National Governors Association

I know each Governor has a vision for his or her own States and we have a responsibility to enact policies to help our citizens and our states Thrive so I've asked Elon to join us today to share his thoughts on how Governors can not only stay ahead of the curve but become Innovation Governors so with that please join me in welcoming Elon Musk hey good see well good afternoon and welcome Elon oh I was going to take off my tie is that all right if I do that I I came in with a tie but then I was like told there bit a tie so then we'll both be more comfortable sounds good um well thanks thanks having me appreciate your you're being here today I you know it's when I'm with you it's difficult to know where to start um let's start just what drives you what what

is it that when you wake up in the morning do you see a problem and you want to solve it uh I I think the the thing that drives me is that uh I want to be able to think about the future and uh you feel good about that um so uh that uh you know we're doing what we can to uh have the future be be as good as possible um to be inspired by what is likely to happen um and to look forward to the next day um so that's that's what really really drives me is is is trying to figure out uh how do we how do we make sure that things are great and um and going to be so and um that's the underlying principle behind Tesla and SpaceX um is that um I think it's it's it's pretty important that we accelerate the transition to uh sustainable generation and consumption of energy

um it's it's inevitable but it's it matters if we have if it happens sooner or later um and then SpaceX is about um helping make life multiplanetary um and doing what we can to continue the the dream of Apollo um and um ultimately make a contribution to life becoming multiplanetary well let's talk a little more about that I think uh everyone very interested that when you say making life multiplanetary that's exciting it is exciting so what's your vision there you know um I think you know particularly for uh Americans you know like think about America is a nation of explorers uh people came here from other parts of the world that you know uh chose to give up the known in favor of the unknown um so I think uh exploration like I think United States is a

is a distillation of the human Spirit of exploration um and uh so that's why it it appeals to Americans so much you know um you can see this when say there was a shuttle tragedy um and seven people died and that's that's terrible but you know a lot of people die all the time um but but why do we care so much because it was the dream of exploration that was dying along with those people that's why no and I'm one of those and probably like many of you remember exactly where you were um when that that tragedy happened so you have 30 plus Governors here today and we're very excited about uh your willingness uh to be with us and you hopefully heard me talk a little bit about U my initiative which is being ahead of the curve what do you tell us as Governors

what we what should we be thinking about in terms of of innovation and and developing public policy for the future well um it it sure is important to get the the rules right um and um you know it's sort of uh in in terms of legislative and executive actions um you know it's sort of like um you you think of say like professional sports or something if you if you don't have the rules right if there isn't uh uh you know um if if if if the game isn't set up properly it's not going to be a good game um so it's really important to get the ru the rules right um now I think it's it's worth noting that I think still um in the United States the rules are still better than anywhere else um um but um the you know it's it's very easy to put something in place which

is an inhibitor to to innovation without realizing it um so in terms of um the regulatory environment uh uh it's It's always important to bear in mind that that uh regulations uh are Immortal um and they they they never die unless somebody act actually goes and kills them and then they they get a lot of momentum so a lot of times regulations can be put in place for all the right reasons um but then nobody goes back and gets rid of them afterwards when they no longer make sense um you know that uh and there used to be a rule in the early days when people were concerned about automobiles cuz that was a pretty scary thing see a just going wrong by itself you know you never know what those things might do um so there were like rules where you had to in a

lot of States we had to carry a lantern in front of the automobile um and had to be like 100 Paces ahead of the automobile there had to be someone with a lantern on a pole like okay but you should really get rid of that regulation and they did you know um really be awkward um so um so just regulations is even if done correctly and for and being right at the time it's always important to go back and and scrub those you know periodically to make sure they're still sensible and they're still serving the greater good um I think uh in terms of tax structure what what is what is economically incented and what is what is not economically incented just make sure that the incentive structure is is correct I I think I'm saying just totally Common Sense things here

um but um it's economics 101 whatever you whatever you incent will happen um so the if you incent one thing that thing will tend to happen more than the other thing if you send another thing that that thing will happen um and so the the economics should favor Innovation um and um and this is particularly important to uh protect uh small to mediumsized companies um because because it's sort of like trying to grow a tree in a forest like it's real hard for a new company to to grow um when it's just a Seedling or a sapling uh it needs a lot more protection um than if it's a giant Redwood or something like that so uh very important to uh give support to small and and small to mediumsized companies on the Innovation front um and um they're the ones that that

needed more than the big companies and I I think this point Tesla is almost big company biggish company anyway um so I'd favor you know supporting uh smaller companies in Tesla relatively speaking what would your response be because there are critics out there with regard to incentives and that and you know Tesla has been and I can speak from experience uh the the beneficiary of of incentives economic incentives when with regard to the to the gigafactory sure what would you tell those those people yeah I think well first of all as you know the those incentives were um a little overstated um the um in the case of the gigafactory it's a it's A5 billion investment capital investment to get that factory going um and I I didn't actually know this by the by

way I didn't I didn't know this until we did the press conference actually that that that over 20 years the V incentives added up to 1.

3 billion actually didn't even know this uh but but but it's now he's telling go ahead literally I learned it at the press conference I'm like really um no but I mean it's the the thing is that they they took what added up over 20 years and made it sound like Nevada was writing us a $1.

3 billion check and I'm you know I'm still waiting for that check must did it get lost in the mail I don't know um so uh but you know this is the way the press works of course um so if now if you divide 1.

3 billion by 20 okay then it's it it's like okay Tesla's on average um re receives a sort of a a tax well doesn't it's it's basically sales and use tax abatement is is what it amounts to um so T gets like on the order we get on the order of 50 to 60 million of sales and use tax abatement divided over 20 years um and uh but but this is for something which has a $5 billion Capital cost uh just get going and then um would have to generate about hundred billion doll over that period of time to to achieve a $1.

3 billion uh tax benefit so um so essentially it's it's a little over 1% over that period of time and that's great okay but uh it's not um you know it's not like it's it's not the way it was characterized in the Press um but if because if it's put in the proper context it sounds like okay well that's neat you know it's about five 5% helpful on setting up the factory and about 1% helpful over the next 20 years cool that actually sounds pretty reasonable yeah um and um yeah so so that that that was that was helpful but there are a lot of other factors as well um and uh we actually had slightly bigger incentive packages from from some other states that were offered uh but we factored in um how quickly could we uh uh get the gigafactory into operation um

what were the risks associated with uh that progress um uh what would the over what would be the logistics costs over time of transferring battery packs and power trins to a a vehicle Factory in California um and uh you know and all of those factors weighed together um is what made uh is what um led us to make the decision in favor of Nevada um and and working with with with your team was great I was very forward leaning um and um and like a big part was also just like making you know sure you feel really welcome you know uh within within a state um so um that's sort of what would L us to make the decision for the gigafactory um and then um then we have another Factory in in in New York doing uh solar panels um also actually it's will be the biggest solar

uh panel producer in North America when it's St um and then we expect to establish probably at least uh two or three more uh gigafactories in the US in the next several years um as well as uh what a couple overseas um but the overall objective of Tesla it's is is really what what set of actions can we take to accelerate the Advent of sustainable production and consumption of energy um and um I think the the the sort of the way the way I would assess the historic good of Tesla is in terms of of how what that how many years of acceleration was it you know and if we can accelerate sustainable energy by 10 years I would consider that to be a great success hope even if it was only 5 years that would still be pretty good um that that's the that's the that's

the overarching optimization so you you've talked about interplanetary travel and sustainable energy and the vehicles a little bit what what would you want things to look like and five to 10 years associated with with energy and with autonomous vehicles electric vehicles well I think things are going to be they're going to grow exponentially so there's a big difference between five and 10 years um you know my my guess is uh yeah probably in 10 years more than a half of uh new vehicle um production is Electric in the United States um and China's probably going to be ahead of that because China's been super pro e um I don't think a lot of people know this but like I mean China's environmental policies are way ahead of the US like their mandate for renewable

energy far exceeds the US I think this sometimes people are under the impression that China is uh either dragging their feet or or somehow behind the US in terms of um sustainable energy promotion but they're they're by far the most aggressive on Earth it's crazy I mean like in fact the a coalition of Chinese car manufacturers Just wrote the Chinese governments to beg for them to slow down the Mandate because like it's like too much they they need to make 8% electric vehicles I think like next year or in two years or something this like they can't physically do it um so China is by far the most aggressive on um electric vehicles and solar um so um but that's a common misperception that they're not um there one Google search way to figure this out by the

way it's really pretty straight pretty easy so and in 10 in 10 yeah 10 years man I think yeah yeah so H half of all production I think will be be EV I think almost all cars produced will be autonomous in years almost all it will be rare to find one that is not in 10 years um that's going to be a huge transformation um now the thing to bear in mind though is that new vehicle production is only about 5% the size of the vehicle Fleet so you think about how long does a car or truck last and they last 15 to 20 years so before they finally scrap so new vehicle production is only roughly one at most 115th of the the fleet size so even when new vehicle production say switches switches over to electric or to autonomous that still means the vast majority of the

fleet on the roads is not it'll take another you know 5 to 10 years before that becomes majority the majority of the fleet becomes EV or uh uh autonomous um but if you were to say go out 20 years overwhelmingly things are electric autonomous overwhelmingly fully autonomous fully autonomous so no one will have to touch the steering wheel if there is one there will not be a steering wheel in 20 years um it will be like having a horse people have horses which is cool um but so so having a regular car will be like having a horse is that what you're saying yeah yeah and there will be people that have that have you know non-autonomous cars like people have horses it's just would be unusual to use that as a motor transport yes all right no let's talk about um

the energy piece and rooftop cell and storage um yeah um so the uh I mean question it's important to appreciate that the Earth is almost entirely solar powered today um in the sense that the sun is the only thing that keeps us from um being at roughly the temperature of cosmic background radiation which is 3° above absolute zero if it wasn't for a sun we would be a frozen dark uh Ice Bowl um and the uh the amount of so the amount of energy that hits the Sun that reaches us from the Sun is tremendous it's it's over it's the it's 99 % plus of all energy that that Earth has um then there's there's there's this energy we need to use to run civilization which to us is big but compared to the amount of energy that reaches us from the Sun is Tiny um so it it's

very easy like it actually doesn't take much if if you wanted to power the entire United States with solar panels um it would take um a a fairly small corner of Nevada Texas Utah anywhere uh look you it's you only need about 100 miles by 100 miles of solar panels it's part of the entire United States um and then the the batteries you need to store that energy to make sure you have 24/7 um uh Power is one mile by one mile one one square mile that's that's it um I I I showed the graph the image of this where uh this is what 100 miles by 100 miles looks like it was like you a little square on the US map um and then one there's a little pixel inside there and that's the size of the battery pack that you need to support that real tiny so well you you talked

about 20 years from now none of us well some people will still be using horses or or be zero yeah but rare so what will the the energy piece look like I mean what will there be transmission lines will there be a need yeah I think the so there use of energy can is roughly divided into three areas um and they're more or less equal um at at a high level um there's about a third of energy is used for transportation of various kinds about a third is used uh for electricity about a third is used for heating so if you want to have uh and of the electricity production call it you know something on the order of 10% depending upon how you count it is renewable maybe 15% um uh today so that means that there's a massive amount of solar that would need be need to

be produced um and connected in order to to be fully sustainable because fully sustainable means you're tackling transport um non-renewable electricity generation and heating um so that that means that will need to be a combination of utility scale solar and rooftop SC solar combined with uh wind geothermal uh Hydro probably some some nuclear for a while um in order to transition to a sustainable uh situation um which means really for the most part massive massive growth in solar um and it's it's going to be important to have rooftop solar in uh neighborhoods um because otherwise you going there'll need to be uh massive new transmission lines built and people do not like having transmission lines go through the neighborhood I really don't like that I

agree um so you you want to have some localized energy uh production um combined with utility so rooftop solo utility solar um and uh that that's that's really going to be the solution from a physics standpoint that I can't see any other way to really do it um um people talk a lot about fusion and all that but the sun is a giant Fusion reactor in the sky and it's really reliable comes up every day um so if it doesn't we got bigger problems somebody asked me to ask you this we talked about Workforce today but they asked me are robots going to take our jobs everybody's jobs in the future or H how how much do you see Artificial Intelligence coming into the the workplace um well first of all I think on the artificial intelligence front um you know I I have

exposure to the very very most Cutting Edge um AI um uh and I think people should be really concerned about it um I keep sounding the longell but you know until people see like robots going down the street killing people like they don't know how to react you know because it seems so ethereal um and um I think we should be really concerned about Ai and I think we should this is AI is a rare case where I think we need to be proactive in regulation instead of reactive um because I think by the time we are reactive in AI regulation it's too late um and nor normally the way regulations are set up is that a whole bunch of bad things happen there's a public outcry the the and then after many years a regulatory agency is set up to regulate that industry um and

there's a bunch of opposition from companies who don't like being told what to do by Regulators um anyway it takes forever um that that in the past has been bad but not um something which represented a uh you know a fundamental risk to the existence of civilization AI is a fundamental risk to the existence of human civilization um in a way that car accidents uh airplane crashes um faulty drugs uh or bad food were were not they were not they they were harmful to to uh a set of individuals within Society of course but they were not harmful to society as a whole um AI is a fundamental existential risk for human civilization and I don't think people fully appreciate that um you know it's not it's not fun being regulated it's not you know uh be pretty irksome

but uh you know in the car business we know we get regulated uh by Department of Transport by EPA and a bunch of others um and and there regulatory agencies in every every country you know in the in space uh we get regulated by FAA um and um but but you know if you ask the average person hey you want to do you want to get rid of the FAA um and just like take a take a chance on manufacturers not cutting corners on the aircraft because you know profits were down that quarter I was like hell no um um that sounds terrible so um you know I think even people who are pretty extremely like libertarian free market they be like yeah we should probably have somebody keeping an eye on the aircraft companies making sure they build a good aircraft um and good cars

and that kind of thing so you know I think there's there's a role for Regulators um that's very important um and I'm against overregulation for sure uh but man we I think we've better get on that with AI Pronto um and uh so there'll certainly be a lot of job disruption um because what's going to happen is robots will be able to do everything better than us I'm in I'm including I mean all of us you know um yeah not sure exactly what to do about this um it's like the it's like this is really like the scariest problem to me I'll tell you um and um yeah so I really think we need government regulation here just to because this is you know ensuring the public good is served because you got companies that are racing that they kind of have to race to build AI

or they're going to be uh made uncompetitive you know like essentially if your competitor is racing Dev World Ai and you don't they will crush you so then you're like ah we don't want to be crushed so uh you know I guess we need to Bull it too um that's where you need The Regulators to come in and say hey guys um you all need to really you know just pause and make sure this is safe and like when when it's cool and we're and regulator convinced that it's safe to proceeded then you can go but otherwise slow down um and but long but you kind of need The Regulators to do that for for all the teams in the game you know uh otherwise the shareholders will be saying like hey why aren't you developing AI faster um because your competitor is like okay we better

do that um anyway so it's like I mean there's like something like 12% of jobs are transport transport will be one of the first things to go fully autonomous but when I say everything like the Rob us will be able to do everything bar bar nothing let's move back to you're rolling out the model 3 this year right uh and how many orders what what is that going to look like um yeah it's going well on that front um we got uh I don't know more I think like if somebody orders a model 3 today they'd only get it probably late next year um we just actually just started production made the first production unit last week um and uh the thing that is is not well appreciated about um something about about cars and any kind of new technology is how hard it is to do the

manufacturing is vastly harder to do the manufacturing by a factor of a hundred like a hundred than to to make the to make that car to make one of something W with with maybe 50 or 60 people we could make a prototype of practically anything in 6 months um now to manufacture that thing we need 5,000 people to spend you know 3 years and that's considered really fast so uh manufacturing will does this kind of S curve where it's excruciatingly slow at first and then it it grows exponentially um and then uh but people tend to extrapolate on a straight line so if it's real slow at first they say oh this is real slow look at that they're only going to make five cars a week forever like NOP uh there'll be 10 cars a week then 20 cars a week then you know 40 cars

a week then 5,000 cars a week eventually um just grows Crazy Fast uh so we're hoping to get to you know something uh you know like 5,000 cars a week by the end of the year well um I want to give an opportunity for some of the governors to ask questions and perhaps some audience questions um I was told that you'd be willing to to do that great so uh Governors any questions for for Elon governor Scott well thank you very much um we and Vermont have uh partnered with Tesla in uh in terms of a power pack in in our homes and it's for $15 a day uh you can rent this for 15 years and it'll it'll carry power as a back up generation device for 12 hours and it's been really really interesting from my perspective uh but I'm curious about vehicles and and where we're

going in the future or how far in the future do the cars themselves become uh the charging device like the the roof and deck lids and and hood or does or do the batteries get so efficient that you don't need that and then you just power up for a week or something like that where are we going in the future with battery storage yeah I think the future is it's there's just there's three legs to the stool uh there's a electric cars there's a stationary battery pack um and solar power uh with those three things you can have a completely sustainable energy future uh that's all that's all it's needed on the Sol on the solar front like I said uh it's going to be a combination of rooftop solar and utility scale solar um you'll need both because of the you know

enormous demand for electricity um and then uh you know one of the things that's that's been missing I think up till now is having rooftop solar that looks good um and isn't uh you know um that's where we got this the solar glass roof that we're developing um and we're doing it in different styles so that it it you know it matches the Aesthetics of a particular house or um so Regional style um that's I think that's actually pretty important um and um the conventional flat panels solers for for flat roofs and for commercial will be uh the way the way to go um but yeah it's and and and putting solar panels on the on the car itself not that uh not that helpful Because the actual surface area of the car is not not very much and cars are very often indoors

um and so it's the least efficient place to put solaras on the car just wondering about maybe a wrap of some sort is that does that make any sense in the future a a wrap of solar around either a building made of a solar panel or a wrap of a of a vehicle actually being the solar panel but being the the components of the vehicle itself I I don't think so um I'll scrap that idea no it's just uh it's just way better to put her on the roof uh for sure um and I I really thought about this I mean really and I pushed my team about like isn't there some way we could do it on the car um I mean technically if you have like some sort of Transformer like thing which will pop out of the trunk like like a you know like a hard top convertible and just like like ratchet

solar panels over the whole surface area of the car extending like for the entire say uh square footage of a parking space um provided you're in the sun uh that would be enough to generate about 20 to 30 m a day of electricity but uh that is for sure the expensive difficult way to do it Governor bergo so thought about maybe we should Elon thank thanks for being here uh with your background in payment systems uh you understand uh the important role of uh security and transactions now that you've got I think security is a huge concern like cyber security yes and you're in a in in the vehicles you're building now are incredibly complex software systems I mean the car is really a rolling piece of software it's like a laptop on Wheels yes so uh share with

us a little bit about uh your thoughts on cyber security and how you how how how we protect uh you talk about protecting society when uh you got a rolling Fleet of um I I think one of the biggest uh risks for autonomous vehicles is somebody achieving um a fleetwide hack um you know in principle if if somebody was able to hack say all of the autonomous Teslas they could say I mean just as a prank they could say like santal to Rhode Island from across the United States and I'll be like well okay that would be the end of Tesla um and there be a lot of angry people in Rhode Island that's for sure um so uh we got to make super sure that uh that a fleet white hack is basically impossible and that if people are in the car that they have uh override Authority

on whatever the car is doing so if the car is doing doing something wacky uh you can press a button that no amount of software can override that will ensure that the uh you you you gain control of the vehicle um and kind of cut cut the link to the servers um so that's uh that's pretty fundamental um within the car we actually have even if somebody gains access to the car there are multiple subsystems within the car that that that also have uh specialized encryption so the power Trin for example has specialized encryption so even if some of you were gain access to the car they could gain access to the power train or to the braking system um and um but it is my top TP concern from a security standpoint at Tesla is making sure that fleetwide hack or any

vehicle specific hack can occur the the same the they have the same problem with cell phones um you know we it's kind of crazy today that we live quite uh comfortably in in a in a world that George Orwell would have thought is super crazy um like we all carry um a phone with a with with a microphone that could be turned on really at any time without our knowledge with a GPS that knows our position um and a camera um and uh well kind of all of our personal information um we do this um willingly um and uh it's kind of wild to think that that's the case um so so pH the the phone like apple and and uh Google kind of have the same challenge of making sure that cannot be a fleetwide hack or a systemwide hack of phones um or or a specific hack so that that's

our top our top concern um yeah become it's going to become a bigger and bigger concern like Tesla's um I don't want to Temp fate here but Tesla's Tesla is pretty good at software compared to the other car companies um and um so I do think it's going to be a bit like an even bigger challenge for for the other car companies to ensure security yeah thank you Governor Dugard thank you Governor Mr musk thank you for speaking to all the governors today it's it's an honor to have you here uh one question I had uh we saw when gasoline prices went to $35 a gallon there was a big jump in interest in hybrid vehicles and uh you saw those Vehicles become very much in demand and then as gasoline prices have fallen you've seen a reversal of that and I'm wondering to

what extent uh you have a concern about the future of electric vehicles in the face of those very low prices can you speak to that well the economics um uh they they they kind of set set the slope of the the the curve um so there's no question in my mind whatsoever that all transport with the ironic exception of rockets will go fully electric um everything um Planes Trains automobiles well a lot of trains are already electric um all shifts um and um but it's question of what that time frame is and the economic uh incent structure drives that time frame um that's really what it amounts to um you know this there the and the Big Challenge is that there's an unpriced externality in the cost of fossil fuels uh so the unpriced externality is the uh the the

probability weighted uh harm of changing the chemical constituency of the uh atmosphere and oceans um it's it's since it is not captured in the price of gasoline um it does not uh Drive the right behavior um you know it would be like uh if tossing out garbage was just free and you know there was no penal you just do as much as you want then like trees be full of garbage um so um and we regulated a lot of other things like sulfur emissions and nitrous oxide emissions and that kind of thing it's done done a lot of good on that front um with CO2 it's tough because there's so many vested interest on the sort of fossil fuel side um and sometimes I think I feel like those guys feel like kind of hard done by uh cuz um you know it wasn't obvious like when they

were creating their oil and gas companies that it would be bad for the environment um and they worked really hard to create those companies and then they feel like well now they're being kind of attacked on moral grounds um when they didn't originally start those oil companies or or build them up on on bad moral grounds um and and and it is true that we cannot instantaneously change to a sustainable situation um but then those guys will also fight pretty hard to slow down the change and that's really where I think is morally wrong go to Governor Bavon and then Governor Hutchinson then we'll take a couple then Governor hickin Looper and then we'll take some audience questions Governor bevon El Elon thank you for being here uh short version of the question

then slightly longer the short version is do you ever feel pressure by others expectations of you and your endeavors in light of the progress you've made thus far is the short version and and and more specifically when you look just at Tesla alone and you look at a company with a54 billion valuation uh and seemingly by typical Mar Market metrics no justifiable reason for that what are you saying does I'm just saying I'm curious sir I'm just in all seriousness do you feel a a concern ever that your intellect in your intellectual curiosity and your Ingenuity cannot be matched by those that are trying to commercialize it does that ever affect how you think or decisions that you make uh well it it is actually I find it quite uh tough um when there are very

high expectations um I try to actually Tamp down those expectations as you know to be possible in fact I've gone a record several times as saying that the stock price is higher than we have any right to deserve um uh and that's for sure true based on you know where we are today and have been in the past so the stock price obviously reflects a lot of optimism about where Tesla will be in the future um and now the the thing that makes that um you know quite a difficult emotional hardship for me uh is is that you know those expectations sometimes get out of out of control and like I hate disappointing people um and so I'm like trying real hard to meet those expectations but that pretty tall order um and uh a lot of times it's really not really not fun I

have to say a whole lot less fun than it may seem um uh so yeah um I mean I don't ever sell any stock unless I have to for for taxes um so you know I said publicly I'm not going to like take money off the table you know I'll be last I'm going down I'm going down with the ship so uh I'll be the last to do it but um yeah I mean it's I really wouldn't recommend anyone start a card company I really wouldn't recommend it it's not a recipe for happiness and freedom thanks Governor Bon Governor Hutchinson Mr musk ASA Hutchinson from Arkansas thank you for your Frank observations about uh exploration uh you know I look at uh the spirit of in uh invention and the spirit of exploration which is really the Hallmark of America what is your comment on NASA its Mission

I was in Congress I supported NASA but I always feel like it's floundering does not have the support of the American people that's needed uh What uh what's your comment on NASA its Mission and what advice would you give us sure um well first of all I should say I'm a big fan of NASA um in fact at one point my password was I love NASA um literally that was my password um um and um you know I think the um n NASA does a lot of good things for which PE for which it doesn't get enough credit um and that the public I guess doesn't know that much about um like a lot you most members of the public they're not really into hard science you know it's like not it's not the the thing they're tuning in for most of the time um I love hard science you know uh but uh

um it's not that popular so uh but there's great things in terms of the the telescopes like the Hubble and the James web and the you know the robers on Mars um and the the pro you prob outer solar system um those are like really great things um but to get the public excited you got to get people in the picture um it just it's just a hundred times different if there are people in the picture um and uh you know if there's some criticism of NASA it's like I it's like important to remember people in the picture you know if you want to get the public support um and um but like if you talk to a scientist about that said like where's the science in that like you're not getting it it's like that's not why people giving you money it's not that's I mean it's a

little bit of the reason but uh the like the the the serious scientists or like people just make things more expensive uh like why do we have people like okay well why do we have people at all anywhere um sometimes the scientists are the ones who just don't don't understand um even they're like smart people but like you know um so you got to have something that's going to fire up the you know fire fire people up and get them really excited and like I think if we had a serious goal of having a base on the moon and sending people to Mars um and said okay this is we're going to be outcome oriented how are we going to do this okay we got to changed the way Contracting is done uh you can't do these like Cost Plus contract Cost Plus Soul Source contracts because

then the incentive structure is all messed up so uh as soon as you don't have any competition well okay there's no the St of urgency goes away and as soon as you make something a Cost Plus contract you're incanting the contractor to maximize the costs of the program because they get a percentage so they never want that gravy train to end and they want to make it and a they become cost maximizers um and then you have good people engaged in cost maximization because you just gave them incentive to do that and told them they'll get punished if they don't essentially that's what happens so it's critically important that we change the Contracting structure to be a um competitive commercial bid make sure there there are always two at least two entities um that

that are competing to serve NASA um and that the contracts are mil Stone based with with uh concrete Milestones PowerPoint presentations do not count um like everything works on PowerPoint okay you say I have a teleportation device look here's my PowerPoint presentation um so uh Milestone based competitive uh commercial contracts with with competitors and then and then you got to be prepared to fire one of those competitors if they're not if they're not cutting it and and recompete the rest the remainder of that contract and by the way NASA's actually already done this and they did it with the Comm with the uh commercial cargo uh transportation to the space station um and that was a case where NASA you know that NASA actually I'm not if they thought it

would work or not work but they didn't have the budget to do anything else so they're like okay we're going to try this competitive commercial Milestone based Contracting and it worked great um and they Ed it uh to two companies to to SpaceX and a company called kler and SpaceX managed to meet meet the Milestones kler did not so then they NASA recomed the remainder of the contract to uh orbital Sciences but then obal Sciences got across the finish line so now NASA's got two suppliers for uh taking cargo to the space station um and it's a great situation same thing for commercial crew of the space station now as to competed that um uh in in in the commercial crew case it's space SpaceX and Boeing um and I think that's also a good situation so now um like

I can tell you like the SpaceX team is like we're going to do this before Boeing that's for sure and then like I bet at the Boeing team they're like we're going to do this before SpaceX um that's good it's it's a good forcing function to get things done that that I can't tell you how important that Contracting structure is that is night and day um there's way too much uh in in government which is uh where it's a sou Source uh Cost Plus contract um that that just again economics 101 whatever you incent that will happen and people shouldn't be surprised it's like oh you just you know said Okay if that company manages to find some excuse to double the cost of the contract they're going to get double the profit because they're getting a percentage so they're

going to do they're can do exactly that um and and also they're not going to say no to requirements so the government will come up with some set of requirements 90 90% of them could make a lot of sense and 10% of them I'll coam that double the price of the of of the the project but those 10% of cocki requirements in a Cost Plus contract the contractor will always say yes there could be a future for you in in Government Contracting at the state level yeah let's go to Governor hicken Looper and then Governor Ducey so uh I think like most governors find so refreshing to have the unbridled truth but I do suspect every time you say publicly that the stock price is higher than we have any right to believe I I going to guess you probably get some calls from

investors suggesting that maybe you don't say that so frequently yeah that's true um I wanted to go back and just just briefly because I think I I wrote this down that you said that uh artificial intelligence is the the fundamental existential risk facing civilization do I get that close enough enough in my opin it is it is the biggest risk that we face as a civilization is artificial intelligence and so to a group of leaders what would you advise that we should how should we be addressing something that's that's such a large landscape and yet obviously so important um I think that the you know one of the roles of government is to ensure the public good um and and to uh that dangers to the public are addressed um so that hence the regulatory thing I think

the first order of business would be to try to learn as much as possible you know to understand the nature of the issues to um look closely at the progress that is being made um and the remarkable um achievements of artificial intelligence um I mean last year uh uh go which is a quite a difficult game to beat um that people thought would never be beaten with uh um by by a computer that that that computer would either never beat the best human player or that it was 20 years away um and last year um uh alphao which was done by Deep Mind which is a kind of a Google subsidiary um absolutely crushed the world's best player um and now now that now it can crush it can play the top 50 simultaneously in questionable so just like that pace of progress is remarkable

um and um and there's you can see more and more coming out like the robotics uh you can see robots that can learn to walk from from nothing um you know within hours like way faster than any biological being um um but the the thing that's uh most dangerous is uh and it's the hottest to kind of wrap um kind of get your arms around because it's not a physical thing is kind of a deep intelligence in the network um he said well what home could a deep intelligence in the network do so well I could start a war um by create by doing fake news and spoofing email accounts and fake press releases and just by you know manipulating information the pen is mighter than the sword um so uh I mean as an example I want to be I want to emphasize I do not think this actually

occurred this is purely a hypothetical that I I'm digging my grave here um um but you know that like that there was that second Malaysian airliner that was shot down uh on the uh Ukrainian Russian border um and that that really Amplified tensions between Russia and the EU um in a massive way well like let's say if you had an AI that was uh where the ai's goal was to maximize the value of a portfolio of stocks um one of the ways to maximize value would be to uh go uh long on defense short on consumer start a war um and then uh how could it do that well you know ha can the Malaysian Airlines uh uh uh R aircraft routing server a route it over a war zone um then send an anonymous tip that an enemy uh aircraft is flying overhead right now let's go to Governor

Ducey and then we'll have after Governor Ducey we'll finish our U gubernatorial questions and then two questions then we quick questions or one audience question and then we'll be done we're we're running short on time Governor Ducey thanks Elon I really enjoyed your comments today and as someone who has spent a lot of time in his administration trying to reduce and eliminate regulations uh I was surprised by your suggestion to bring reg regulations before we know exactly what we're dealing with with AI you know and i' I've heard the example used uh if I were to come up with a colorless odorless uh tasteless gas that was explosive people would say well you have to ban that and then we'd have no natural gas so you've given some of these examples of how

a AI can be an existential threat but I still don't understand as policy makers what type of regulations beond slow down which typically um policy makers don't get in in front of entrepreneurs or innovators well I think the first order of business would be to gain Insight right now the government does not even have Insight um and I I think the the right order of business would be to stand up regulatory agency initial goal gain insight into the status of um AI activity um uh make sure the situation is understood um once it is then put regulations in place to ensure Public Safety that's it um and for sure the companies doing AI will most of them not mine uh will squark and say hey uh this is really going to stifle Innovation blah blah blah it's going to

move to China it won't um and uh it won't because like it's like has like has Boeing moved to China nope they bowling aircraft here um uh same on cars um and so it's not it's um the notion that if you establish a regulatory regime that companies will simply move to um countries with with lower regulatory ecomment is is false on the face of it because none of them do and unless it's really overbearing but that's not what I'm talking about here just talking about you know making sure that there is awareness at the government level um I think once there is awareness people will will be extremely afraid as they should be right one audience question we'll take the first hand that came up right here thanks Elon Ena freed with axios early on in this Administration

you had argued pretty viously that it was best to engage and better to be in the room than not be in the room uh then when the president decided to pull out of Paris you said that was kind of the last draw and you were going to drop off what drove you to that and if you were still speaking to him today what would you say to the president well I I thought it was worth uh doing you know trying hard to um you know to do what worth it was worth trying I got a lot of flank um from multiple fronts for even trying um when some guy ran at Billboards and like uh attacking me and like full page ads in the New York Times and whatnot um just for just for being on the panel um and and you know in every in every meeting I was like just trying to make the arguments

um in favor of sustainability um and uh you know sometimes other issues like we need to make sure that our immigration laws are not unkind or unreasonable um and uh you know did my best and I I think in a few cases I did actually make some progress which gave me uh some encouragement to continue um but but then I I just really think that the Paris ACC Court man I I'm I'm if I st on the councils then I'd be essentially saying that that wasn't important but it was super important um because I think the country needs to keep his word um and you know that that's is not even a binding agreement so we could always like slow it down um the argument that there would be job losses well we could see if there are job losses before we exit the agreement and maybe

there won't be job losses maybe there'll be job gains um but yeah there's just no way I could stay on after that so you know did my best all right all right well everybody if you would please join me in thanking Elon for being here today right thank you thank you well that was a treat wasn't it