Baron Investment Conference

Thank you everyone. As I said before it's a lot different than Convention Hall in Asbury Park. Uh Today we're privileged to have Elon Musk join us uh virtually. And there couldn't be anyone more appropriate to speak to today when our theme of our conference is changing lives. Uh there's no one who's changed our lives more than Elon.

Especially changed our lives financially, but changed everyone else's lives and and and that really feels like it's just beginning. Without him there'd be no electric vehicles. Uh there'd be no FSD. Has anyone ever heard of thought of full service drive self-driving 5 or 10 years ago? Has anyone ever thought about that? Uh so uh uh uh re-flyable rockets. No one has been able to do that before. I congratulate Mr.

Jeff Bezos for accomplishing it uh yesterday first time. Uh we've already done uh what? 5,000 flights? And uh and uh we have 9,000 satellites, I think it is. On the way to 15,000. So and the people who did that for him did it for Jeff are people who used to work at uh at at for for SpaceX uh but couldn't go fast enough for Elon. So now they went over to Bezos. Um So there would be no Starlink. Uh no re-fly no no Optimus.

In fact uh one of the first questions I wanted to ask as I was telling my assistant about Optimus before and how the plan is to go from uh a million production next year to 10 million the following year to 100 million to a billion. And what she asked me was, "Well so where's the room for them on the sidewalks? Are you going to build something?

Is that the idea that we have behind uh Boring Company to go underground for the robots to walk around or fly above? Where's the room for them?" Well, actually actually you you could you could fit um all of humanity um on the floor in the city. That's how small the humans are. And and Optimus uh doesn't mind being packed densely. So it it's always helpful to think how how much room do people take.

And and and this is why I think just having it in the back of your mind that all 8 billion people on Earth can fit on one floor in the city of New York. So plenty Another way to think about it is is as if you fly across the country and your goal is to drop a water balloon on someone below you you will fail. >> [laughter] >> Cuz it's empty. We we used to do that when we were in eighth grade. We got them though. Um Yeah.

So so Caitlin don't worry, there's enough room. Uh So one of the things I think about when you talk about Optimus is that there's so many functions that it can perform what's going to be left for humans? Is there a job that humans going to have other than just living in you know this this great abundance that that you're going to create? What what's going to happen?

Well, I think there's this question of fundamental of how do you derive meaning in life? If the robots can do everything. But we see lots of examples where even though machines can do much better humans still enjoy these things. Uh like athletic athletics for um or let's take a a mental sport like chess. Uh the the computers are so good that your phone not even connected to the internet can beat Magnus Carlsen easily.

But yet chess is at all-time highs in popularity. So really machines being better at doesn't mean anything. Doesn't mean we can't derive satisfaction in doing it. By the way, guys, is the connection isn't that good with the phone. Is there some way we can do something else? A bit echoey. We're not the connection isn't that good. I think it keeps cutting in and out. >> What if I talk on this? Talk to us. >> [laughter] >> Okay. Okay, you do that.

You do that and I'll do this. Um [laughter] uh-oh. Um uh So so the function the function You'll get a like a close look at my Optimus arm. The the the functions that you see these robots doing is what? What are they going to do? And why is there How are we going to have a billion of them when we have 8 billion people? How where are they Look it it's it's going to take us a minute to make a billion robots.

So you know, they're not going to be expensive. Um But but I think we will um they will ultimately be a billion billions of humanoid robots on Earth. Uh a way to think about it is uh who on Earth would not want their own personal R2-D2 C-3PO? I pretty much everyone wants you know R2-D2 C-3PO but even better. Um like your personal helper buddy robot it would be great.

Uh you could teach your teach your kids, take your dog for a walk, get get the groceries you know, chat chat you know, protect you when needed. Great. Um And then how many robots would there be in industry providing products and services? Probably three or four to one relative to humans. Which which suggests that total number of robots will be somewhere around maybe as high as 40 billion 40 40 billion maybe maybe 30 billion robots. It's a lot.

So so uh the Japanese company that makes those those robots that are used in manufacturing are 50,000, 100,000, 150,000 and you're describing a robot that's $20,000. We have to have a million a year to do that or 10 million a year to get to $20,000. And is that something that's going to be affordable for people? Are they going to be rented? They going to be purchased?

Corporations are we going to get some kind of carried interest once they buy them from us? How is this going to work? We don't have the model yet. Uh well, uh my rough guess is that the uh cost to be sold uh their labor and materials for Optimus um after we reach a million units of steady state production. So call it a year after reaching a million units a year. Um cuz it takes a lot of effort to uh improve the cost.

Um uh but at at that point I would expect the the the labor and materials to be 20 to 30,000 in current year dollars. I think that's that's a pretty I think that's a pretty safe estimate. When you're improving cost so with cars, your idea is that everything we buy from other people to use in our cars, we know exactly how much it costs. And therefore we can tell someone how much we're going to pay for what we're buying from them.

And if it doesn't if they're making too much, then we make that stuff ourselves. Is that the same kind of idea we have in this robots where we're going to should be much simpler to make than a car. Or am I wrong? Raise your hand. But the hand is hand is extremely complex. Um there are 50 actuators in the hand. In the hand and forearm. Actuator is the motor? Yeah, actuator is the motor, gearbox, and power electronics. Um So that's 100 per robot.

Um really a lot of lot of actuators and sensors. Right? Am I getting that right? Approximately? Um So it it's it's there's a lot of complexity. Uh Why is that important? Why is it important that we have such a complex hand? Uh so in order to do dexterous tasks you you have to have a hand with the the sensitivity, precision and degrees of freedom of a human hand.

Because I you you know, the so something that is we find easy to do like pick up a screwdriver or turn a wrench uh or even say thread a needle uh or play the guitar actually require a lot of dexterity.

Um and uh one of the one of the past but one of the reasons um we we think we can achieve sustainable abundance which is sort of the the new um or so the revised version of the company's goal because it was accelerate sustainable energy which as you mentioned we've we've done that. Um our new goal is sustainable abundance.

So that's abundance for all um and but in a way that is sustainable that does not uh destroy uh any of the natural world in this. How do we decide who gets what? Somebody wants to buy my house they can just come in and start living there? Well I'm not sure why I mean you do have a nice house so >> [laughter] >> uh I can certainly see the see the appeal.

Um but uh the robots will be able to make anyone a house and uh you know as long as you don't just don't have being in a particular location you can have robots will be able to build you a castle if you want. So and then but the the reason for dexterity is you want to be able to do um so like surgery and precision medical uh actions. And um so imagine a world where everyone has access to the best surgeons literally everyone.

And uh Op- Optimus will have level of precision that is frankly superhuman. Um and will be able to do medical procedures um of very sophisticated medical procedures. A- any any medical procedure perhaps things that that really humans can't even do because they're too they're too difficult. Um and that will be available to anyone. There are people often talk about eliminating poverty and providing great medical care.

But they don't they don't actually have a solution. Um and money doesn't solve it because there are only so many uh there's a very limited number of of great doctors and surgeons. Uh they don't grow on trees. Um but now they they'll get built in factories.

So so I sent you a year or two ago an article about a young man who was an interview in Barron's and he was 33 at the time and he had become a portfolio manager and he lost his legs to a um I know he was a Paralympic performer and he lost his legs to man-eating bacteria and I said is there anything we can do to get him out of the wheelchair?

And you said yes there is in three or four years we can give him an Optimus body and then we can use our you know transistors in his head in his brain to let him function as a normal person and dance and sing and walk and run. Have we been able to make progress in that area? Yeah so that's a confluence of two of my companies one is being Neuralink and the other being Tesla.

Um so Neuralink has also made good progress um now has I think over 10 uh patients with Neuralink implants um and uh these people who had never who didn't have the ability to move their arms and legs in some cases were completely locked in like like Stephen Hawking um and they can now communicate um I think as quickly almost as quickly as we're communicating right now. Um which is very cool and that's that's going to continue to accelerate.

Um so what we can do is use a Neuralink implant um that is taking signals from the motor cortex of the brain um and and also uh uh receiving signals from the somato cortex somatosensory cortex um and then give someone uh who's lost their legs Optimus legs and so you do I mean we're we're really getting like the $6 million man here I mean from back in the day. Uh I don't know if you watched that show but I watched it back then. I I I watched it.

Yeah I thought it was pretty fun um and and we we can actually give someone superhuman cyborg capabilities like the $6 million man but less than $6 million. >> [laughter] >> I mean in this day and age I mean $6 million back then was a fortune man these days it's like nothing. Um but uh but for much less than that I mean like for something that that would be reasonably affordable um you know it it it it it might be well like $60,000 type of thing.

Um and um and you can take the signals from Neuralink the mind that would be transmitting to the legs and transmit those to the attached uh Optimus robot legs and um and you would actually be able to run faster than any human. Just just like $6 million man. Your Neuralink sounds really exciting sounds unbelievably exciting. Uh let's switch to XAI.

Uh so three years ago uh you were here and you had either just purchased or about to purchase uh you know Twitter which you've renamed X and you were widely criticized for that. And yes I was. Right? In fact you you've even mentioned here on stage that you didn't want to have anyone else be angry at you cuz you had enough people trying to kill you already. Yeah yeah totally. Right?

So so you were buying you were buying X and it was $42 billion I think and you were in the process of raising money and I called you up and you hadn't called me to solicit me and I called you up and I said I would like to invest with you $100 million in this and it was $60 million for one of our funds and $40 million for me and and you said really? I said yeah and you >> [laughter] >> Really? You said really?

And I said yeah and and you told me that you thought I would make a double. And I said well I hope so but to me it felt like you made us $8 billion in in in Tesla and it would be not very appropriate if I didn't support this new venture that you were doing. So we and and then the day that we paid the money we marked it down 70%. Oh man.

>> [laughter] >> This is this is how I know you're a true friend Ron because uh this is uh you know I do regard you as as a true a true and trusted friend. Um and you know the the the test of friendship it I got more to the story. >> [laughter] >> It's a better ending better ending. The test of friendship is is is who supports you when the chips are down and the times are tough and everyone's against you. That's a real friend and that's you Ron.

Thank you. Um so so so we did invest that 100 marked down to 30 and then about a year later we started getting phone calls from hedge funds who always seem to know things they're not supposed to know. >> [laughter] >> Yeah how do they do that? Right?

And they started saying I'd like to buy your stock uh for what you paid for it and I said I think I'd rather wait and stay in which I did and then and then uh change the name to X and change the configuration of business and and then uh from that uh you bought Twitter and it came together in a social network along with this and and and all of a sudden we have a business that has incredible data.

Did you buy this for the data that no one knew about but it but but the data with 600 million people talking with each other so physical data that no one else has and then you started Grok which is based on our data and everyone else doesn't have that they got digital stuff and then when they have Grok then we need more data centers and you're building those and in a space of a very short time less than months you built a data center which is four times what is the largest than anyone else on the planet 25,000 what what other people had in in CPUs and we built it in GPUs 100,000 uh more powerful and then uh you know now we have now we're going to go to hundreds of but the bottom line is the investment that we made we put up more money and we have a total

of $350 million invested over the past two or three years and now it's worth $700 million.

So everything you touch is like that it's the most unbelievable thing I've ever seen. So so everyone is investing but in technology and we're investing in in the technology person the best engineer on the planet. So thank you very much. So so the vision is the question is did you buy X did you buy Twitter because of the data is that did you have all this in your head before you did it?

Uh not really no I I just bought Twitter because I thought it was um having a negative effect on civilization >> [snorts] >> um and um just sort of pushing uh ideas that were anti-civilizational um you know it it sort of what having having sort of captured by uh the far left I think you know it's fair to say the radical left to me they they wouldn't regard themselves as such but it was captured by uh you know a group of people whose uh political beliefs are those of uh you know, deeply San Francisco and Berkeley.

Um which is about as left as you get in America. Um so that that that matter wasn't a good forum for debate um cuz they they suspended many people on the right including the president as it as it may occur, a sitting president which is really unprecedented for a president. Um so I think we we need to have a public square where there's uh true freedom of speech. Um and freedom of speech is Yeah, freedom of speech is is the bedrock of democracy.

Um we we if there's not freedom of speech people cannot make an informed vote. Uh and and if you cannot make an informed vote, you don't have a a real democracy. So, that's the purpose of uh acquiring Twitter was to try to uh bring it more to the center. Uh there there have been no no left-wing voices have been banned or or anything like that or suppressed. Um but uh what what we're trying to do is give equal weight to all parts of the country.

Um so that they can be a public town square where people can exchange ideas and hopefully it does not result in violence. Um and uh I think that's that's fundamental to uh I think it's one of the like I said, free speech is the bedrock of democracy. It's quite the first amendment. Cuz people came from countries where if they could be uh killed or imprisoned what they said. And in fact, this is happening all around the world as we speak.

Uh even in places like Britain. Um so that's uh that's you know what I I did because I I I felt like uh if it's these civilizational risks had to be addressed. And I mean what if America is not strong then what do businesses matter? The the the America is a central pillar that holds up our Western civilization. And if that pillar falls everything falls. So so uh so you were one of the founders the two founders of chat GPT and you know, open AI.

And uh and you had a disagree and it was founded as a charity and it was your idea that you wanted to make sure that you know, freedom of speech and all the things that you deem important for good lives on our planet uh were followed safely.

And uh uh the uh the other founder uh what he tried to do and did was accomplished is that he got control even though it was your money and he got control and uh and you and he said, "Elon, I'd like you to stay." And uh you said, "I want to go. I don't want to be a part of this." And uh and and he offered you some ownership and you said, "I don't want it."

And so here, you walk away from an ownership of chat GPT so you're obviously not doing all this stuff for money. I mean, you are, but I mean if that's not but I mean, if you if you were only about money, you would have never left with something that's worth $500 billion by itself.

And so here, you're forming this new entity uh uh Grok to accomplish what you wanted chat GPT to accomplish, but you think that we have an advantage in this because of the data, because of the compute, because of what? And what are you going to do with this ultimately? You talk about connecting physical world to digital. What does that mean? Yeah, well just going back to open AI for a second.

Um the reason I founded open AI was because I was concerned based on my conversations with Larry Page who used to be a close friend of mine um that he was not sufficiently concerned about the dangers of AI. Um this really came to a head when at my birthday party uh he in front of a large group of people called me a species um for favoring humanity over computers. I I I found that troubling.

Um >> [laughter] >> I was like, "Larry, uh what side are you on?" Um it sounds like you're on the side of the computers. Uh but you you really need to be on team humanity here, you know. Um so uh after that I was like, "Okay, this is it. We got to have some counterbalance to uh Google." Um because Larry doesn't seem to care if humans make it or not. Um so I I thought, "What's the opposite of Google?" It would be an open source nonprofit.

And that's where the word open in open AI comes from. It It means open source. And and then I I provided I provided all the money beginning um like whatever the series A B C rounds and uh recruited the key people like Ilya Sutskever and um taught them everything I know. And uh you know I I actually even got them to deal with Microsoft with with such efficiency to I got Sergey to donate some time from Azure.

Um and for all that, I did not seek any financial reward whatsoever. Um The and the reason I actually turned down the offer for shares is because I mean, I I felt like, "What do you shares and what?" Like nonprofits supposed to have shares. At least last time I checked. Um you know, they're not supposed nonprofits are not supposed to be vehicles for self-enrichment.

So, that's why I turned down the offer of shares cuz it it didn't seem morally or legally transferable. Um so that then with with with xAI we and we are starting late with xAI and we're only I don't know, two and a half uh years old basically. Uh And we're starting from behind. Um you know, we are somewhat of an underdog. Uh but you know, pretty good with technology.

So, I don't want to pat myself on the back here, but I'm pretty good with technology. Um and um and we are advancing faster than any other AI. So, I think in in the for technology ventures, the winner ultimately is the one that is able to move the fastest.

So so so we think that so we're optimizing for the best technology and we're doing something different than others others do in in in a digital world and we're physical to digital with movement uh and uh and visual and other people can't match that. And also, we have the real-time data. What does that mean? Why should we do better than everyone else? Why are we going to win?

Or why are we going to at least be different than everyone else so we have a really strong business? Well, first of all, I think in in in terms of being a strong business, I'm actually not too worried about that that because um e- even if even a small player that is successful in AI will be worth a lot because they'll contribute so much in productivity to the economy.

So and and so so it's actually pretty easy to achieve a not pretty easy, but I mean it's it's it's not there there will be many companies that are worth sustainably several hundred billion dollars. Sustainably. Um so then it's a simple question of like, "Well, how do we achieve the lead?" Um that comes down to three things. Um are you able to attract the best talent? Um are you able to bring the most amount of AI hardware online?

Can you can you bring uh GPUs online faster than anyone else? And we've we've already demonstrated that we can do that. Uh uh Jensen Huang himself said that um he was blown away by how fast uh xAI uh launched its data center. Jensen said there's only one human on the planet who could have done that. That's you. Yes, he did say that. Um >> [snorts] >> I I swear I'm very very kind of I'm very very uh It's made us think about are you really human?

>> [laughter] >> I I keep telling people I'm an alien, but nobody believes me. I mean, when I got my green card, it said alien registration card. So, I mean, you know, I have I have proof from the government. >> [laughter] >> Um so I think I just have to get registered. >> [laughter] >> Um so uh I'm I'm I'd say I've got some some uh s- like relatively rare skills these days in America in terms of of getting hardware built.

Um if you look at the biggest successes uh in manufacturing in America since World War II by far are Tesla and SpaceX. Um yeah. So uh So So to stay on to stay on Grok for another minute so the idea of connecting physical and digital is that that's different than digital digital figuring out who wants to buy what. We're doing something entirely different. Is that fair? I I wouldn't say we're doing something entirely different.

We're doing uh we're doing some things that are same, some things that are different. Um but I'd say if you if if just saying like the the elements that define success for any AI company are going to be one the talent, two the uh hardware, how much AI hardware can you bring to bear? Um that that's actually a very big deal. Um and we've shown that we're the best at doing that at XAI. And then third, uh unique access to data.

And for that we've got the the X system, formerly the Twitter system, which is the by far the best source of real-time data in the world. So that that that those are some pretty significant assets. Um and uh and I think we're going to come up with some very innovative ideas. Um but I have more ideas in my head than I know what to do with, frankly. Um so I think we'll make some moves that are not on the chessboard. Uh that people don't anticipate.

Um some creative moves. Uh and and and like I said that So So I I should point out that Grok right now actually um Grok heavy um is still the smartest AI. Uh best of my knowledge. It's it's I recommend cooling it down. Um Grok Grok 4 heavy is more responsive than Grok agents. Uh they they they work in parallel and they compare their output like a study group and give you the final conclusion. And it keeps getting better.

Um and now we've begun training on Grok 5. Grok 5, I think will be the smartest AI in the world by a significant margin on ev- on every metric, without exception. Um I might be wrong, but I th- I think that will be the case and and that will be in Q1 sometime. Grok 5? Yes. I mean Grok 5 is the first time where I thought, "Well, we have a non-zero chance of achieving artificial general intelligence." Um not that it's a high chance.

I I I sort of I calculate like 10%. But that's what my biological neural net comes up with. Which still means 90% chance that we don't. We're clear. Um but I've never thought that before. And so for the first time I think like, "Wow, this this this really could be general intelligence, at least a small chance." Um Grok 5 will really be something special. Um and and it'll be both extremely intelligent extremely intelligent and extremely fast.

Um So So one of the things that we're doing that I think is interesting is Grokopedia. Um which we're we're going to rename down the road to to be Encyclopedia Galactica uh in honor of Isaac Asimov uh and um Douglas Adams, who who both mentioned that in books. Um and the idea behind Encyclopedia Galactica is to create an open-source repository of all knowledge. Like a distillation of all knowledge.

And And open-source meaning anyone can access it. Anyone can use it. And if if other people want to train on it, they can do so. Uh and then we want to create copies of this and distribute these copies throughout Earth uh and even put them on the moon and Mars and out in deep space um as in a way sort of a a modern-day Library of Alexandria. It was the great tragedy that the Library of Alexandria burned down or or was burned down.

Um and um so in order to preserve this knowledge, I think we we we want to actually etch it in stone and sort of stone stone like microfiche and and and distribute it widely, so in a worst-case scenario, future civilization can can see what we what what we learned and maybe pick things up from there. So is there a major breakthrough that you can describe that allows us to do this with Grok 5? Or is it just speed?

Is it more compute and therefore we have more analysis more uh you know, information we can train on? What is the breakthrough that allows us to uh to have this 10% chance for AGI? Is there Is there a breakthrough or is it just speed and access to data? Not just, but So there's a couple things. It will be the largest model to the best of my knowledge. So this is this is a a 6 trillion parameter model.

Um whereas Grok 3 and 4 are based on a 3 trillion parameter model. Um and moreover, the 6 trillion parameters will have a much higher intelligence density per gigabyte than uh Grok 4. Um I think it's an important metric to think about intelligence per gigabyte and intelligence per trillion operations. Um we've learned a lot. Um so um quality of the data that we're training on with Grok 5 is much better.

Um it's also inherently multimodal, so it's text, pictures, video, audio. Um it's um it's going to be much better at tool use uh and in fact creating tools to be more effective at answering questions and understanding them. Uh its vision will be uh extremely good. It'll have real real-time snap real-time video, which is I think a really fundamentally important thing that none of the other AIs can understand real-time video.

I think if you can't do that which us humans can obviously do. Um you're at you really can't achieve uh AGI. Um By the way, every one of these advances >> There's some special sauce items that I that There's some special sauce items that I I can't talk about in the public forum, obviously. You can't can't give away you know, all all the all the secrets here. It's just between us.

Um But but But But we have a few a few other special things that are that are in the works. Um for Grok 5. So it's it's It's It's It's really going to feel sentient. So but there is no when we with Grok 5 when you're talking about the advances there is no limit. So when we're Grok 5 is better than Grok 4, which is better than Grok 3, which So So it keeps going.

So once we get to sentient levels we go two sentient, five sentient, 10 sentient, a million sentient. The sen- the sentience will grow. I mean, what's really mind-blowing is can how far can the sentience grow? To to your point, well, how far does it go? Um I think it goes immensely far, almost almost incomprehensibly far. It It does does go incomprehensibly far.

Um uh so the Like Like we see a path to to putting a 100 gigawatts per year of solar-powered AI satellite into orbit. Um and and having this be actually the lowest cost way to uh power and operate uh AI at a very large scale. Um for reference the United States consumes roughly 460 gigawatts on average per year. Like if the average power load in the US is 460 gigawatts. >> country. The whole country. All electricity of all sources in the US, yes.

And you're talking about 100 being added. Well, roughly equivalent to the US electricity output. Um And we We have a We have a plan mapped out to do that. It It gets crazy. So So there's um what, a trillion planets like Earth in the uh world and in a solar system or whatever you call it. A trillion.

And in that trillion, so Big Bang was 14 billion years ago, 13 and a half billion years ago, I don't know what, and planet our planet's only 4 billion years old. So, there must be other planets that are like ours with all the minerals, oxygen, hydrogen, silicon, carbon. Uh So, life here has been extinguished four times. And presumably you feel that other places, other civilizations, other planets, then we'll get off of this. Uh exist.

And are they planets where the beings there are part human, or part carbon, and part metal? Well, I think we'd like to find out. I'd like to find out. Uh I mean, my philosophy is one of curiosity. I I I just want to know what's you know, what's going on in this universe. Um is the standard is the standard of physics right? But, the beginning of the universe, is heat death the end of the universe? Are there other alien civilizations?

Can we talk to them? And and what questions should we be asking about reality that we don't know to ask? So, that's my motivation is to expand consciousness to better understand the universe. So, so so let's go to away from the universe, back to Tesla again. And so, you said that uh Got [laughter] to be back on the ground here. Back on the ground.

And uh so, you said that our expertise is in making things better, faster, cheaper than other people. And when I started investing in Tesla, when we started investing in Tesla, you were telling us that uh that it's the machine that makes the machine that's most important. The machine that makes So, you were into machine learning, machine technology then, which is 15 years ago.

And uh so, and and now uh the average car I think it's 50 minutes uh or 50 seconds, 40 seconds, 60 seconds, and we're now 35 seconds. Every 35 seconds a car rolls off. And then, you say that we're going to get down to 10 seconds. And you said it's a possibility we can go to five. Five I I Five seconds every car is rolling off a line. How's that happen? I I I certainly see a path to achieving um a roughly 5,000 ms cycle time, or 5 seconds.

Um which is only that's only really walking speed. That's like sort of a fast walk. Um 1 m per second is a fast walk. The car is less than 5 m long. So, um the 5-second cycle time the the the cars will will be exiting line at walking speed. So, it's it's like you you can run away from them. It's not it's not going to be like they're coming out like bullets or something.

>> [laughter] >> So, but as a as a rough rule of thumb, there's you know, there's 10,000 minutes in a week if you run a 24/7 operation, and you get uh you know, let's [snorts] say 10 cars per minute. Um you've got uh yeah, 100,000 cars a week. So, so, but the question is how come we're able to do this? Do other people just not care?

Do they think that if I do something, if I have this idea, and we try to implement it, and it doesn't work, then I'm not going to get promoted, or I can get fired, or I'll get blamed. And if it works, then I might have to do a lot of extra work uh that I wouldn't have had to do if it didn't work. So, why don't other people have, you know, a mindset of making things better? Why the the Chinese, they've been great at copying us.

And in some instances, probably even done better than us. They have to live copied for the first time. But, how how come do you think that other people haven't been able to make the advances we have? And even the guy from Ford this recent said, "Geez, people in China wouldn't give us compliments, but they said the people in and the Chinese have copied us.

Uh those people in China are doing great, which is really a compliment to us because the reason they're doing great is because of us. So, why don't other people do this? Why doesn't he do that? Um most companies are incrementalists. Um you know, the management team wants to do I don't know, 5%, maybe 10% better than last year. Um as opposed to take big risks that could fail. Um Uh obviously don't have a problem with taking big risks. Yeah.

I'd say. Um So, that And I and I like to use the tools of physics to analyze things. And you know, when I was in the factory one night, when I was I was looking at the factory, and I was like, you know, this this could be much more efficient. It could be much faster. Um the I was trying to do rough math, trying to calculate the volumetric efficiency of the factories.

So, if you divide factory into cubic meters, and say uh how many cubic meters are doing something useful? And it's a surprisingly small percentage. The volumetric density is not very good. Um and then, the speed of like the cars and the parts moving is quite slow. Um generally limited by the speed at which people can say uh attach brake lights or the seat or something like that.

Um So, if you densify the factory and improve the volumetric efficiency, um which is it's helpful for for more uh for production efficiency because then things have less distance to move. Uh just like just like a chip, you densify circuits in a chip, and you make it more efficient. You you think of a factory is like a chip. Um how do you make a chip faster?

Well, you you bring circuits closer together, make them smaller, and and uh you increase the the clock speed. So, Robin told me that you told her once that "I think of myself as a bit. And if I'm a bit, how would I like to travel?" That makes sense. >> Bit or an atom. So, if it's if it's the I'm software I software, or if I'm on a ship, I say, "What's the journey of the bit? Where am what am I doing?"

And if if those journey doesn't make sense, I need to fix it. And if the journey of the atom in the factory doesn't make sense, I need to fix it. So, when you say you're working on weekends, "I spent all my Sundays working on a chip." What does that mean? What do you do? Uh it's it's Saturdays, but uh some sometimes Sundays actually it's faster. Recently we can spend Sundays, too.

Um Yeah, just the the AI 5 chip, which is going to be a great chip. Um you know, all of Tes- all of Tesla engines on that chip. You know, that's that's the chip that goes that will go into our next generation of self-driving cars, and it's also essential for the Optimus robot. So, that that chip program was in bad shape. Um It it wasn't it wasn't closing cuz that it's it's it's quite an ambitious chip design.

And and it really wasn't on a path to success. Um And then, we also had the Dojo program, which was doing it was also doing okay, but but not on a path to be competitive with Nvidia. So, I I collapsed the I collapsed the two programs into just one program just to get everyone focused on AI 5 chip, which is essential. Um continue to use Nvidia for training, but we need the AI 5 inference chip.

Um which is it's a a very powerful chip, but that but it's also a very low power chip. So, it it doesn't use a lot of power. So, it's it's performance per watt is extremely good. Um you think you know, it's probably going to be at least two to three times better than Nvidia in performance per watt. Um at at the at the inference level in the car and the robot. And you know, I don't know. 10% of the cost of an Nvidia chip or something like that.

So, so the these are very important uh numbers to achieve. And um I had to get the chip program back on track, so I you know, I spent a lot of time into it. And at this point, I have the entire physical design of the chip laid out in memory. I can visualize the whole thing. But, when you're when you're talking about chip manufacturing, you say we might have to build some kind of a giant fab.

Presumably, we would have a partner with TSMC or with Samsung. We wouldn't do this by ourselves. And those guys have been doing this for We would do it by ourselves? And and these are things that cost 20 billion, 30, 40 billion dollars. And where do the people come from to do this? How could we not have partners? What is your thought to have a partner? To do it by ourselves over the next 10 years?

You know, there's not going to be enough chips in the world to accomplish what we're trying to do. Yeah, first of all, I have immense respect for TSMC and Samsung, and we we've worked with both TSMC and Samsung um at Tesla and at uh SpaceX. Um So, TSMC and Samsung are great companies. And we want them to make our chips as quickly as they can and scale up to as high as possible volume that that they're comfortable doing.

But it's it doesn't appear to be fast enough. You know, when I ask how long will it take to from start to finish to get a new chip fab built, they tell me five five years to get to blind production. I'm like five years to me is infinity. My my my timelines To me, too, by the way. one year, two year And at year three, scale it goes to infinity. So so I I can't even see past three years.

So then I'm like, damn, okay, this is um this is not going to be fast enough. So Now if if they if they change their minds and say, yeah, they're they're going to go faster and they're going to they want to provide us with, you know, 100 to 200 billion AI chips a year in the timeframe that we need them, that's great. But how could they not when they know that we're demand and we are going to use the product in our own product?

How could they not want to be our supplier? Or how could they not want to be partners with us? I don't understand. I know what they they are partners. We're using both TSMC and Samsung. >> really expand capacity tremendously, why don't they do that? From their standpoint, they are. Because we'll be using TSMC Taiwan, TSMC TSMC Taiwan, TSMC Arizona, Korea, Samsung and the chips is back Samsung. So we got four or five coming.

And um Yeah, from their standpoint, they're moving like lightning. Um I'm just saying nonetheless it would be a limiting factor for for us. They're they're going as fast as they can. But from this standpoint, there's no limit to that. They're they're just never had someone without such a company that has that sense of urgency. So I that's what really matters.

It it might just be that the only way to get to scale at the rate that we want to get to scale is to to build a earth scale fab. Um and um or or be limited in output of Optimus and self-driving cars by the AI chips. Obviously, you're not going to do that. Those are two choices. Um to go to FSD, we don't have too much more time.

But FSD, uh full self full self-driving, um the uh you know, we're we're making these tremendous uh breakthroughs, it seems. And uh you said recently that you didn't want to expand capacity for making cars until you were convinced that that was the case. You are now convinced that's the case. And again, here we're making these exponential leaps uh in make in in these cars.

And you said that a very large percentage of people who actually paid for full self-driving don't use it and have never tried it before. Yes, it's pretty wild. Yeah, how Yeah, how we doing? How how You buy something and you want to try it type of thing. Yeah, it's amazing. Yeah, yeah. So so we're we're we're we're now kind of insisting uh with customers uh for safety reasons that we demonstrate full self-driving.

Because the numbers are unequivocal at scale that with with the now over 10 billion miles driven, that it's four times safer on full self-driving than than than not. So so here it's actually a big improvement in in safety. And so at this point, we're we're we're we're just insisting that we at least demonstrate uh self-driving to customers so they know how to use it and turn it on uh for safety reasons.

So drives full self-driving drives just like a person as opposed to having to code through uh look for every circumstance that would happen and you had a you know, this this is a fire truck in front of us with a bicycle attached to it or someone walking his dog while he's driving along. They have to identify everything with a code. What AI does, what we do is we as I understand it, is to make sure that it's just like us. Is that fair to say?

Yes, it the key to achieving uh full self-driving uh unsupervised full self-driving and safer than human is improving the AI software in the car. We're confident that the AI 4 uh hardware that that's chip that we designed, uh currently made by Samsung, uh is capable of achieving uh a safety level unsupervised, meaning if you're asleep in the car, uh at least two to three times that of the average driver. Uh maybe more.

Um and then with AI 5, we think you know, achieve probably a 10x uh improvement in safety. Um So these these are really big deals. I mean, I think it's a one of very profound things I'm saying here. Um And I really encourage people to go out there and try the Tesla self-driving and and see for yourself. It's you can just go to any Tesla store. They'll show it to you, you know. It's not secret.

So everyone here, uh you're benefiting if you try this and then buy it. But once you try it, you're going to buy it. You should try it. Um And uh so so I want to close on what I mentioned this morning on CNBC was that you're not doing this uh so you can get enough money to buy a beach house. You're doing you're doing this even mine. >> [laughter] >> Yeah, that's right. But but But but you're doing this because you know, uh Larry Page was right.

You're you're species that you think humans should survive. Yes, I'm pro I'm I'm I'm an unabashedly pro-human. >> [laughter] >> I mean, so you're you're spending so actually whether you worth another trillion dollars or 400 bi- it doesn't really matter. What are you going to do with all this money at the end? What what what's your plan? How do you want people to think about you?

Well, you know, mostly I need to have enough enough ownership of the companies to be able to continue to direct their activities. Um but as for my personal consumption standpoint, um I I don't actually own any vacation homes. Um And I just own one sort of you know, medium-sized house in Austin. Um So and and actually I should say a tiny house at Starbase. And I bought it for I've seen that house. It's tiny. >> Yeah, yeah.

Yeah, but I actually people people like friends might have come to visit and they they thought I was kidding. I'm like, no, it's real. Uh I bought it for 50,000 dollars, but I've done a lot with the place. Artificial turf in front, little white picket fence. Um yeah.

So um But but like like I said, with with AI and robotics, there will be uh abundance for So it's people actually in fact in in a benign scenario, there's going to be an interesting threshold that that AI passes, AI and robotics pass, where it's run out of things to do for humans. It's literally it's it's completely uh satiated all human wants. Um and then I guess it'll have to start thinking about what to do for itself or I don't know.

Um But I I I you know, overall I want to take take the set of actions that expand consciousness into the future so that the scope and scale of consciousness grows tremendously and that we explore other star systems like in Star Trek, go places that we never gone before.

And find out if there are existing alien civilizations or maybe there's a long dead alien civilization and we can look through their ruins and try to understand what what they were like. Um and just generally understand the universe. Where are you now right now? I'm in I'm in Silicon Valley. Thank you very much for today. Welcome. >> Thank you for everything you've done for me, for our shareholders, and for humanity. Thank you, Elon.

I appreciate it. All right.