Tesla Shareholder Meeting 3 juin 2014 Assemblée annuelle des actionnaires de Tesla en 2014, avec un aperçu de l'entreprise par Musk et une séance de questions-réponses avec les actionnaires.
Assemblée annuelle des actionnaires de Tesla en 2014, avec un aperçu de l'entreprise par Musk et une séance de questions-réponses avec les actionnaires.
Transcription Todd Maron (General Counsel)
Good morning, everyone. Good morning. Welcome to Tesla's 2014 annual shareholder meeting. We're really glad that you could be here with us today. My name is Todd Marin. I'm Tesla's Deputy General Counsel. Momentarily, we'll be welcoming Elon Musk, our co founder, CEO and Chairman, to the stage. I would now like to introduce our board, who's sitting up in the front. We also have our cfo, Deepak Ahuja, and our Vice President of Investor Relations, Jeff Evanson. We also have representatives here from our independent auditor, PricewaterhouseCoopers. There are two parts to today's meeting. First, we'll have the formal part of the meeting. It will cover the five items that the company has asked the stockholders to vote on today. After the voting, Elon will provide a brief overview of the company and we'll have a question and answer session. I'll begin by calling Tesla's annual stockholder meeting officially. To order, I ask that you refer to the agenda and rules of the meeting that you received earlier today. I declare that the polls are now open. As I mentioned earlier, if you wish to submit a ballot to vote, or if you wish to change your vote, please pick one up at the table and hand it to our Inspector of Elections, Lisa Brenton, who's in the back. Lisa has taken and signed an oath as Inspector of Election and that will be filed within minutes of today's meeting. Computershare has certified that starting on April 24, 2014, the proxy materials or a notice of Internet availability of the proxy materials were mailed or provided to all stockholders of record as of April 10, 2014. Copies of these proxy materials and related certificates will be attached to the minutes of today's meeting as well. We have our majority of the outstanding shares represented at the meeting today. So I declare that there is a quorum present and that we may proceed with the meeting. We're conducting the meeting in accordance with Tesla's bylaws. The five items on the agenda today are as first, to elect two Class 1 directors, Elon Musk and Steve Jurvetson, to serve for a term of three years or until their respective successors are duly elected and qualified. Second, to hold a non binding vote to approve on an advisory basis our 2013 executive compensation program. Third, to approve an amendment and restatement of Tesla's 2010 Equity Incentive Plan to specify certain performance goals for and limits on awards that may be granted under the plan. Fourth, to ratify the appointment of PricewaterhouseCoopers as Tesla's independent auditors. For the fiscal year ending December 31, 2013, Tesla's board has recommended that our stockholders vote for each of the director nominees and for each of these four items. Finally, we've received a stockholder proposal today regarding super majority voting provisions. In our governing documents, our board has recommended that our stockholders vote against the stockholder proposal. The stockholder proposal is going to be presented Today by James McRichie. And I understand that Mr. McRichey is here and he's ready to present his proposal. So, Mr. McRichie, if you can step to the microphone, we'll give you a couple minutes here. Thank you.
Shareholder
Thank you very much. First, I want to say that I'm excited to be a share owner of Tesla, our company, shown that combating climate change can be more exciting than contributing to it. That's the best car ever tested by Consumer Reports. And with the recently announced EPA power plant reductions, our cars will be even cleaner. Tesla is a great company, but even great companies can be improved. I'd like our corporate governance standards to someday match our engineering standards. That's why I propose to eliminate Tesla's super majority voting requirements. And I think that doing so will help us to attract more institutional share owners. I'm not alone in my opposition to super majority requirements. Many see them as an impediment to good governance. For example, the Council of Institutional Investors, whose members have over $3 trillion in invested assets, includes the following in their policies on corporate governance concerning voting requirements. A majority vote of common shares outstanding should be sufficient to amend company bylaws or to take other action that requires or receives a shareowner vote. Super majority votes should. Should not be required. Thank you. And I ask for your I vote.
Todd Maron (General Counsel)
Thank you. Mr. McRichey. I would like to remind our stockholders that Tesla's board has prepared a statement in opposition to Mr. McRichey's statement. And that's found in our proxy statement. They've again recommended that you vote against that proposal. Before we finish the meeting, the formal part of the meeting, I would just ask, are there any proxies remaining in the audience that have not been submitted? So if you could please find Lisa, or Lisa, if you could come gather the remaining proxies. We'll just wait for them to be handed in. Thank you. We will attempt to calculate the at least the unofficial tally and announce that at the end of the meeting as well. So we'll just wait for the rest of the votes to be handed in. Just one more over here, over here. Anyone else? One more over here. Okay. I don't see any more. Hands up. I declare that the polls are now closed. As I said, we will announce the unofficial results later in the meeting. And we will formally announce the official results of the voting with the filing on an 8K form with the SEC within four business days of today's meeting. Now that the formal part of today's meeting is adjourned, I welcome you to stay for Ilan's presentation. We'll also leave time at the end for your questions. When you ask your questions, I would ask that you limit them to one question. You try to keep them focused on the business of the company and that you keep them brief so that everyone can have a turn. If you have something to say on the agenda, you may not. Something away from the agenda. Is it on the agenda? Okay, go ahead.
Shareholder
It's the microphone. It's down. I wanted to comment on the stock option kind of plan. First, I could not understand what the changes were, that is from the old plan to the new one. Second, I think that it's important that it's recognized when you vote in favor of this that 100% of the stock in this company will be diluted by 100% in 25 years because it authorizes 4% per year of stock to be issued under that plan. Warren Buffett said with Coca Cola, it's outrageous. So I object to the executive compensation plan. Of course, under having already taken all the proxies. Comments with respect to resolution are irrelevant. That doesn't seem right in the operation of the meeting as well.
Todd Maron (General Counsel)
Thank you. Obviously, we have prepared a proxy statement with the board's recommendation on the equity incentive plan that addresses many of those issues. If anyone wants to refer to the proxy, they certainly may. Going back to Ilan's presentation, just briefly, during the course of his remarks, we may discuss our business outlook and make other forward looking statements. Such statements are predictions based on our current expectations. Actual events or results could differ materially due to a number of risks and uncertainties, including those disclosed in our Most recent Form 10Q filed with the SEC. Such forward looking statements represent our views as of today, should not be relied on thereafter, and we may disclaim any obligation to update them after today. So with that, please welcome Elon Musk.
Elon Musk
All right, welcome everyone. And as always, thanks for being an investor. So we'll do just a few slides and then go into questions. So let's see this complicated device which has two buttons, Blah, blah, blah, something, something. So it's been a great year. We've. Sorry, close to the mic. It's been a great year. We've produced and sold a lot of cars. We're now at 344 miles, a million miles driven. And I'm sort of pleased to say, sort of touchwood that no one has received a serious permanent injury in a Tesla ever. And all those miles driven. So, I mean, that is certainly one of our proudest accomplishments. And there have been some pretty crazy crashes, I should say as well. We've had a guy, in fact, things that I wasn't sure that really would work out so well. There was a guy that drove through two concrete walls at 110 miles an hour. There was. I'd always say, well, I think the car's really safe unless you drive it off a cliff. And then somebody drove it off a cliff. Fine. So that's looking good. We've got 126 locations around the world, from China to Norway, service centers, lots of superchargers. We're actually trying to accelerate the rollout of superchargers even more. In fact, by the end of this year, we'll probably have doubled that number of superchargers. So there's a huge number of supercharger locations in process. And Tesla, we have to come up with the whole solution. So you have a really great driving experience all the way from when you think about buying the car to receiving it, driving it, servicing, the whole works and, you know, and then of course charging it. So I think it's important when you create a product to think of like, well, at a high level, what is someone trying to achieve? And you know, obviously with a car, it's, they need to go from one place to another. And so we want that whole experience to be as positive as possible. And we really want people to love their, love their car. And in fact, my goal is that people like the Model S more than their house. I think that is actually the case in some situations. And, you know, there just aren't that many products that really give people joy and would like to be one of those products. And I'm pretty excited about some of the software that's coming out later this year that will be provided to all Model S owners. That's really going to personalize the car a lot more. I mean, there's ranging from the highly functional to the, you know, not that functional. Like there's the. You'll be able to name your car and it'll show up in the mobile app as that name. So I found her too, and it's Old Faithful and There's going to be a lot of sort of customization where the car kind of learns your behavior and it just automatically adjusts to what you want. So things like traffic based directions and calendar integration and anticipating where you're going, alerting you if there's traffic along the way and an alternate route may be better, that kind of thing. So expect to have that rolling out fairly soon. So yeah, I mentioned the navigation enhancements in particular traffic optimized directions I think is really important. So what we're doing is similar to maybe what you've experienced with Waze where you have the cars operating collaboratively as a network, sort of a crowd sourced intelligence as to the traffic information. So as the number of Model S's in a neighborhood increases, the quality of the traffic will actually improve quite considerably. And we're also bringing in data source, multiple other data sources. So it's like something like 20 million other data sources but with priority given to the Model S as a data source. So in places like the Barrier Peninsula it should be pretty great or west la and you know, but as, as the Tesla's increased that that's going to get better and better.
Elon Musk
And then we've, we've also introduced a number of hardware improvements over the past year. A lot of subtle things but they're important number areas like power folding mirrors, the parking sensors and of course the sort of underbody shields which I mean aren't, they aren't really necessary but you know, it's sort of, you know, it's really helpful to know that you can drive over a concrete block and be okay. So sales have been pretty good and still obviously room for improvement, but a good start. And you know, we've really been production limited as I think most people know, with the biggest constraint being supply of the battery cells. And that constraint is sort of gradually alleviated over the course of this year and then next. So we expect to steadily ramp up production. In some cases there'll be, you know, important step changes, significant step changes in the number of cars that we can produce and we'll be going into more markets as well. So this is kind of where we started out. Obviously not in a good place with respect to gross margin, but then ultimately ending up in with a pretty good gross margin per car sold. And we do expect steady improvement in the gross margin despite what I think is likely to occur. And we're seeing to some degree occur, which is that the number of options or the value of the options that people are picking for the car is slightly reducing because of basically affordability. So we'd expect to see a slight decrease from people spending on the order of $100,000 a car to maybe $95,000 a car, which is still quite, quite a lot. And yeah, so we've expanded to some, some very significant markets recently. I was. Sorry, I'll talk later. I was over in China and we, we have very good reception there. There's a lot of interest in the car. So we're making dramatic investment or significant investments in service centers and superchargers in China in order to meet the demand. In fact, our biggest constraint really is how fast can we open service centers and install superchargers and make sure any local charging issues are solved with each market. There are idiosyncratic issues around charging that relate to building codes, to the way that the electricity grid works. And, and these can be quite difficult to solve. And we had some challenges, for example, in Norway, which is our highest sales per capita in the world, but they've got a unique electricity grid and it took us several months to get to a good solution there. So in markets that we're opening up right now, we're actually intentionally slowing down the introduction until we're certain that the service, that there'll be good, good servicing and good charging capability because we don't want people to have a negative experience. And then in terms of right hand drive markets, I'm headed to London this weekend to hand over the first right hand drive cars and then we'll be going into Japan, Australia, Hong Kong and a number of other markets later this year. The Gigafactory. I think people know what our situation is there. We are getting quite advanced in the planning for the Gigafactory. And overall I'm quite optimistic about the potential cost reduction in the cost per unit of energy. I think we're targeting a minimum of 30%, 30% reduction and I think that's probably conservative at this point. I think we can probably do better than that with the Gigafactory. And I feel also really good about our partnership with Panasonic. We have daily meetings with Panasonic and then every week there's sort of a more comprehensive meeting. And Panasonic at first wasn't sure about whether these cost reductions could be achieved, but I think they are now convinced they can. And of course there's good old Model X. So I should say that the production version of the Model X actually looks different from this. It looks better. One of the things that drives me crazy about cars is that, you know, very Often you'll see kind of a show car or a demo car and then the production version is some much worse version of that. And at Tesla, whenever we show off a car as a demonstration item, the production car will always be better than what people saw. Now sometimes that takes a lot of effort and it's very difficult. That certainly is the case with the Model X, but we had two choices, which is either produce an amazing car that I think is going to blow people away or produce a pretty good car. And you know, we want to have amazing cars that just blow people away. So in the case of the Model X, that's just taken a bit longer than we would have liked. In particular, getting the Falcon Wing door right is extremely difficult. And then things that you maybe wouldn't expect are also very difficult, like the second row seats are quite a challenge because what we're aiming for with the Model X is that when you open the Falcon Wing door, you have the second row seats are essentially framed and we want that to be, to feel like a work of art. If you open up the door, it should just be this amazing experience. I mean it's. This may sound a bit silly, but it should just be like, ah, yeah. And then the seat, I mean it's just a seat, but we want the seat to feel like a work of art, like something you could have in a museum. Anyway, that's what we're going for with the Model X and it's bloody hard. And of course it'll have dual motor, all wheel drive and then we expect to start to reach volume production in the second quarter next year. And then, you know, Tesla's always been, the grand strategy of Tesla has always been a three step process where step one was low volume, high price car with the Roadster. Then we've got mid volume, mid to high priced car with the Model S. And then generation three being the high volume, lower cost car. And with Gen 3, with our third car, you know, we're expecting that to be about a $35,000 car with a range in excess of 200 miles. But I should say that 35,000 may not sound all that affordable. But when you consider the savings from use of electricity versus gasoline in the U.S. that translates effectively to like a gasoline car of about maybe $28,000 or in Europe a gasoline car of about $22,000 to $24,000. So actually the affordability of it should be quite high and very optimistic about that. And we're going to try to make that third generation car happen as soon as we possibly can. Obviously the Gigafactory is a precursor to the creation of that car or the volume production of that car. So we're going to make sure that the Gigafactory and the tooling and development of that Gen 3 car move in sync to market release in hopefully sort of the late 2016 timeframe. Then we completed our coast to coast connection with the Superchargers. So you can travel from LA to New York via an, Via an admittedly circuitous route. And actually I don't think we did a good job of explaining to the media like, well, why is this weird route that way? And it's because it was originally the route that I was going to take my family on on a road trip. And then it ended up taking us a bit longer to complete the route because of sort of heavy icing conditions in the winter. And then by the time it was completed, the kids were in school and it would have been difficult to take them off for a week. So we just had a Tesla team do a cross country trip and then a bunch of customers did it. Actually, I think a customer did it before we did it. We set sort of Guinness Book, a world record for the fastest trip from LA to New York in an electric car. And then of course, by the end of this year we'll have filled out a bunch of more routes. You'll be able to go in a much more direct manner to New York or from say LA to Florida. Of course you can go all up and down the east and west coasts and anyway, so you'll see that map sort of mostly filled in by the end of this year and then something similar for Europe and we'll be making good progress, I think, in China and other parts of the world on supercharger front. All right, so questions? So I think we're, we're going to. So if those have questions could line up at the microphones and I'll just go from one to the other. Go ahead. Hi, my name is Benjamin and since the deal with Toyota had actually fallen through and you know, the, they no longer wanted batteries and actually wanted to switch over to hydrogen fuel cells, I
Todd Maron (General Counsel)
wanted to get your opinion on. Now that gas is going to be
Elon Musk
going off and you're going to be competing with infrastructure for hydrogen fuel cells and electric charging stations, what is your outlook on that? Like the competition between the emerging, the reemerging of hydrogen fuel cells in the talks between the car companies and such? Yeah, so first of all, I should say talks with Toyota didn't really fall through. It's just, you know, we were sort of coming to the end of the electric RAV4 program, and Toyota was interested in doing sort of a high volume deal for battery packs and powertrains, but we're just not in a position to be able to supply them. So we just. Until we alleviate the cell supply constraint, it's not really possible for us to do a high volume deal. So what we agreed with Toyota to do is to just sort of put things on hold for now and circle back maybe in a year or two once we alleviate the cell supply constraint. Because otherwise we're simply just moving, you know, one car from, say, Tesla to Toyota, and it's just, it's not really accomplishing anything. So that's why we're so gung ho on the gigafactory, is we've got to get that done in order to ensure that there's enough lithium ion supply in the world. As people probably know, I'm not the biggest fan of fuel cells. I usually call them pool cells. And I mean, I think like a good rule of thumb for any storage technology would be to sort of say, well, let's consider some very high value situations where electric energy storage has, is extremely important and gives a product a great advantage. You can say, well, let's think of like cell phones. Like a cell phone that lasts longer is a key strategic advantage. Gee, nobody's using fuel cells there. Okay, what about something really expensive? How about a $200 million satellite? Oh, wow. Nobody's using fuel cells there either, huh? Okay, case closed.
Todd Maron (General Counsel)
Thank you.
Shareholder
Hello. My remarks are for you, Mr. Dusk, and also for Dr. Jerome Guillen. And just to remind you that in the developed countries we have a lot of women who would like to buy Teslas, but they need to be a little bit more women. Favorable. Those of us who have sufficient buying power are generally not the younger, but the sort of older generation. And we're not as tall as the men or as the younger generation. So we have a little bit of difficulty getting to the pedals and also being higher on the seats. Okay, so my remarks to you, Mr. Reska, and Dr. Guillenine, who is like the godfather of the Model S, is to make it a little bit more friendly to the women because after all, After all, we are a majority. That's well. And finally, I would like to say that whoever has a comment, they should say yum when they approach the car. And the Teslas are definitely yum, yum, yum. Thank you.
Elon Musk
Well, thank you. Good point. Thank you. I should say we are with the Model X. We're certainly paying more attention to the needs of women in the Model X. And I think you're right, we probably got a little too guy centric on the S. So we're hoping to correct that with the X. Hello, Mr. Musk, my name is Russell Kinsella and I'm a satisfied shareholder. My question today is actually about the non trivial matter of the merchandise Tesla sells in its stores, which also function more or less as a uniform for
Shareholder
the Tesla product specialists.
Elon Musk
I just wanted to know if there was any consideration to improve or update these as a way to bring them in line with the Tesla brand.
Elon Musk
Yes, I think a good point indeed that we are planning to do that. Yeah, thank you. You know, you're right. You're right.
Shareholder
Satoshimusa from la. I have a question about the Model X. And as you ramp up and obviously there's battery issues, I mean, supply issues, and I'm sure there's more demand than supply, are you going to be able to ramp up or are you planning to ramp up even from the initial target that you had for the 2015 year and the years after? And will it come with the optional upgradable seats?
Elon Musk
So we're going to try to ensure that vehicle production matches the availability of battery cells and obviously we have some external dependencies on that front, but we're going to try to ramp up as fast as we possibly can. So I think at some point we'll probably hit some, you know, customer demand limit, but we're going to ramp up as rapidly as we can, ramp up production and see what that limit ends up being. But it's difficult for us to say with certainty what it is. But we're going to try our best to increase our production and, and then see what the demand limit is on the seats front. I have to admit that historically our seats have not been the best. And we are planning on offering an upgraded seat later this year that will be both sportier and more comfortable and will be offered as a retrofit as well. So if you want to upgrade your prior car, you can do that. In the meantime, we actually have made a number of subtle improvements to the seat comfort in terms of improving the foam, the type of foam that's on the seat. And we kind of oversprung the seat so it's a little too tight in terms of the springs under the seat, so it causes the seat to crown slightly. And so we fixed that. And then the lumbar support is slightly too forward. So we've also fixed that. So all of those changes are going into the seats. Most of them are already done. The lumbar support, I think, is about a month away and they make quite a substantial difference to the comfort of even the base seat. Yeah, sorry, seats have been like a thing. All right, thank you.
Todd Maron (General Counsel)
Hello, Mr. Musk, just a quick question with regards to Gen 3, or maybe not. From what I understand, Tesla has abandoned the trademark for Model E. Oh, I
Elon Musk
got a funny story on that front.
Todd Maron (General Counsel)
Yeah.
Elon Musk
So apart from an apparent desire to
Todd Maron (General Counsel)
break the world's greatest combo.
Todd Maron (General Counsel)
What motivated this decision? I just kind of want to get a sense for the thinking there.
Elon Musk
So let me tell you our sort of very deep thought process on branding here. So we have the S and the X. And then a friend asked me at a party, hey, what are you going to call a third generation car? I was like, well, we've got the S and the X, we might as well make it the E, you know,
Elon Musk
And then it kind of stuck, even though we're just kidding. And then just to sort of add to it, we also, just for laughs, trademark the Model Y. But I guess things are pretty dry in the trademark world, so nobody picked up on that. And anyway, then, then Ford gave us a call and said they were going to sue us for using Model E. And we're like, okay, like Ford's killing sex. I mean, that's terrible.
Todd Maron (General Counsel)
That's going to end up on Twitter.
Elon Musk
So anyway, like, okay, fine, we won't use the Model E. And so now we were thinking like, well, you know, maybe there's something else we can use. So we're trying a few other ones and the trademarks are in process, the applications are in process, so I can't say what they are, but I think we've got something that might be, that might be a good. Might work out pretty well.
Shareholder
Hi, Roy Philippos, philosopher and entrepreneur from Philadelphia. Tesla shareholder. Two years ago I was here asking you about Model S sales and you had mentioned to me 8,000 as a break even unit. And it seemed like now much more better things have occurred, which is good, good for all Tesla shareholders. A question today is you had mentioned that you're planning to step down from Tesla as a CEO at one point. Can you talk more about that and as well as who would you want to be the CEO of the company after you do step down from that position? Thank you.
Elon Musk
Well, you know, nobody's CEO of a company forever. I mean, eventually, you know, they carry you out. So, you know, in my case,
Elon Musk
mean, it is quite difficult, I'd say, being the CEO of two companies
Todd Maron (General Counsel)
and
Elon Musk
it was never my intention to be CEO. I tried to actually not be CEO quite hard and eventually it was sort of, it was either that or the company wasn't going to make it, so. Or at least I had to give it a try. So, you know, what I've committed to is to be CEO of the company through volume production of the third generation car. So that's somewhere in, I don't know, four, four or five year time frame. And then I'll have to see, you know, how things are going at that point and whether it's, you know, it's, you know, if it's sort of manageable to do that on a personal level, you know, without getting burnt out essentially, then I'll keep doing it. Otherwise I'll probably have to find someone else. But we've got a lot of time to sort that out.
Shareholder
So you're talking maybe a few years then pretty much when the volume production car comes.
Elon Musk
I think I will, yes, certainly be CEO for like say four or five years and then it's sort of TBD after that. But yeah, but that's the commitment I made to people at Tesla and also to investors is that I'm going to make sure that we execute through the high volume, affordable car at a minimum and then we will evaluate at that point.
Shareholder
Okay, just a quick follow up. I've been asking to speak to you now for two years to talk to you, to tell you that I'm also a super genius like yourself.
Elon Musk
Okay, I'm not so sure. I'm sure I'm one, but. All right, no, I'm sorry, I'm not.
Shareholder
I'm just saying serious, this is to all benefit as Tesla shareholders in the world. I am a capitalist like yourself. I am also level two stage. I've been waiting for 10 years now for someone to give me a second look, a full second look, and if they did, they would see a very advanced mind in front of them. So I'm asking you today, can you give me a second look?
Elon Musk
Thanks, Raymond. Okay. I mean, I'm not sure what second look at what, I'm not sure what we're going.
Shareholder
I would like to come on board as vice chairman of Tesla.
Elon Musk
Well, we don't really have a vice chairman spot, but yeah, I mean, I think that's, you know, I don't think I have to say no.
Shareholder
I'm sorry, I'm sorry. I can also apply for a future CEO position. But at least, at least I would like to come on the board of directors. I apologize. Is it to the benefit of Tesla shareholders?
Elon Musk
I think we need to move on to another question. My apologies. I apologize.
Shareholder
Thank you for your time.
Elon Musk
Hello, Mr. Musk. I know that your long term goal is rather than just to sell Teslas, but to accelerate the electric vehicle market around the world. And it seems like no one's really matching what we're doing at Tesla with the Supercharger network as far as rapid charging and battery swapping of high energy batteries. I was wondering, would it. To advance the long term goal much? Long term goal, Would it ever make sense to open this Supercharger or a similar charger, maybe a junior charger station to other manufacturers, maybe on a subscription basis or to work with them to make their cars compatible as well? Since it seems like no one else just wants to put in the effort to make anything close to the Supercharger in terms of capacity.
Elon Musk
So the intent of the superchargers is not to create some sort of walled garden or anything. We're actually happy to have other manufacturers use the superchargers. They just need to create electric cars that can accept the energy level or the power level of a supercharger. So superchargers, the current generation superchargers, put out 135kW and we're planning to go up from there, but there's no other electric car that can accept anything close to 135 kilowatts. We're more than happy to have other manufacturers do this. And I've said this publicly on a few occasions. No one's approached us and said, well, they'd like to use it, but we're happy to have them do so. They would just have to contribute to the capital cost, like, so figure out like, okay, what percentage of the time are their cars using the Supercharger network and then they can make a contribution proportionate to their customer usage of the Supercharger network. We're very open to such a thing.
Shareholder
Thank you. Mr. Musk. I'm from Los Angeles and I would like to buy a rally jacket of the team that went to New York and you don't sell it.
Elon Musk
All right, well, I'm following the comment
Shareholder
of somebody else about redesigning the Tesla accessories that that be an accessory. Certainly most of the people who were there with me watching the guys get started, wow, how do we get that? It's not available. But the real issue I am raising today is the superchargers are unique and placed individually. How about putting them on a metal platform on a flatbed and dropping them in place and it's done. Instead of all the construction you do cookie cutter prefabric. I invite you to think about it. It may cut cost and speed in delivery.
Shareholder
Hi, Mr. Musk, I'm Ben Clark. I'm a huge fan. Happy shareholder, happy Model S owner, hopeful future occupant of Mars. So I'm very thankful for the time that you give around the world and kind of regularly answering these questions and talking to the public. It's a huge benefit to a lot of current and future engineers and innovators and entrepreneurs. I've heard you talk a lot about your desire to accelerate the advent of electric vehicles. I get the sense that you'd be extremely happy if all the major competitors came out tomorrow and announced long range electric vehicles that had great styling and performance and low cost. Even to the point that I think you would feel personally satisfied if Tesla Motors was put out of business by all these great electric vehicles driving around?
Elon Musk
Well, I don't know about that.
Shareholder
At least having satisfied your goal of
Elon Musk
bringing the automotive market is big. I'm sure there's certainly room for many companies.
Shareholder
So I'm just kind of curious, how do you balance your desire to bring the advent of electric vehicles and wanting your competitors to have these great vehicles that are benefiting the world with your kind of fiduciary responsibility of, of maximizing shareholder value and if you can give any examples, kind of how you make those trade offs and what future decisions you might anticipate.
Elon Musk
Yeah, that's a good question. I mean, it is surprising that there hasn't been more activity from other car companies to make serious electric vehicles vehicles. I mean, thus far what we've seen is really, you know, the number of electric cars they make is the minimum required to satisfy regulations. And then when those regulations are ordered down, then they reduce or eliminate the electric vehicle program. So it's, you know, it's surprising. And I so really was hoping that other car companies would engage in more serious electric car programs. And I'm trying to think of ways to help that along. That would be a good outcome. I mean, I don't think, you know, I don't think their success is necessarily to Tesla's detriment because ultimately we need all electric cars to all cars to go electric. And the car market is enormous. There's 100 million new cars made a year and there's an existing fleet of roughly 2 billion cars. So even if all cars were electric immediately, all new cars produced, it would take 20 years to replace the fleet. And if you look at the sort of puny number of cars that Tesla makes, there were the 22 and a half thousand last year. Maybe we'll do sort of 35 this year. It's a big percentage increase, but it's a very tiny percentage of the overall market and we've got a long way to go just to get next to the decimal point in terms of market share, like 10 over. So, Yeah, I mean, I'm contemplating doing something, you know, fairly significant on that front, which would be kind of controversial with respect to Tesla's patents and. But I probably want to write something so I can articulate it properly and explain the reasoning for the decision. Okay, yeah, thanks. Hello, my name's David, I'm a shareholder. I have a question relating to batteries. How concerned are you about a new
Todd Maron (General Counsel)
battery chemistry such as a dual carbon battery, and how quickly could this gigafactory
Elon Musk
be retooled to make this new battery? You know, it's rare that a day goes by when there's not some new battery chemistry that. That is announced, but I should maybe give people a good filter for assessing any new battery chemistry in terms of its potential. The key metric is energy density. So energy per unit mass or volume. This is different from power density. Power density is the rate at which you can extract energy. Energy is like the total amount you have in there. Energy defines your range and power defines your acceleration and charge rate. The problem with something like the dual carbon approach is that the energy density is very low. It's only about maybe 20% of. What about current cell energy density? Now the power density is very high. You can charge it, you know, quickly, but. But that's. We don't have a constraint on power. The Model S really has a lot of power. So range and really the cost per unit energy, those are the two things that are important. Now, something like the dual carbon is actually okay in terms of the cost per unit energy, but it really fails hard on the energy density. There are potential breakthroughs out there, but we have yet to see one. To see even a single example in our lab of a cell working at the laboratory level that is better than the one that we have or the ones that we expect to come out with. And so my response always when I hear about electrochemical breakthroughs is, please send us a sample cell that usually, well, that always has resulted in nothing happening.
Shareholder
Thank you. Hi. Hi, Mr. Marks. I'm Kevin Wang. My question is related to Model X and the Generation third. And speaking of the other car manufacturing activity recently, I attend the BMW i3 test drive event. And since I have been greatly spoiled by Model S, I wouldn't, you know, walk away as a i3 buyer. But however, there's one thing impressed me very much is that the tremendous interest from the consumer showing up. So it's kind of a tent event and then running the test drive all day long and then hundreds of people kind of sign up. So it just come to me that, you know, if Tesla has the Model E or Y ready, they'll be selling like hotcake. But then, and looking in your roadmap, Model X still have the priority. So I wonder, you know, is it that it takes this much time for you to learn how to build generations, sir, or is that any of the resource constraint like battery? Just wondering if you could share some of the rationale in terms of priority.
Elon Musk
Yeah, I mean the thing that's important is to have a compelling mass market car. So I mean, I drove the i3 and it's not bad, but the range is very short.
Elon Musk
It's okay in other respects, but it's just, it would be hard to say for most people that you could replace your gasoline car with an i3.
Shareholder
I'm not impressed by i3 at all. I'm saying that if you have the Model E ready, that you could take over the market.
Elon Musk
Sure. So the issue there is, in order for us to create a compelling mass market car, we need a lot of battery production and it needs to be at a affordable enough price that it doesn't cause the, it doesn't destroy the affordability of the car. So, so that, that's why, you know, the, the gigafactory is vital for getting to that level of volume and for reducing the cost via massive economies of scale and vertical integration. Now there will be, I should say, technological innovations in the cell as well as the sort of monster economies of scale. But what we're trying to do is dial everything to the, to the maximum to, to get to that affordable, a compelling electric car. Compelling, meaning it's got to be long range as soon as possible. The soonest we can figure out how to do that is sort of the late 2016 time frame. So that's, that's what we're aiming for. I mean, we could obviously produce a car like the i3 or maybe probably better than i3 right now, but it just, it wouldn't be great. It would be okay. And it wouldn't, but it wouldn't really, you know, wouldn't be amazing.
Shareholder
One quick follow up. So that leads to the gigafactory and as I understand you right now you choose two state simultaneously. So at what time frame you will go with the final state.
Elon Musk
Yeah, so we're probably going to do two or maybe three states all the way to creating a foundation and completing the plans and getting approvals and everything. I think it might actually be three states that we do it in. So I wouldn't expect that we do a down select for Gigafactory 1 before the end of the year.
Elon Musk
I would just like to re ask my question of how quickly could that
Todd Maron (General Counsel)
new battery chemistry composition, how quickly could
Elon Musk
the gigafactory be retooled for that new battery composition? It would be fairly straightforward for us to change the anode or cathode composition. Okay, thank you. Yeah. In fact, we expect to evolve the anode and cathode. It's not merely what if that happens? We expect that to happen. Hi, Mr. Musk, my name is Bob
Shareholder
Ashmore, I'm a shareholder, I'm a roadster owner and a model S owner.
Elon Musk
And I have a question about if you're planning on any upgrades or enhancements
Shareholder
to the roadster and if not, when I can expect another roadster type vehicle.
Elon Musk
So yes, we are planning on, I think a fairly exciting upgrade to the roadster. I'm hoping we can get it done later this year. I did say it would be this year and I'm, you know, I'm trying to sort of, I mean, yeah, you know, we'll get it done this year. There'll be a cool thing. It's like add straw, add straw to back. But you know, we said we'd do it, we're going to do it. So we're going to do something cool with roadster before the end of this year. And in terms of a next generation roadster that's probably, I don't know, five years away.