it could go wrong, like the top three and a couple of contenders or were they all kind of jumbling around.
Waiting for you know, if you look, if you look at and say, what's what's really going to have an important effect on the future of humanity?
As all those are the five.
Areas that that I could come up with standing in the shower basically, you know.
So there's this moment of epiphany that that you held for a while because you didn't pursue those right away. Right these were this sort of early vision that you
then got opportunities to execute on. Yeah, so when you maybe if we pick an example like Tesla going towards the models or SpaceX going towards the Falcon nine, do you commit the team, yourself, your resources to that endeavor you know, now a little farther along when you the end point in mind, or just let's say the cost of goods analysis for the rocket or the gosh EV should be better.
Than internal combustion engines.
Just in general, I'll commit, I'll believe that should be done.
Yeah, I didn't.
I mean I didn't really get into any of this with the expectation of success.
Or at least Yeah, I started out with.
Thinking, okay, when I do something in the electric vehicle space, and that's why I originally came to Standford was to work on advanced energy storage technologies and particular aultric capastors. So that was continuing on research that I'd done as an intern in Silicon Valley and summer prior. So that's
why I originally came out in ninety five. And then during that summer I wrote some Internet software and I thought, Okay, I can either work on electric vehicle technology or or I could sort of work on Internet stuff, try to try to do something with the Internet. I thought the Internet would something that would dramatically affect the future of humanity,
be like like acquiring a nervous system. And whereas previously communication would have to occur almost by osmosis from one person to another slowly through telephone or mail or something like that.
But now.
If you have a nervous system, any part of the human collective note can know about any other part instantly, and you're previously you'd have to be at the Library of Congress, even to have the Library of Congress as sort of information. But with everything digitized and access anywhere, you could be in a jungle in South America and if you had just an Internet link somehow you could,
you'd have access to all of humanity's information. So it would actually effectively create a super organism and fundamentally change the nature of humanity itself.
So I was kind of I just wanted to be kind of.
Part of that is that the path AI that you might see, it's it's actually not exactly AI.
It's some sort of human machine collective intelligence, so different different from AI, although AI may not turn out to be exactly what hopefully not, it's not exactly what's, you know, like describing a terminator or something.
Now a quick pause for those that haven't been the SpaceX the data center has got to be the coolest thing they've ever seen.
It's you know, Skynet on the door, cyber nine.
Systems branding, and a little bad asset of lights coming from a winking server.
So you don't own it exactly.
Our FAA and CFD cluster is called Cyberdigne Systems.
We'll get back to influences, uh later on, but I'm gonna try to see if I understand what you were saying about this. This You see the long arc of and what's important to humanity, not little problems but huge problems that could be solved.
A lot of us go.
Around and we see something frustrating, like traffic on the four or five, we just take it as well, crap, government screwed.
You know what, we need to do it? Right? You have this incredible sort of.
Scope of ambition, right, planetary scope, interplanetary scope. Right, a little more than changing the world, let's change in other worlds too, right, And this is big stuff.
Is that always in your mind?
Or that did you become more emboldened over time that this is available.
We can do these things.
It definitely emboldened over time.
I mean at the you know, when I started the first Internet companies up Too with my brother and another person, a great Curry. The it wasn't really with the thought of being wealthy. You know, I've got nothing against being wealthy, but.
We'll get better to that.
But it's just it was just from the standpoint of wanting to be part of the Internet, and I figured if we could make enough money to.
Just get by, I would be They'll be okay.
And when we started off, we literally only had like one computer, and so it would be our web server during the day and I'd code at night and We just got a small office in Palo Alta back when rent was not insane, and it cost us like four and fifty dollars a month. It was cheaper than an apartment. So we actually just slept in the office and then and then share at the YMCA on Page mell al Camino. So we'd walk her over there and shire and and.
That was.
Actually I think that was when we first I first met you, by the way, and so I don't know how many people.
Probably not many.
People knows, but we actually pitched Steve in like January ninety six on the ZIP two business plan, and actually I thought she was actually one of the most up to speed on on what actually was in our business plan. Most most of the people we met did not actually read our business plan. In fact, a lot of people, a lot of bench capitals who met at the time
didn't even know what the internet was. They've never used They've never used I still do, yeah, right, yeah, something like you know, sort of well known people in Sant Hill. It was like, wow, okay, but but at the time, nobody made any money on the internet, so I guess that's you know, then it wasn't really clear evidence that that there.
Was was a business and yeah, those were fun times.
I remember Kimball and you coming in right, very young looking guys. I think I was in my first four months on the job too.
Yeah, yeaheah exactly.
So let's excuse for a sec I've I've also had the great honor to work with Steve Jobs briefly but enough, and as a business school student to study him with as much scrutiny as I could during that period.
And there's some obvious parallels, and so let's start with the most obvious, but just must be like the elephant in the room.
Is the secret to your.
Success to be the CEO of two companies at the same time.
Oh, I think it's just look at the correlation. Yeah, struggling companies.
Everything's in the craft can in December two thousand and eight, So let's take on a new CEO gig.
Yeah, and same for Steve.
Coming back to No, definitely, it was not my intention to BECO of two companies the after.
I mean, there's certain things that I kind of wanted to.
I thought it were important to happen, and I thought it was important that that there was that that electric vehicle happened, that there was a success in the electric vehicle arena because the the incumbent companies were convinced that it was not possible to create an electric car that looked good, had range, a good range performance, and so forth, and that even if you did make such a car, it would not sell that Chris, people had this love of gasoline, and.
So we had to.
Show that it was possible to create a compelling electric car, long range, good looking, you know all those things.
That was a test the roads to and don't.
If you created if if you made such a thing, people would buy it. And so so that that's that's what we would try to do with with with this.
If I should say.
Like one mind sort of correction on the on introduction, I'm not a co founder of solar City, but I'm a co founder of Tesla.
That's okay, that's a good point.
So and probably architectures, yeah, many of its key features. So very much like jobs, both a hand in some of the detail as well as the long arc of what's important for the company.
The quipto about being co.
CEOs is more than just a joke in that I wonder if in ways that are hard to predict, and you wouldn't set out for this amount of work. It seems insane, but inevitably, both companies cannot expect more than half your time at most.
It sort of naturally forces a.
Delegation upon you and an expectation they have to rise up for partial awareness at best, right, And I just wonder if that helps drive prioritization and really focusing on what's important a bit more than you otherwise might have to.
It probably does, Yeah, I think I probably do.
Yeah, I mean, because I have to triage the things that I do at each company and constantly think about what is the most useful thing that I could that I could do.
But even with that, it's it's still actually just take it an almost amount of time.
And for a while I was just doing constant one hundred hour weeks and that's that's definitely wearing. And you know, now I'm kind of in the eighty to ninety, which is well manageable, but you know that if you divide that by too, it's only like, you know, maybe forty five hours for a company, which is not not much if you're there's a lot of things going on like a slacker.
I mean, yeah, so you.
Know, it is interesting also how you have a love for certain aspects of the product.
So it's SpaceX you.
You know, the whole concept and the vision of going to Mars back into features and stuff. It's it's a wonderful thing to see. I think what obviously should strike folks in the room as remarkable as the diversity of industries that you've tackled, right from commercial banking to the
military industrial complex to the automotive industry. These are heavily regulated industries the generally investors flee from and startups routinely failing, and they haven't seen much change for good reason over decades. So there might not be an obvious pattern in which
industry you tend to thrive in. But I wonder if there's a pattern perhaps in process, like do you approach each of these perhaps the way a software architect might to think of a different way to bring innovation, a different way to reset, you know, for first principles, perhaps instead of iterating from the past a breakthrough. And is there reason you end up in these otherwise really tough industries. I mean, I don't know if that's ever occurred to you that you don't even in Solo City going up
against the regulated autilities. None of these are places that you would normally find entrepreneurs.
Yeah, like I said, it was not from the standpoint of like what's the best risk adjustin rate or return or you know, where I think it thinks could be successful. It's just like I think these things need to happen, to try to make them happen, And certainly when we started SpaceX or Tesla, I thought the probably of success was less than fifty percent, you know, probably a fair bit less than fifty percent.
In the case of Solar.
City, I thought the probably to success was probably greater than fifty percent, But it wasn't clear what the magnitude of success would be.
You know, it could just be small.
And yeah, but it was I just thought these were things that needed to get done, and even if the money's lost, okay, it's still worth trying.
See conviction, But it didn't mean certainty.
Right, you knew that all vehicles would be electric in your heart, but.
Ultimately also, I mean, I think the sort of fundamental good that Tesla can accomplish is acceleration of the inevitable, which is electric transportation. But I thinks there's a lot of value to accelerating, even though I think it's somewhat inevitable.
It's about this value to accelerating it to.
Minimize the that the environmental and economic damage.
That would otherwise occur.
So you know, it's better if we transition sustainable transport ten years or maybe twenty years sooner than might otherwise
be the case. And I think the Tesla's effect has been much greater than the cars that made that It's made internally because when we announced the Tesla Roadster, then Bob Lutz, who was fish shamed GM at the time, saw our pressure release and said, if a small company in California can do it, than circ and jam and he took it to his engineers who told him that you could build an electric car and told them that
they need to get going. That's what got the volt rolling, and that in turn got nisigned to do the Leaf and so it's kind of got the got things going, and ultimately it's like it's what we induce other companies to do that will have a greater impact than the cars we make ourselves.
And it's an interesting point. I'm going to come back to you later.
This idea that Tesla's founding mission is as Elon has articulated from the very beginning through the most recent reports to the public, is to cat is an industry shift that test level be is some part of. But to help others in that shift as well, which is remarkable.
So we supply pow trains to Toyota and to Mercedes.
To help what could be viewed as your biggest competitors
one day, you know, absolutely in fact accelerate that. Before we get to that sort of purpose driven mission, I do want to ask one or at least maybe make sure the audience realizes how cool this car is, and so the eland doesn't have to do this in case you haven't been as much of a fan as the two of us, it's a bit unprecedented the reviews it's received, consumer reports saying it's the best car they've ever tested, road in tracks saying it's the most important car in
America's history, the safety testing showing is the most safe car ever manufactured by far, including Vans and Issuvies. And so it's pretty remarkable to peg performance, desirability, safety and all these parameters. So is it luck or is there something particularly unique about the EV design space that let it be possible to build the best car.
Well, I think, you know, let does play some role here, but I think we I think electric pickles have a fundamental architectural advantage if one designs an electric vehicle from the ground up and takes advantage.
Of of what's possible.
Like if you just were to convert a gasoline car, you would not you would not achieve these advantages. But if it's probably done, you can actually package the battery pack in the full pan and achieve a low center of mass and have a very compact motor and a verter.
And gearbox, so that that the actually usable space.
In the car is significantly greater than a gasoline car of the same over external excelled dimensions.
And then if you do a few.
Other things which one's necessarily specifically related to an electric car, like using an aluminum body in chassis is helpful because you can absorb more energy per unit mass.
Essentially in a crash, it crupples.
Yeah, well so that yeah, but part of it's related to electric vehicle architecture, and part of it is related to other technical decisions that were made in the design of the model ass and.
So yeah, that's that's what leads to sort.
Of having a high safety is I mean, I don't want to sort of go into too much stakes because it might take up too much time.
But like, did you know some of those things at the get go or did they unveil themselves as you went along. I'm just curious how the vision materializes, for example, like along either the product dimensions, like it will have all these great features like like at the get go that the ald gel And then secondly, I'm also curious when.
Did you first know that all vehicles would be electric? Like was that.
Probably twenty two years ago something like that.
Before he met Tesla.
Before, way before there was before there's a way for those Tesla. Oh yeah, well, like I said it, you know when I originally came out when I I mean when I was studying physics pen That's probably when I thought it was the case. And maybe you know, sooner than that, probably when I was in my sophomore year.
Did you have certainty in your heart?
Yeah? Absolutely, it's super obvious.
Yes, yes, now yes now it is.
There are something that was super obvious then.
But that this is a bless in my mind because even like three years ago, most people probably didn't agree with this point of view. And if I could be confident of any prediction I could make, it's that within ten years old, people will be of this point of view, but we won't have made the transition yet, but we'll realize that it's a ridiculous debate to be having. You were a lone voice of sorts back then, probably amongst your cohort and friends and you know social.
Yes, actually I used to talk to like dates about electric cars.
How I go. It wasn't it wasn't helpful. It better.
Yeah, So, actually I ran into a girl I did briefly in Canada, Christy Nicholson. She's now at like a writer for Scientific American, and she mentioned, Yeah, when we were on a date, I asked her, do you ever think about electric cars? And she said, no, I don't. So yeah, a while back, it's pretty I mean, almost everything's electric that we have in our daily lives here.
It was from the physics of it, Yeah, the heat loss of an eternal combustion engine just yeah, pretty amazing, pretty amazing. So I'm gonna I want to share a little story that leads to a question along a different angle. I don't think you've heard this before, so, but I find it fascinating. I was at a lunch at a Google event, and out of the blue, with no expectation this would be a topic, Larry Page turned to me, knowing a little bit about our connection, said.
You know, how much money do I have?
And you mentioned a number. I thought that was cute that he was trying to recall that. He goes, you know, if I were to get hit by a bus today, I should leave all of it to Elon Musk.
Really, yeah, he said that.
Yeah, And and so I'm like paper pen.
Yes, so he likes, he likes singers, he likes.
He's like a good friend of mine.
So he was so context is important, you know.
I mean I met Larry before he got venture funding. Yeah, so that's.
That's like.
Yeah, yeah, wow.
Well he's a remarkable guy, obviously also underachiever, and you know, has a company that wants to do good in the world, right, And I think he looks at you with a bit of end because what he then proceeded to say was, you know, I could give my money to nonprofit and a lot less we get done than a corporation that's pursuing things that are directly aligned with things I care about like getting off of oil and colonizing other planets.
He bleeds in those missions and thinks that a corporation with endowed with the right to do that has his business purpose, is the best vehicle out there, and wishes he could do more of that in his own life. He compared poigntly, I think to some other software companies in the Pacific Northwest who might have executives who do evil for the first part of the career, then do good for the second half, and then the sad story of others who'd never get to the second half of
their life, like Steve Jobs. I mean not in a joking way, I mean seriously, and it was a very deep moment. So it raises the question of a purpose driven business. So you've heard already that Tesla is not just trying to make money. That is not the parody if you read the most recent shareholder letter.
Yes, in fact, I started off the the shareholder letter saying the profits are not our primary goal.
And then I got a little.
Bit of.
Some of the board members who question that statement, and I was like, well, it's true, you know.
Like like like for now or like just just while we're growing, But no, just not the parody, which I think in a business goal is a really good point to dwell on for a moment.
Yeah, it's not that I think they're unimportant or anything. It's just not the primary goal.
And I actually told me well that on IPO as well, And so it's not like new information at least, you know, if people had watched the IPR, it's not your information. And yeah, and actually amazing the stock went up after that.
Was I think there's a profound reason.
I mean, you see the benefits of being focused on something that's a higher calling as your primary motivation.
Your employees love.
At the customers love and partner's love, right, and you feel better about your job. The interesting thing, the irony perhaps, is that at least with an our portfolio, the companies that have that kind of a founding principle actually make more profit and grow their revenue more quickly than the.
Ones that don't.
You know, it's this low sample set, but the handful that had taken this bold of a step to say no, no, that we will not make that a number one priority actually do a great job. And it occurred to me, and I don't know if this was conscious in your head, at at some point that if you weren't wildly profitable,
the auto industry wouldn't follow you. In other words, this whole mission of catalyzing a shift to a new electric vehicle isn't going to work if the business model is worse than a current business model.
And so even you know, it's the obvious byproduct.
Of what you're focusing on. I'm not obvious, but it curs to me that it's a byproduct. It wasn't obvious at first at all. But I'm curious that thought occurred to you, that all, yeah, the profits will come, or yeah, well.
We have to generate positive cash flow, or we have to generate enough cash flow to fund future developments, which requires having a good gross magin. And so I guess one could just say, okay, well we're going to stop developing your products, and then you would be really profitable.
So at any given point.
You could sort of say, we could be profitable, you know, at this point in a significant way, but we've got these great things that we want to develop for the future, and they're a good investment, and that's what we're doing.
And similarly, at SpaceX, the you know, the founding vision was to colonize Mars indirectly again interestingly catalyzing others to move. Yeah, and then you realize, hey, I've got to actually lead this charge.
Yeah, well, I mean with SpaceX.
Originally I started off just thinking, well, how do I increased NASA's budget.
Actually, that was my goal.
So it was like two thousand and one with just just Torn, a friend of mine, and he asked me. He asked me what I was going to do after PayPal, and I thought, well, you know, I was wondering, like I'd like to get involved in space, but I just didn't think there's anything as an individual. And but I was curious as to when we when we're NASA would be sending a team to Mars, because that was always going to be the thing to do.
After the Moon.
I figured that that there'd be some plan and I just go to the website and I could read, you know, the schedule, and oh yeah, it's like okay, twenty seventeen, good, okay, But actually there wasn't anything on the website, and or at least I thought like, am I cannot not find it? Like what's going on here? And is it secret?
I don't know?
So but it turned out that that NASA had done a study on what it would constant send to do a man Mars mission. And this was under Bush the first and in suppose he asked for a ninety day study short laughter taking office and now so he came back with a five hundred billion dollar price tag and he said, okay, maybe not billion. That's when five hundred billion dollars was serious money.
For the government. So I.
So then that got totally shelved and it was like you were not allowed to talk about any kind of crude mission to Mars at NASA.
Anyway.
So but I thought, well, if I can do something that would galvanize public interest that and then that public interest would translate to additional appropriations for NASA and increased that their budget, then maybe they could do it. So so actually, what I sort of thinking I would do is send us a small greenhouse the service of Mars seats in dehydrated jail and then upon landing, hydrate to
jail to grow the plants. And the public tends to respond to precedents superlatives, so this would be the furthest that life's ever traveled, the first life on Mars. And you have this great shot of green plants on a red background, and.
I thought, okay, maybe that would get the money shot. The money shot.
Yeah, I'm never quite sure whether that's the sort of a word you can use or not. Now i'm realizing maybe, yeah, I didn't. I didn't know its origins until somebody pointed.
It out to me.
But so moving back to that greenhouse on Marsh, Yes, the photo is out.
There and you have this great photo, and I thought, okay, if we could make this happen to be cool and now so we get the money and they could do they could sort of send a team.
To Mars and be great. So I tried to trying to figure.
Out how to do this with the proceeds that I had from from PayPal, and I was able to figure out how to get the cost of the spacecraft down and the munications and the little greenhouse and everything. But the one thing I couldn't compress was the cost launch. It was only a few options, and the US options were way too expensive, and so I ended up going to Russia three times to try to buy the biggest ICBM in the Russian nuclear fleet.
That's where I started.
Yeah, yeah, I mean, okay, that.
Was it.
Was.
There was some strange trips, that's for sure, but you're just like virtually like you can buy any.
It's a very capitalist society in some ways.
So I actually did negotiate a deal to buy two of the ICBMs minus the nukes. And but I came to the conclusion after that their trip that it wouldn't really matter, like if if I actually came innclusion that my initial premise was was was wrong, because I actually think there's there's amount of will in American population, particularly to explore the United States, you know, maybe more than any other country, is a distillation of the human sporad
of exploration, and it's really fundamental to psyche. So if people think there's a way, I think you actually get a lot of sport. But then it can't be just bang your head against the wall. I gotta believe that this can be done without breaking the federal budget. So that's when I said, Okay, well, is there some way to affect the cost of space transport and and and so I got together with a group of people of
a series of saturdays just to just try tounside. Is there something super fundamentally super expensive about rockets or can the cost be substantially improved. And we had a bunch of those kind of brainstorming sessions and I couldn't see I couldn't see any fundamental obstacle to improving the cost of rockets.
So that's when I started SpaceX.
I'll just build them myself.
Yeah.
And then but I.
Said, at that point I would just say the probity of success was definitely less than fifty percent. I thought it would most likely not succeed, but what's worth a try.
But it's fascinating. But the parallels are so many between these companies. Again, probability is low, certainty that it needs to be done, certainly that it could be done by for physics, and first principles that it's the success is an option, right, it's one of the possibilities. And interestingly, starting with a roadster and a Falcon one as a
proof point to a larger design. You know, as I look at the Falcon nine and it looks like the product of a software engineer modular reuse, like let's build one engine and step and repeat and building all kinds of elegance into the system design to abstract away almost from the hardware into the software, into the design the beauty of the system. And I wonder if that's why incumbents don't see the sort of re engineering of the.
Of the car, of the rocket, or the what have you.
The hyper loop is this, they don't approach it in that kind of blank sheet of paper. How would you do this if you didn't have to create jobs across district or you didn't have some other ulterior motive?
Interesting, interesting looking at the.
Time I want to give I'll ask one last question, but i'll give a heads up on there's Mike's to start getting them ready for audience, because I don't want to monopolize people's time here. Actually, there's so many questions i'll ask, but what I'll start with maybe and here for at least some of the quirky.
One about influences.
So you, uh, we've heard about the Iron Man reference and your childhood interest in comic books and Hitchiker's Guy the Galaxy and as them off. But there's all kinds of things woven into like cyber nine systems that at.
SpaceX that we heard, and then some Easter eggs.
So some of us noticed that the steria goes to eleven right on the on the Tesla. This is the spinal type reference for those who know that this one goes to eleven and he just just one more.
Louder than loud. That's right, exactly, that's right.
But no one seems to have noticed the product lineups. You got the models, you got the Model X. Oh you've just trademarked the Model E.
Yeah.
No, one's yeah, you got and the model and the Model Y.
No, I know exactly, but there's not I guess there's not a lot of humor and trademark uh, the trademark law, you know, because yeah, obviously we just trademarked sexy.
So uh.
And then we're having this this discussion with the like Ford because they.
The Ford's Council.
They also didn't get it, like because because they're they're sort of slightly opposing us using Model E.
And then they saw that we.
Were registered Model Y and they said, oh, you're planning to use Model WY instead of Model E.
Like, no, it's just a joke.
We don't do that.
What is this foul? Come on?
Fantastic? Well do we I'll keep going if we don't. But do we have microphones for folks if they want to ask.
Questions Okay, let's do a qu see if anyone Oh my gosh, yes we have them. Why don't we do that. Let's take a couple of questions in the audience and I'll let you guys figure out how to do the allocations. Thank you very much.
I heard you talk about supersonic aircraft. You guys have done some beautiful work at space X on be tall. Ah. Clearly tesla is is focused on electric. Have you thought about the the synergies of electric and be tall and aircraft for solving the four or five challenge?
For solving the four five film? Well, I mean, I do think there's there's a there's.
A real vertical take off and landing.
Yeah right, sorry, vertical take for landing is vitall? And uh yeah, I do think there's there's a really like the I think the optimal sort of air transport solution is a vetall electric supersonic plane and and it actually works together quite well for a bunch of reasons.
In particular, the higher you go, the better.
The electric the more efficient the electric aircraft is, whereas if you have a combustion aircraft, as you as you get higher it get it tends to get worse because you have a kind of.
A fixed aperture and airscoope.
Yeah, like the engine is the hole in the front of the engine is a fixed size, and so you have to pick a particular cruising altitude and so you've got to figure out how do you get the right amount of air at sea level.
All the way through really high altitude.
And then you've got this issue of super supersonic combustion that you know, you see, you end up having to slow the air down and it ends up being not that efficient. But electric after aircraft would just get better and better as it got the higher and then electric motors have a higher power weight ratio than a combustion engine, so you could you can actually have the power to do the vertical takeoff landing part with a fairly small
motor compared to combustion. And then you could get rid of the elevator and uh and rider, so you don't need the rare control services if you gimble the end that you can gimble the.
Motor gotch so it starts to look like a podcraft, like yeah, Bolivian or something, right.
And so it's it's yeah, it's something quite the real trick of it is like, how do you make it really long range and at least as safe as existing aircraft? But those are really the only two questions on that front, I think. But they're they're tricky, they're certainly.
Don't underestimate those questions.
Great, let's go to the next one.
Or whoever has a.
Mic, however, we're doing the allocation fairly and efficiently.
Let me give him a hand. Okay, No that we have someone great.
Young GSP and Andy four Hey, Steve by a long time. And one question, are you as Tesla going to expand the worldwide? And I think GSB is going to host China two point zero tomorrow, and do you have any plans to go into the biggest car market today? But I know you're a little concerned through another friend of mine, I actually asked you indirectly a few years ago that you were concerned about the secret and the parenting in
the Chinese market. Are you still concerned about that or you have a strategy?
Yeah, So Tesla is definitely going to ship worldwide. In fact, the Tesla roadsters in thirty one countries right now, and we expect to ship the model ast to China starting next year as well. As to Japan and Hong Kong and Singapore and Morella and Australia. So really it's going to be quite widely distributed next year. Certainly, China is an extremely important market in fact, for premium sedans. China
is about half the world market for premium sedans. So if it takes some growing, yeah, to take something Mercedes S class, but last year fifty four percent of Mercedes S classes was sold in China, so pretty important market. And yeah, so we're gonna definitely do a major push
in China. And actually some of the most enthusiastic potential customers we've seen are people from China, So we actually want to make sure that the car actually has features which are specific to the Chinese market and make sure that it's not just you know, taking an American product and you know, just sort of sending it to China without any any changes.
So we want to make sure it's tailored to the market and Japan as well.
I don't want to you know, a lot of it's not many American class sell in Japan, but I think that would be like which were symbolism. Yeah, I mean, like I think we should take the Japanese market seriously, and and I think if we do things right, we should have reasonable sales there. So yeah, so that that's going to be next year. I mean as far as
copying stuff, I think that that's certainly a risk. I think China is actually getting a lot better these days, and I think the new government is taking taking intellectual property a lot more seriously. So I'm actually starting to feel more and more confident about that the technology not actually not being copied in China, or at least you know,
it's getting much better. And I don't think it's going to be too much of an issue until we want to establish local production and that that's that's where you know, we need to make sure that we do it right. And there's not an incentive for the factory team that we established there to sort of go across the road and create a competing factory.
But but that'll that concern is a few years away.
Do you have an know that, oh yeah, up here and the students are largely upstairs that right, Yes, this is GARYL.
Parra, NBA student. First of all, thank you.
It is very inspiring to hear an experience about actually, you know, changing the war using organizations as the organs that you created hopefully will inspire another Ironman.
Movie as well.
And I was wondering if you can tell us more about the experience about like you know, how to balance you know, those straight off between your profits and you know, following purpose that goes forwarther than just make money. You know, you are trying to change the war, you know, well for the humanity rather than just make profits in the short term.
What was the question, I'm sure if I.
How do you balance? Well? Yeah, well, I mean, first of all, I should say.
Yeah, with with with all of the companies, but I think particularly SpaceX and Tesla, although there's in a good position today, they went through some super tough times and in fact, for SpaceX, I reserved to capital to do three, to have three launch failures, or to withstand two launch failures and have the third one b success sort of
three strikes. And actually we had three launch failures, were just able to scrape enough money together for a fourth flight that succeeded in two thousand and eight.
And then also in two thousand and eight.
As Steve knows, we got the Tesla financing round done on the last hour of the last day. It was like six PM December twenty fourth, two thousand and eight. And if we hadn't gotten it down then the company would have gone bankrupt a few days after Christmas.
So what he's not the only reason that happened is he wrote.
A check for the remainder of his wealth to save the company during payroll and Christmas when no one else would and Goldwin had just failed the private offering and the financial collapse was amongst us. There was no deal, we loan, there was no Daimler deal. The car had a negative gross margin.
It was not pretty.
Oh and you had you know, your largest yearholder just completely pissed off.
And you know, gong a wall. Yeah yeah, it was ugly.
Yeah Yeah.
It was a stressful period.
And that was just at work.
Yeah.
So so for a while that really wasn't a question of profit or nonprofit is It was like we need to live?
How do we live?
So that was the main challenge. And and and now, I mean now we're at the sort of the stage where we can say, okay, we can shift the dial between we could we could make let's say, at this point, a medium amount of profit or a small amount which sort of chosen to make a small amount because we
can reinvest the cash flow into future products. So now we're you know, right now, we're reinvesting the cash flow into developing the Model X, which is an suv, and to increasing the production capacity of the factory and doing a little bit of advanced planning on the third generation vehicle that'll be a mass market sort of affordable, compelling
electric car. So so that's really I guess what what's meant by in this case not pursuing We're not trying to maximize profit at this point because it would constrain the business, the growth of the business, and constrain the overall objective of transitioning the world towards electric cars. So I don't think against profit in general, but it's just it's just it's not I mean, I actually don't think
it's the smart move. I mean, if one were to take the net present value of future cash flows, I think maximizing profit at the stage is actually not the smart move, you know.
And it's interesting because earlier I said, we get back to it, you mentioned that your goal was not to start a company that has the chance of making the most money for you the quickest, right, and that the wealth personally is almost.
A byproduct of these activities.
Of passion and by analogy, like in the investment field inventric capital.
You know, you could look for the thing.
That'll make the most money the quickest, right, like a new ad network for social media, but who cares?
I guess it really just doesn't help the world in any meaningful way.
And there are much over longer if you take a longer term perspective, there are things you could do that don't answer the short term question of what's going to make me the most money this year or this five year period, but the over twenty years focusing on those ironically, he may make the most money right of any entrepreneur, or these companies might be more profitable than their cohort that doesn't follow that same purpose driven kind of almost messy onic zeal.
So there was a balance. Question almost implies the dichotomy.
That may not be opposed, but maybe aligned if you orchestrate it right.
Yeah, maybe more of a short term it's a long term approach.
Yeah, exactly, great. We have one hand up here, up here, another one occur sure up here?
This will be the last question.
Oh, this is the last question.
Okay, Yes, from your current car marketing strategy. You could say that your car is directed towards a luxury car marketplace, so that's a fairly well defined market. Do you have any plans for expanding it to the general marketplace, to say, make a car for the masses, which might be maybe in the twenty five to thirty five thousand dollars range.
Yeah, absolutely question.
In fact, for the first blog piece I wrote for Tesla was the Tesla master Plan, which is to start off with an expensive, low volume vehicle, then go to a mid price mid volume, and then sort of low,
low price, high volume. So we're kind of in phase two and without third generation vehicle, we expect to be somewhere in the thirty to thirty five thousand dollars range for the car, which when you're take into account the savings from the use of electricity instead of gasoline, is more like comparing it in the US to about a twenty eight thousand dollar car or in Europe to a twenty two thousand dollars car, and.
The maintenance is much the least to feel costs so much.
Yeah, absolutely, that's right.
Well, great, well, I want to thank you very much for this and transition to the closing segment of our invenite.
Thank you all right,