Churchill Club: An Evening with Elon Musk April 7, 2009 A wide-ranging 2009 Churchill Club evening with Elon Musk on entrepreneurship, the founding of SpaceX and Tesla, and the thinking behind betting his PayPal fortune on rockets and electric cars.
A wide-ranging 2009 Churchill Club evening with Elon Musk on entrepreneurship, the founding of SpaceX and Tesla, and the thinking behind betting his PayPal fortune on rockets and electric cars.
Transcript Hello everyone, welcome. My name is Karen Tucker. I'm CEO and board member of the Churchill Club. And tonight we present an evening with Elon Musk in conversation with Michael Malone, Elon and Mike, thank you very much for being here with us tonight. And I would also like to thank Microsoft for hosting this program this evening. Before we get started, let me mention some of our upcoming events. First, on Tuesday, April 21, it's virtualization. What's next? Six leading experts will talk about trends and the next generation of this hot technology area. And then Next, on Thursday, April 23rd, we present a Women Tech Executive Roundtable. What's top of mind in 2009 with an all star cast including Sheryl Sandberg from Facebook. And on April 27th we have a program about executive leadership style and its effect on business performance. The panel will include Bill Campbell, Chairman of Intuit and others. You can look for that on ChurchillClub.org this week. And on May 7, it's our 2009 CIO agenda, including the CIOs of Home Depot, Baxter, among others. An incredible group. Should be an interesting program. This too we'll post on the website this week. And last but not least, it is our most anticipated program of the year, the Top 10 Tech Trends event on Wednesday, May 20th. And this year we have Vinod Khosla, Ram Shiram, Steve Jurvetson and Joe Schoendorf will be making their predictions with high audience participation. So if you haven't yet made your reservation, please be sure to do that. Just a note about the club for over 23 years the Churchill Club has been the leading forum for the Bay Area business and technology community. Presenting Presenting what's new? What's next? What matters most? We are a nonprofit member supported group and so if you are not a member and you enjoy tonight's program, we hope that you will consider joining us and we make it easy for you to do so Simply just visit ChurchillClub.org and go through the steps. Now I'm pleased to introduce our moderator, Michael Malone. Mike has had a most impressive career having covered Silicon Valley and high tech for more than 25 years. He has written for the Wall Street Journal, Economist, Fortune, the New York Times, Forbes, ASAP and earlier the San Jose Mercury News. He wrote or co wrote a dozen books, he hosted three public television interview programs series and most recently he co produced a PBS miniseries called the New Heroes about social entrepreneurs. When I asked Mike for something about him that doesn't appear in his bio, he admitted that he was nearly expelled from Santa Clara University because he used a certain obscenity. I believe he said it contained 12 letters in his school paper column. I'm sure that wasn't the first time that Mike stirred things up, and I trust that it will not be the last either. So let's give a warm welcome to respected journalist and author Mike Malone.
Good evening, everybody. Looks like we have a pretty full house. Recognize a lot of faces and I promise not to or try not to use that 12 letter word tonight. Elon might, but I'll try not to. I hope all of you had a chance to take a look at the Tesla Roadster sitting out there in the parking lot. It was the one behind the orange cones that look very different from all the rest of the cars out there. If you didn't get a chance, try to beat Elon out of here tonight and go take a look at it or at least watch them tear out of the parking lot silently. So allow me to do an introduction, sir. We've known each other a long time.
We have inner Churchill Club. Is 12 letters.
Oh, yes, it is. Oh my goodness. I was just thinking it was 20. It's hard to believe. It was 28 years ago that Rich Karlgard and Tony Perkins showed me a plan for this. And it was about just a few years before I was shown the plan for ebay. And in both cases I said, I just don't think it's going to work.
No, it's just crazy. So let me introduce you. 37 year old Elon Musk was born and raised in South Africa, but left home at age 17 to make his way in the world, living on as little as $1 per day. He eventually made his way to the Wharton School at the University of Pennsylvania, where he earned bachelor's degrees in economics and physics. Musk then attended Stanford's graduate program in high energy physics, where he lasted exactly two days before dropping out to form a company with his brother. That company, Zip2, was sold for $300 million. Musk then founded exp.com, an online financial services company. It eventually became PayPal, of which Elon was the largest shareholder. PayPal, as we all know, was purchased by eBay for $1.5 billion in 2002. When he graduated from Wharton, Elon determined the three important areas where he wanted to make a contribution was the Internet, clean energy space. And with PayPal, Tesla Motors, SpaceX, and SolarCity, he has done just that and in the process made himself one of the most celebrated entrepreneurs on the planet. Ladies and gentlemen, Elon Musk. So let's begin with the topic of greatest interest to the audience here tonight. I assume, Tesla Motors. Okay, where's the company at right now? Where do orders stand?
Oh, Mike, I don't know what to tell you. It's been rough. No, I'm just kidding. It's actually. It's actually been. It's been pretty good. In fact, really quite a contrast to the rest of the auto business. We're sold out, first of all, for the Tesla Roads to the sports car. We're sold out through the end of October, and I think probably within two or three months will be actually sold out of all 2009 production for the Roadster.
Is this for the standard roadster or the. Or the advanced version?
Well, we do have a Roadster Sport coming out, which is a, you know, for those for whom the roadster. The Roadster isn't fast enough.
There's the Roadster Sport.
Now, that'll do 0 to 60 in 3.7 seconds. As fast as almost any.
It's like a nice CBM laid over on the side.
Yeah, it's ridiculously fast.
Now, how are the orders for that? Good.
Actually, I haven't looked at the latest orders for the Roadster Sport, and people actually have an opportunity to upgrade their car to the Roadster Sport that are getting their car after, I think, late June or July. And what we're finding is a lot of people are choosing to upgrade their car to the Sport package. So I actually don't have an exact number for you, but anecdotally, it seems to be doing very well.
Now, The Roadster is 109,000, is that right?
And the race sport's 139,000. Do I have that right?
Well, the price to customers is actually, in terms of a comparison price that's relevant for comparing it to a Porsche or something like that is actually about $98,000. And the reason for that is if you buy an electric car, you get a $7,500 federal tax rebate. Even if you're an AMT, it applies to everyone. And then you don't pay the gas guzzler tax, which is somewhere in the order of $3,000. So effectively $12,000 discount. Yeah, you're roughly. And it depends on which car you compare it against, because the gas cost of tax does vary, but it's somewhere between a 9 to $12,000 discount relative to a gasoline sports car. So in effect, you're talking about a car that's just under $100,000 as a base price. And then the sport package is another $20,000 on top of that. And that's equivalent to going from, you know, a 911 to a 911 Turbo or something, you know, that kind of thing.
Now, if I were to order one right now, if anybody in the audience wants to order one right now, raise your hands. I will take orders. I mean, there you go. If somebody out here were to order one right now, what would it take? What's the deposit and what's the delivery date?
So we're actually reducing our deposit requirements on the Roadster. And previously we'd used the deposits to provide funding for the company, and that was an acknowledged thing. We said, look, we car companies are very capital intensive, so in order to make this doable or more doable, we're going to take deposits. They'll be at risk. People should recognize that. And then the advantage is that they get one of the first cars. And we actually got a lot of people who sign up to that, but we don't really need that anymore. So we're actually going to reduce the deposit down to, I think, $9,900, and then you pay the balance just at start of production, which is a couple months prior to delivery.
Now, did you find any impact on the orders with the falling gas prices? We saw what happened with Prius. I mean, you can go to Cityvale and entire supermarket parking lots are filled with unsold Priuses. Did that affect you guys at all?
You know, I don't think that was a huge impact because most people aren't buying the $100,000 sports car because of the, you know, to save money on gas.
It's more geek love than it is cheap gas.
Yeah, I was more worried about how that would affect sales for our sedan, which we just unveiled a few weeks ago.
We'll talk about that in a moment, but keep going. Yeah,
but I don't think that's been a key impact on roads to sales. I think certainly the economy as a whole and the implosion of people's net worths has had an effect on new roads to sales. And we're fortunate that we do have a significant backlog going out six months. But I wouldn't say gas prices have had a big effect on the road stuff.
Now, being in the car business, you have to be asked, are you taking any federal money, you know, and are you worried about your job security if you are?
Well, you know, I don't have to worry about My compensation, my compensation currently is a dollar. So I'd be happy to cut that in half for the federal government if they do give us a loan. But actually we've taken no government money at all thus far. Some people out there think we have and we haven't. Now we do aspire to get a government loan under the, what's called the ATVM program. It's the Advanced Technology Vehicle Manufacturing program.
That's from the doe. It's not bailout money. And it was, this was, this program was done before there was need for ballot money. This legislation was written about 18, started writing it about 18 months ago and it got, finally got approved by Congress last year sometime I think late last year. So. And this is before a vomit. So this isn't stimulus money, this isn't bailout money. This is actually something that originated in the Senate Energy Committee because they felt it was a matter of national security for and environmental obviously environmentally important for the United States to accelerate its transition away from oil for all the obvious reasons that it's damaging. It's obviously very damaging to the environment. And as gas prices rise, as they will dramatically when we come back to another boom, there's going to be a massive wealth transfer out of the United States to other countries. And it's just kind of silly, you know, for that why it's cheaper for us to just accelerate the move of oil.
Now I'm not going to ask you how much you plan to get from the government or when because I think you said that publicly once and got in trouble, didn't you?
I did get in trouble. I just said what they told me and they didn't say keep it quiet. So. But suffice to say we are highly optimistic that we will receive approval, loan approval in the near term.
Okay, let's talk about the factory that was. There was an awful lot of news a few months ago. Groundbreaking ceremonies, big assembly plant going to be out there on 237 in San Jose. Now it seems to be on hold and something about financing delayed or you couldn't, you didn't qualify for it or what happened.
Yeah. So the San Jose, the idea of using sort of the undeveloped land of the 237 in San Jose occurred before the Section 136 or the ATVM loan program was approved by Congress. So. And one of the clauses in that ATVM loan program is that you have to. It gives preference to manufacturing facilities older than 20 years, which was actually sort of a quasi buy American clause Because the foreign car companies that have factories here, almost all their factories are younger than 20 years. So it's essentially to bias the cash towards American companies that clause has put in. But nonetheless it's there, which means we can't do Greenfield. So.
Well, I assume there's going to be a lot of empty buildings in Dearborn soon. Is that where you plan on going?
No, we'll most likely be in Southern California. We actually have term sheets from two locations in Southern California. We look first in the Bay Area. I'd love to take over nummi. That'd be awesome. I don't know if there's maybe at some point we'll have an opportunity to acquire numi. That would be great. I'll take that in a second. But that isn't available right now and I don't think we can't afford it really, unless they give it to us, which maybe they will, I don't know.
So where are the cars being manufactured right now? UK at Lotus. Actually.
The Roadster is considered a US manufactured car. The final assembly occurs in the Bay Area, in Menlo park of all places.
That well known auto center.
Right. Well, bear in mind we're talking low production for the Roadster. So this is a production rate of around about 25 a week. That might rise to 30 a week in the summer. So it's not. I mean, when you sort of add that up, it's five cars a day. I mean, it's like your average service center could do a lot more than that. And so we install the powertrain in Menlo Park. We do final vehicle verification. We do the high speed tests out at Moffitt Airfield and. Yeah, and that's. And then we manufacture the battery pack in St. Carlos. So it's by value. Talking about something mostly done here.
Where do you do the tests at Moffitt?
Have any of you ever seen a Tesla racing down the Runway at Moffitt Field? You guys do it at three o' clock in the morning or something?
No, there's hardly any traffic on Moffitt nowadays.
True. Let's talk about the new car, the S. Tell me about it.
All right. This really is a great car. I mean, the Roadster is a good car. I think the S is a great car. And I think it's something that will. It's really quite historic, or at least it aspires to be, in that this will be the first mass produced highway capable electric car. And there's never been. This may sound strange. But there's actually never been a mass produced electric car outside of golf carts.
Is it the first non internal combustion mass produced car since the Stanley Steamer?
Yeah, it might be. Wow. Okay. So, yeah, I mean there's been hand built things and conversions of gasoline cars and stuff like that, but not an actual mass produced electric car. So now of course we have to mass produce it for that to be true. So that's why I say it aspires to be. Its aspiration is that. But if we fulfill that aspiration, then it'll be very historic. And this is a car really designed to take full advantage of an electric powertrain. So the packaging is very optimized. The battery pack is in the floor pan between the two axles. So it's this big sort of flat battery pack. Looks a lot like a giant laptop battery pack, in fact uses laptop cells.
I was going to say, is it still just a ton of laptop batteries?
Well, it's half a ton of laptop.
Half a ton of laptop batteries strapped together.
Yeah. Now that's tricky, by the way, so.
So strapping is tricky. Yeah, I bet, yeah.
So you need a lot of micro, you need a lot of processors. Right, to manage all that.
I think we're like 30 or 32 processors or something on board. A lot of them are like little tiny ones.
So you must go to bed every night praying for breakthroughs in battery technology so you don't have to deal with this.
No, you know, it's not too bad actually, having lots of little cells. I mean, we keep, believe it or not, that is the highest energy density pack that you can make is to use a large number of laptop cells. And we keep pushing on the cell manufacturers. Technically, by the way, a battery is a collection of cells. And the cell, if it's just one, it's a cell, and if it's two, it's a battery. And the cell is a chemical engineering problem. The pack, the battery is actually a mechanical engineering, electrical engineering and software engineering problem. So there are different types of expertise needed to do that. And in fact there are many makers of cells, but there's only one maker of large lithium ion battery packs and that's Tesla. So of course there will be others in the future. And that's why Daimler came to us to make the battery pack for the new electric Smart. Right.
Now, something I've never asked you. My laptop just about sets my pants on fire. How do you keep all of those from just cooking that car?
Are you sitting on your laptop? I don't Even want to think about that may be part of the problem.
I don't even want to think about sitting on half a ton of. Of laptop batteries.
Yeah, well, what's the worst that could happen? I mean, We do extensive safety testing. I mean, I shouldn't laugh. This is a serious subject. So I'll break it down. Okay, so we start off at the cell level. We use only the finest cells.
Corinthian cells, finest cells, Each one gently observed and carefully prepared. We do actually use BIOS quality cells which come from Japan. They're carefully verified by the manufacturer. Then when we receive them, we check each cell. In addition to the fuse that's built into the cell from the manufacturer, we double fuse the cell so it's triple fused in total at the cell level. Then the cells are incorporated into modules. The modules are designed to ensure that there's passive propagation resistance between the cells. So what that means is even if all active safety systems fail and a cell goes into what's called thermal runaway, that energy is contained and it does not spread to any neighboring cells. So this involves insulating the cells, making sure you've got a thermal conduction path to get rid of the heat so you don't essentially have a chain reaction. So that's quite tricky. But we also never want to get to even losing a single cell. So we have an active cooling system which is. So the battery pack is liquid cooled. And that also is a tricky problem because you need to be thermally conductive but electrically isolated. And moreover, that needs to be true. Over 100,000 plus miles of bumpy, bumpy roads.
Yeah, real life cars. Real life cars. It is hard to make things last for 100,000 miles in 10 years and that kind of thing. So if you hit potholes and you get. So you know, it's getting shocks from the road, it's getting vibrations going through extremes of temperature, it gets into an accident. Under all these circumstances, you cannot have the pack catch on fire. Very hard problem. And then also it must be, you must be able to make the pack inexpensively. It's got to be pass all the regulatory requirements. You've got to preserve the pack so that you maximize the calendar and cycle life of the chemistry within the cells charging.
So you have to deal with the DoT and the DoE, any branch of the.
Yeah, tell me more. I don't want to go into too much minutiae. Tell me more about the car.
Yeah, sorry. You know, I should have, I should have Said, yeah, I'll give you a sales pitch on the model S. Ok, so this is a car that has a range of up to 300 miles. It seats up to seven people. That's five adults plus two kids. And the way we get the two kids is it's kind of like the old station wagons where you have two rear facing kids seats in the back. That's an option that you can order.
Yeah, I mean, you know, it's not great being in the back. Being in the back. But I guess it could be kind of fun if you're a kid and you can sort of watch all the other cars and stuff. And most people, you know, when you put seven people in a car, it's almost never seven adults and it's only occasionally, rarely is it seven people. So we try to make something that could substitute for your SUV so you don't have to have cart, this gigantic seven passenger SUV all over the place. It will be five star crash rated. And that's a very hard thing to achieve. In fact, today's five star will reduce to a three star in two years.
They keep moving the bar.
Yeah, they keep raising the bar on what's necessary to achieve a five star. So people might think, oh, I've got a five star a day. It'll be like a five star in two years. No, that's like a three star in two years. I mean you basically have to be a Sherman tank level safety to get to five stars. We will be at five stars. I'll have my own kids in the car. We're not going to make something as nice as you got.
Yeah, we'll be fully occupied in the car. And so the challenge then is to make it, make it super safe but not super heavy. So it is quite a difficult mechanical engineering problem and mass optimization problem. And actually arguably it will be safer than an SUV because it'll have such low center of gravity because the battery pack is in the floor pan that you're not going to have the tip
over risk it's going to stay on the ground.
Yeah. So I mean, because if you're going on like some mountain path or something and you go up the side, I mean it doesn't matter how many airbags you got, you know you're toast. So you want to make sure you don't have tip over risk. And on tip over risk you'd actually win against an suv.
Tell me a little about the ergonomics. I hear you have some innovations on the Dashboard.
Absolutely. So for the interior approach you can think of it like a giant iPhone. Okay. That's the center console. Imagine a 17 inch diameter iPhone. And that's the basic thought there. And 3G wireless connected. Yeah, absolutely. In fact, so it'll have your controls, your standard controls for stereo, H Vac, but it's also going to be able to connect to the Internet. So you want to do Pandora radio, if you want to do YouTube, whatever you want to do, it'll have a browser. This is just Linux. Linux running a browser. So if you want to look at your email while you're not driving and in fact there's some sort of interesting ideas. Who thought of, well like maybe you could have it read out your email to you while you're driving and you know, do voice commands on the computer and nice to allow people to develop applications that could run on the computer because it's a full fledged computer, it's not some sort of dumbed down car thing. And also you should be able to theme the display. So there's a 17 inch display in front and there's about an 11 inch display in front of you.
So it's user modified display display.
Yeah, yeah. So there's a read only display right in front of you and then a big 17 inch touch screen in the center console. And you know, you can theme your cell phone, you know and customize it to your interests and needs. Well why can't you do that with a car? You should be able to, you know, seems like a reasonable thing. So if you want to see different instruments on the front, like you care about seeing this readout, that readout, you want it to sort of look, have a heavy metal look. You want it, you want it to look like country and western whatever, make it feel like it's more your car, not just something that rolled off an assembly line.
So you could have the dashboard of a 67 GTO.
Stuart Warner gauges if you wanted to.
You can have it look like steam gauges if you wanted to. Yeah, absolutely.
So this is your five series killer.
You know, we're not going to kill, we're looking at 20,000 units a year. So we're not going to kill anything. And we'll impinge on the market share of several cars out there like Lexus, Mercedes, Mercedes, BMW, Audi, Infiniti. But really it'll be a small, I mean a hardly noticeable impact on total sales. I mean, you know, well, at least there were 17 million cars sold in the US a year. I think it's around about, you know, not much like 99 million cars a year at current run rate. So even at my 9 million cars a year. Yeah, and that 20,000 is 10,000 domestic, 10,000 international. So we're talking, you know, 0.01% of the car market.
Okay, so give me some performance, give me some performance specs on this thing.
Price, starting price 49,900. 49,900.
Gosh, that's less than 50.
50 grand. That's half the price.
It is half the price for. Yes.
Thanks. Now that is after there's a $7,500, remember that federal tax rebate? That's after the $7,500, although I haven't taken into account the gas guzzler tax. So in effect for an apples to apples comparison will be a little bit less than that, maybe 47,000 or something like that.
And you said distance was on a charge.
It can go up to 300 miles. But now the 49,901 will do 160 miles. But there will be a 300 mile range pack available. And one of the things we're thinking of doing is perhaps making that something you can rent. So if you can't afford the more expensive 300 mile range pack or don't want it, then that's fine. Get the 160 mile pack, rent the bigger one when you need it. Some other ways we've addressed the range issue is a 45 minute fast charge capability which is about the limit of the battery chemistry. And then we're designing the battery pack such that it can be switched out faster than you can fill a gas tank. Which in principle, if you think about it, I mean, this is basically a big laptop on wheels. And if you can switch out your laptop battery, you know, in 30 seconds, why can't you do that with a big one? You just need something that can simulate
a hand because there's two little clips and that 500 pound battery pack falls out.
Yes. Not something you can do by hand.
But so you need, you do need special equipment at sort of a battery pack swap station. And there's, you know, companies out there that are looking to do swap stations.
Now once you talk about your solar company, weren't you talking about having solar panels that people could put on like the roof of their house? Yeah, absolutely. And do home charging for a quick 75 miles or whatever it was.
Well, the most efficient thing to do is to actually put solar Panels on the roof of your house and just have them basically power your house, particularly during the day, because during the day is when you encounter peak load and they have to put the least efficient power stations online during the day. And then at night it's actually better to charge your car at night, so it's better to decouple it effectively. So if you want to be truly green, then you just need to say, okay, well I'm going to generate more energy via solar than I consume in my car. Although the Model S will have a solar panel option. So you can put solar panels on the roof of the car itself.
Yeah. And there's some interesting ideas to potentially have solar car ports. And if you want to get some really sort of crazier ideas or try to coat the whole car with some sort of amorphous photovoltaic coating and have the whole thing be one big silver panel. Yeah, yeah.
Now there was talk for a while and I guess you've abandoned it of even putting a gasoline engine in.
It is gone. We looked closely at the whole plug in hybrid thing and you know, I guess about a week ago or so there was a guy who asked me, some asked me, sent me an email. He's like, he runs like a bolt site or GM bolt site or something. He's not working for gm, but he just said, you know, so why isn't Tesla doing the range extended electric vehicle approach, the plug in hybrid thing? And I just sort of gave them kind of a matter of fact. This is why we chose the strategy of one another. And then it's all over the place like I'm trashing the vault. I'm not trashing the vault. I hope the vault is successful. And I've said so many times, but I'm just explaining why do we not do that? So I'll explain here. I mean, basically what it comes down to is it's a technical point because we had to sort of drill into it quite deeply to appreciate why it wouldn't be ideal in our opinion to have a plug in hybrid. If you go from say if you consider a 200 mile range pack versus say a 40 mile range pack, it sounds like you have a pack that is 1/5 the size right. For the 40 mile pack, but that's actually not true. So because what happens is the 40 mile pack has to generate, particularly if it's a range extended electric. So you're not. A 40 mile pack has to generate five times the power, although technically you could have the motor running and so maybe it only has to generate two and a half times the power. But then you're running both simultaneously and you're not really being electric if you're doing that. So if you just consider the pure electric case, you've got to generate five times the power. But the way it works in battery chemistry is that power and energy work at opposites. You can either have a high power pack or a high energy pack. Energy is total mileage. Power is the rate at which you can take the rate at which you can consume that energy. And so in effect you then push to a low energy density chemistry in a plug in hybrid case. And because you're hitting the pack so hard, it's, it's working so much harder than the bigger pack that you have to derate the pack, derate the energy content. So you end up with something which is close to half the size, maybe 8, maybe 40 to 50% of the size of the 200 mile pack. And then you've got to add in the cost and weight of the engine, the generator, all the cross connects between the two. You've got a factor in that. There's servicing of two complete drive trains. You still have to deal with all the EPA stuff for emissions. And then when you've consumed your 40 miles, which we'll do reasonably, not every day, but maybe call it every third day, you're then going to have something which is an engine which is super, really underpowered.
It's a heavy car down there. Yeah.
It's going to feel like I've got a lawnmower engine trying to power my sedan. And so it's going to be running at very high rpm, it's going to be working really, really hard.
It's not going to make that 100,000 miles.
It's going to be tough. Yeah. And so you really, it's going to feel very anemic on the highway. And so it's problematic. You're neither fish nor foul. And it stands to reason that if you've got a given mass and cost and you say to an engineer, make the best electric car for a fixed master cost, or you say to engineer, make the best gasoline car for fixed mastering cost, it's going to be a better gasoline car or a better electric car than if you split the baby.
So you're not trashing hybrids, but you just did a pretty good job of trashing hybrids.
Well, I could be wrong, you know, I'm just saying that's the reasoning that caused us to focus on Electrics and continue to focus on electrics.
Let me ask you a Silicon Valley question.
Your vice chairman, and for a long time, the CEO of the firm, is a name out of the Silicon Valley past, Zev Drury, a guy that we haven't seen around here for 30 years, who ran Monolithic Memories way back when. Kind of a legendary figure, kind of a swashbuckling guy. I seem to remember. He ran. He was running Monolithic Memories and the Yom Kippur War broke out, and he literally called into the office and said, I'll be in Israel until the war is over, and volunteered and went off to battle. Unique guy, but he's been missing from action by him for a long, long time. Where did you find him? And why would you get a chip guy in a battery business? In a car business?
Sure. How do we find him? Actually, it was through one of the investors at Tesla. Zev is a car guy. I mean, he went into sort of racing, did a lot of racing. And he was very competitive, obviously, great entrepreneur, strong track record. And I think, very importantly, he was someone who was not afraid of danger, as evidenced by his running off to the Yompaka War. Yom Kippur War. So, towards the end of 2007, we needed to find a CEO for Tesla, and we didn't have a lot of takers because it was a very difficult situation and there weren't very many people with the guts of Zev. And anyway, so Zev, I thought, was somebody who could help get us out of a pickle and who wasn't afraid to try to do that. And it's hard to describe. Tesla was in a really dire situation at. At the end of 2007, it had come to light that the car's cost was $140,000. We'd been selling it for $92,000.
You're going to make it up in volume, right?
Yeah. And not only that, we couldn't. I mean, there were several things broken about the car. Technically, transmission being the most notable item, but there were a lot of other issues. And so it really wasn't a car that could. Even if we said, okay, well, we'll accept the $140,000, this isn't a car that would have passed safety and reliability and endurance tests. And so it was just, wow. And we were sort of out of money or close to being out of money. So this is, you know. Yeah, 18 months ago, in your situation like that, you got to be pretty bold if you want to come in and help run the company. And he was willing to do that. And he'd sort of, like I said, he'd taken things from very tough situations before. And so he, yeah, he joined as CEO. In effect, he and I were kind of the co CEOs of the company because he was coming in cold and didn't know any of the background. And although I'd been at sort of a fairly high level up to that point and not in the nitty gritty, at least I had the contextual background. So he and I basically ran the company together for about 18 months. And then when the financial crisis hit, I guess it was about, well, when the financial crisis hit and I was like, oh man. Okay. So I got to up my time in the company and spend and go from being kind of the half CEO to the full CEO because I also had to up the ante in terms of my investment in the company financially. So it's like, all right, if I'm going to do that, then I got to be the full CEO, not the half CEO.
Well, now, bold is the ultimate entrepreneurial trait and you obviously have it. I want to go back. Let's talk about your upbringing. But before we do that, real quick, 40. How much for the. For the S?
It's zero to 60 in about five and a half seconds. And top speed, 130 miles per hour, electronically limited. We will have sport versions of the S that will go have a 0 to 60 of under 5 seconds. So. But 5 and a half seconds in a sedan is plenty far, plenty fast.
Oh yeah, I'm thinking about those kids in the back seat facing backwards.
Yes. It's not 3.9 seconds like the roadster, but it's pretty fast.
Yeah, real fast. All right, let's talk about your upbringing. You leave home at 17 and you want to get to the States. Right? Was that your dream?
First of all, you didn't want to be in the army.
That doesn't seem like a good use of time. Being in the. Yeah, serving as being conscripted in South African army just didn't seem like a great way to spend time.
So without your parents approval, you take off and you end up in Canada first.
Well, so I was trying to figure out how to get to the US So try to convince my parents to move there. All my parents go to war so at least one of them can move there and I could move there with them. But I wasn't successful in convincing them. But then I found out my mother had Been born in Canada. So I kind of walked you through the process of getting a Canadian. Getting her Canadian citizenship, which allowed me to get my Canadian citizenship, which meant I could go to Canada. And my grandfather was American, actually, but because my mother hadn't gotten her American citizenship before he died and before certain age restrictions, I wasn't able to get American citizenship, unfortunately, directly. So I went to Canada initially. Canada's a great country. I was there for about three years and. And then came down to the States to go to continue going to school at UPenn Wharton.
And you live on a book a day. How did you. Well, briefly, yeah, but how do you do that? I mean, there's several times in your life when you're basically well below the poverty line. Right. And this is one of them.
Oh, buck a day was. That was 20 years ago.
So that's like two bucks a day.
Two bucks a day. Well, there's all the difference.
It is all there. It does make a big difference. Yeah. Well, I wasn't quite sure how much money, how hard it would be to get a job or anything like that. So I hadn't really had a real job because I was only 17. So I'd done, like, paper routes and stuff like that. So I thought, well, just in case it takes me a long time to get a job, I better make sure that my tiny stash of money lasts a long time. I only had a few thousand dollars, so I thought, well, let me see if I can live for under a buck a day. And you can do it. Just buy hot dogs in bulk and oranges in bulk. And Scoby is bad, so you could have an orange. Throw an orange in there.
When the blisters start forming on your tongue, it's time to get an orange.
An orange every couple of days will keep scurvy away. And hot dogs are. It's just sort of like pasta and pasta sauce. Just buy the stuff in bulk, and at least at the time, you can get to under a buck a day.
So now you pick up two degrees.
You got a little monotonous after a while.
Yeah, I can imagine the 14th day in a row of spaghetti.
A lot of people pick up econ degrees. A lot of people pick up physics degrees, but not many people pick up both of those. Those are two different worlds.
I thought it was relatively unique. And then I found out actually somebody else did it, but, yeah, it was. Yeah, just. I mean, I'm more an engineer than anything else. You know, engineering and design is my interest, but I figured If I don't learn the business stuff, then somebody else is going to make me do things I don't want to do. So I better learn the secrets of business. And so that's why I did the physics degree as well as the Wharton finance degree.
Now, this is the most finance stuff
was easy, by the way. That was really easy. I say all my business courses in the final year, all my business courses together were not as hard as quantum mechanics.
Okay, I'll buy that. So now this is the mythical moment in your career. You get accepted to grad school at Stanford. That alone is a pretty big deal. You're in physics.
Well, to be precise, actually, my initial department was material science department. And you used the word high energy physics, and that's actually a defined term in physics. Technically, I would have actually been in kind of the quantum mechanics more than high energy physics, because the area I was going to be researching was sort of an intersection of applied physics and material science and basically trying to figure out, can you create a capacitor with enough energy density to replace a battery? Now, capacitors are very common components in circuit boards, and they are occasionally used to store limited amounts of energy. But the problem is that the energy density does not compare to what a battery can do. But if you could get a capacitor to approach the interchange through a battery, then things like charging could be done in minutes or seconds, technically, so you wouldn't have a recharge time issue. And then also cycle life and calendar life would be measured in decades.
But, Elon, you were there for two days. You were there for 48 hours. I've been in meetings that lasted longer than 48 hours.
I've been drunk longer than 48 hours.
Two days. How do you do two days? I mean, that's not even long enough to, like, get the books.
Well, it was a tough decision, actually. I was trying to figure out, okay, should I do grad studies or start a company doing some Internet stuff? And this was in 95. It was before.
Before the bubble. Just before.
Before Netscape. You were in public. So, in fact, when I started Zip2, it was not with the expectation that I would make a large sum of money. It was like, okay, can I make enough money to live and buy food and stuff? That was really the threshold. It was a very, very low threshold. And Netscape had not gone public. Somebody wrote something about me that said, oh, I saw Netscape go public. And that's why I decided to start Zip2. I started Zip2 in the summer of 95. And before Netscape had gone public, I tried to get a job at Netscape, actually, and didn't hear back from them.
Reading your biography, I would have thought you were the wild man, the black sheep of the family. But now I've come to the conclusion it has to be your brother. Because you come out planning to get a PhD, and 48 hours later, your brother has convinced you to drop out of school and join his new company.
Not quite. No, actually, I convinced my brother to come from Canada. Oh, yeah. My brother's a convincing guy. Maybe it was. Well, he was in Canada at the time, and. But, you know, I always wanted to do something with my brother, and he wanted to do something with me, and
so a $300 million shared gift is
a pretty good gift for. Yeah, but I mean, really, at the time, it was. Expectations were really tiny.
Now, is this when you were sleeping on the floor in your office?
Actually, I was sleeping on a futon, which turned into a couch during the day. So that was, like, where you held your meetings. Yes, right. Exactly. True.
So you were renting an office, but you didn't have a place to live. Right.
So the apartment cost more than the office. So then my brother and I just got two futons, which turned into couches, you know, and then during the day, and then we'd have a table and have meetings there. And then at night, they'd be unbeknownst to people that we'd have meetings with that we slipped, and then we shouted the YMCA on Pagemill and El Camino, so. And then you could work out as well. So I was in great shape, and, yeah, it was actually fine.
So all you guys sitting in Pete's with your business plans, you guys think you have it tough. Any questions from the audience right now? We're going to get into space in a minute here, but I want to. As long as we're on cars, let's take car questions first. Yes, sir.
Congratulations on your success. It's very impressive.
We do need it because we're recording this.
Oh, yes, of course. You want to record what I have to say.
I'm very interested in your idea about email being built into your next car. Now, the question I have for you is, say I'm sending you an email with this voice. Is that what you're going to hear while you're driving? My voice Reading my email to you, and when you respond to me, I'll hear your voice responding to me. It's just an idea, so you got it from me. Just keep it in mind. You don't have to respond right now.
everybody sign an NDA on the way in.
Why did you name the car Tesla? Well, the company's named after Nikola Tesla, who's actually very well known in physics because units of magnetism are actually units of Tesla. And he came up with a number of innovations. He also went crazy. So hopefully that's no indication of future of Tesla. But he was a great man and didn't get, I think, the popular side of things hasn't gotten quite the recognition that he deserves. So it was a choice between Tesla or maybe Faraday, after Michael Faraday. So. So capacitance is measured in farads, by the way. In farads.
Could you give us your perspective on the future of Detroit?
Future of Detroit, Wow. Well, clearly the companies are going to be smaller than they used to be. I don't think. Actually, I'm not sure I could shed any light that people don't already know about Detroit and that it's going to be a much smaller industry than before. I think there's a good chance it will emerge healthier from this process than it's been in recent years. I mean, GM and Chrysler in particular, and to some degree forward, this was inevitable. It was only a question of when. And so this, the financial crisis accelerated the inevitable, but it didn't. It would have happened anyway. So, you know, there need to be substantial reforms in the management side and on the labor side. And I think really they need to get back to. They need to focus on producing great products. That's what it really comes down to. If you say who makes great cars, how many people in this room would say gm? It's kind of unusual. People say that. If you said, tell me, who makes the best cars in the world? It might be a Toyota or a Daimler or a BMW or an Audi or something like that. So, I mean, that's really what great companies evolving great products, hopefully.
But now, once you prove mass production of electric car, why wouldn't the MA guys from General Motors and Ford come knocking on your door?
Well, I should point out that there needs to be some currency for that acquisition, and the stock isn't worth a lot and they don't have any cash.
You're not going to take equity in General Motors?
Well, I made this comment actually, several months ago. I mean, I was a little more flippant when I say well, what if General Motors calls up and what if Bob Lust is no longer on the board, calls up and says he'd like to acquire Tesla? What would your response be? I say, well, you can't afford it because. And that's just true. I don't think they can afford much of anything. They just don't have the cash and the equity's not worth anything.
One more car question out there and then we'll go to space. How would you compare a Tesla with Fisker Automotive?
Fisker is producing a plug in hybrid, so Fisker is producing a plug in hybrid. It's not as we were talking about earlier. We're pursuing a different strategy for the reasons I articulated and Fisker's staying. I think they're producing a four door, but it's a sportier sedan than ours. Our sedan is intended to really be very functional and have a lot of cargo space, carry five adults in comfort, plus potentially two kids, and still have room for luggage. And we're at sort of the roughly $50,000 price point there, I think at around $80,000 starting price after tax rebates. I think that's probably a fair characterization of the differences.
Let's talk about space. We literally don't have enough time interviewing you to cover everything you do. We could do three different events on three different activities. Let's do a space real quick. Where does SpaceX stand right now? What's the status of things? And what's the status of the X Prize too? Let's get into that.
Okay, well, SpaceX is doing really well, thankfully. Otherwise I would be in real trouble, I mean, particularly in terms of the time that it takes, the time that I have to dedicate to the companies, on average, sort of roughly 50, 50 between SpaceX and Tesla. Although as there are issues that crop up that need to be addressed that may that could swing to as much as 80% SpaceX or 80% Tesla in a given week. But space SpaceX is profitable. It's been cash flow positive for the cash flow positive and profitable for the last two and a half years. We got to orbit last year. In December, just before Christmas, NASA awarded SpaceX a $1.6 billion contract to resupply the space station with cargo.
That begins at the end of next year. Okay, so the first operational mission after the demonstration missions is December of next year.
And at what point do you take over completely? Don't you have exclusivity for a while as the space shuttle retires?
Well, the space shuttle is supposed to retire at the end of next year. And then we'd follow cargo missions immediately thereafter. Although if the space shuttle ends up running a little longer, then there may be some overlap.
Are you going to hit those milestones?
I think we have a decent chance of doing it. It's not entirely.
I was hoping there's going to be Geist. You have guys waiting up there for civil.
Well, NASA isn't, NASA isn't. I don't think NASA's counting on us being there exactly on time. They do have some contingencies. We're certainly going to do our best to meet those timelines. I think we can. We don't have. It's not fully within our power because there's NASA as well. We've got to meet all the NASA safety requirements. And if they levy requirements on us that we don't yet understand or appreciate or their new requirements, then that could push out the effective date of the first operational mission. But I don't think it's going to be much beyond the end of next year.
I'm curious. I've always wondered about this, about you. You know, space exploration rockets are the stuff of governments, large countries. Did you have an epiphany one day where you just said, to hell with it, I'm going to actually do this myself. I'm going to create a commercial space company. Who comes up with that idea in the shower?
It is kind of the office out of left field. Yeah. Well, you mentioned the areas of interest that I had in college. One of them was space travel. In particular, the extension of life beyond Earth, making life multi planetary. Actually, when I was in college, I didn't think I would actually be a part of.
I was going to say you're the only guy who thought of this stuff that actually did it. I mean, there are millions of people that think, oh, I'm going to do this. I'm going to be an astronaut when I grow up. Not many people actually build rockets when they're 35 years old. Right.
And actually, when I was in college, it wasn't. These are the three areas I want to be involved in. These are the three areas that I think will most affect the future of humanity. I didn't. If you'd asked me in college, do you think I'd be involved in space? The answer would have been almost certainly not. I thought it would be highly unlikely because you need billions of dollars, you need to be a government. And actually there's only like a handful of governments that can even do that. So it wasn't with the expectation that I expect to be involved in space. But as a result of PayPal, the capital I got from that I could do something in space. And it actually, the space stuff, well, it actually came from a conversation Adeo and I. Where is there? There he is. So we were coming back from Adeo's parents place in Long island and they were asking, what am I going to do after PayPal? And I said, well, you know, I thought maybe there'd be something philanthropic that could be done in space that would get the public more excited about space travel and in particular sending people to Mars. And I said, but I'm sure NASA's got that covered. And you know, so I'll go look on the NASA website for when are we going to Mars? Because of course it should be on the website like we're going to Mars in this year and this is how we're going to do it. But there was nothing, nothing at all about people going to Mars. I was like, this is, I just don't understand why there's nothing about people going to Mars. Because if you look at the literature in the 70s, it was all about, well, we went to the moon, now we're going to go to Mars. And so what happened? And there was a space shuttle, and the space shuttle turned out to be a really big mistake. And it could barely get to low Earth orbit, moon or Mars or anything like that. And so I thought, well, geez, maybe I can do something that's going to get the public excited about Mars and that will generate congressional support, which will turn into funding for NASA to go do this. And looked at a few different options. Actually, Adeo and I did a couple of trips to Russia to look at buying some Russian refurbished Russian ICBMs.
Just change the frequency a little bit.
Yeah, yeah. Make sure you shift the payload. Like which button do we press?
And meanwhile, NASA lost the blueprints for the Saturn V rocket. Right. So you couldn't rebuild that. Right.
Saturn V was a great rocket. It's just too bad that we should just rebuild that rocket and make it better, like just improve on that rocket. It was a good, it was a good design. It's so much better than the Space shuttle.
So are you going to put a man on Mars? Are you going to put a man on Mars? You and I have a bet. I haven't forgotten the bet.
We were in a plane flying over the North Pole under the Aurora Borealis, as a matter of fact, and we made a bet. You believe that man Would want you would put a man on the moon by 20. Not on the moon, I'm sorry, on Mars by 20.
I think it was 2020 or 2025.
What's the next milestone for SpaceX?
the next big milestone will be launching Falcon 9, our big rocket, which hopefully will occur towards around the end of summer. And that's the rocket that will be used to carry our Dragon spacecraft to orbit and Dragon spacecraft as well as service the space station. So Falcon 9 is a pretty good sized rocket. It's actually the most powerful single core rocket in the US fleet. More powerful than what Boeing and Lockheed make before considering side boosters.
How much each one of these cost
on a per flight of Falcon 9? About $40 million.
Yeah. And then if you add a Dragon spacecraft on top of that is about the same. And then there's various NASA overhead.
So you're making $100 million bet when you light the fuse on that thing.
Yeah, that's a deal. In the rocket world, by the way, for only $100 million, we will carry some cargo to orbit. So. Yeah, so launching Falcon 9 will be the next big one. There's a sort of smaller milestone, which is an upcoming Falcon 1 flight maybe as soon as the end of this month that'll deliver our first operational satellite to orbit, which is a Malaysian satellite. It's intended to do Earth observation for like natural disasters and stuff like that. And. Yeah, and then let's see then at the end of this year, hopefully we'll launch our first dragon spacecraft from Falcon 9. It won't go to the space station. We'll do sort of basic orbital maneuvering and reentry. And then next year we go to the space station for the first time.
How long is the contract for the space station?
How long? It runs through approximately 2015. And although I think it'll be extended beyond that because it's just that the operational plan for the space station kind of only goes to 2015, frankly.
In theory, if you get this right. Do we need NASA anymore?
Well, absolutely. Well, NASA, we aren't a customer to NASA. NASA is our customer. I should say so. Our biggest customer. And in fact, when NASA does developments, although in all circumstances prior to this, NASA has been, has had these sort of made the design decisions, the implementation of those design decisions has been done by aerospace contractors. So the, the novel thing here is that for the first time NASA isn't dictating the design, they're simply saying we need cargo delivered. We're willing to pay.
Giving you a performance contract and let you do the rest.
Right, right. It's sort of more like FedEx.
Any questions about space, guys? Got one down here. We have a Homestead High School junior asking a question.
Okay, so for your Falcon series you
decided to use the Merlin engine. Right, Right. We developed the Merlin engine actually. Yeah, yeah, yeah. My question for you is why did
you go for the single or one type of engine and then using nine
of them on the Falcon 9? How many? Yep. Because I've seen a lot of other
in the history of space. It's like everyone know it like above five you're like oh my God, the turbo pumps are all going to blow up or something.
And then. So why'd you choose that instead of
developing a larger engine?
Well, I should point out like the Saturn V, although it had five engines on the first stage, also had five engines on the second stage and then one engine on the third stage. So it was actually an 11 engine rocket. Falcon 9 has got nine engines on the first stage, one on the second stage. It's actually one total of 10, so one less than the Saturn V. And the advantage of the nine engines is that you can lose an engine at any point, including immediately after liftoff, and still complete your mission, which was not true of the Saturn V. The thrust weight of the Saturn v was about 1.15. So you actually had a very dangerous point immediately after liftoff where you could potentially subside if you had an engine failure within the first few seconds. With rockets, because you're taking it vertically, it actually for the first stage, it actually the initial boost stage points you towards having more engines if you want true engine out capability because you always have to have a thrust weight greater than one, otherwise you're coming back. Whereas an aircraft you can have a thrust rate of much less than 1 and still be OK because you can sort of glide and reduce your climb rate and that kind of thing and still be ok. So actually it does push you to have more than say like 747's got four engines, but the equivalent for a rocket would be some number greater than four. And maybe it's not as high as nine, but we needed nine to achieve the payload requirements that our customers wanted. And as long as you're very careful about ensuring that the problem with one engine cannot cascade into problems with another engine, more is actually better. And Google operates with tens of thousands of computers rather than a few giant mainframes.
So it also fits with the Tesla model of having 8,000 little batteries.
You think nine engines is bad price? 6,831 cells.
So, Elon, with the Dragon spaceship spacecraft,
is that going to also be a man's craft?
And if so, are you going to be shuttling the astronauts back and forth to the space station? Yeah, Dragon is designed to meet the NASA man rating requirements. There's a few key documents there regarding structural safety margins and redundancy designed to meet those requirements. There's, you know, G loading, match G loading and dealing with worst case abort conditions and that kind of thing. All those things were designed to meet. There's one key development item that we need to finish, which is the escape tower so that we have a launch escape system in case something goes wrong with the core booster, it can carry the capsule to safety. It's also something they had during the Apollo era, but they didn't have that for the space shuttle. And so I mean really the two weak areas of the space shuttle and the two most dangerous periods for a manned vehicle are during the ascent phase and the, the descent phase. There are two, there are fundamental architectural flaws with the shuttle approach. One is on the ascent phase, there is no escape system. They decided they didn't need an escape system because the shuttle would never fail. Really like, wow, okay, so there's no escape system. If anything goes wrong on the ascent, it's curtains. And then on reentry, particularly the initial part of re entry, which is the high heating point, because it's really, it's not a naturally stable vehicle, you've got to have control surfaces and wings. So it has control surfaces and wings. So if anything happens with the control system, so any electronics that don't work or malfunction, or there's a hinge that isn't working properly in one of the control surfaces that's at your toes, it's not naturally stable. It has to be controlled. And then the heating rate goes with the square of the radius of whatever you're dealing with. So if you've got a wing leading edge that's got a very effectively got a sharp radius, you have a very concentrated heat, which limits the material choice to some very brittle materials. In fact, it'll only work for Earth orbit reentry. If you come in at a higher velocity than low Earth orbit velocity, there's no material known to man that can withstand it. So actually for like the moon, you couldn't use a winged vehicle. It Just, it's impossible. So I mean, it's sort of like if you think of polar era, they had airplanes back then. It's not like, oh, wow, wings. What are those things? The designers of Apollo, Von Braun and the others were very familiar with aircraft. If they thought wings made sense, they would have said, let's put wings on this thing. They don't. When it comes to space, wings are dumb. Just as you don't make an airplane look like a boat. So when they retire the space shuttle, how are they going to bring the astronauts back until you.
And get them up until you're able to do that?
The Soyuz, okay, the Russians will do it. Yeah. So the Soyuz is a good. I mean, I would definitely prefer to ride on the Soyuz than the space shuttle. You have an escape system on the Soyuz. And then of course, on re entry, a capsule, a blunt body reentry capsule, can be designed to be naturally stable so that even if all the control systems fail, lights out, dark, everything's naturally, it's like a shuttlecock. It's naturally stable on reentry and you don't have to do anything there. And you can just manually pull the chutes or something like that. In fact, that's happened on a couple of Soyuz flights where they've had control system failures. If that had been the shuttle, it would have been curtains. But because of the naturally stable, you don't have to worry about that. And then because you've got that blunt body reentry, the heat shield is much more robust because you've got this really big radius heat shield instead of these sharp radius wings. So it's really a much safer design. And I believe there's never been a fatality on the Soyuz, which has been going much longer than the shuttle made many, many more flights.
Elon Musk, how do you keep these two different things separate in your mind? I mean, you're dealing with two massive industries, very distinct worlds. I mean, do you have to like literally say, oh, wait a minute, I'm doing rockets right now? No, I'm doing cars right now. And how do you, how do you segregate those two things? Because they're both competing for your attention 24 hours a day.
Right. And I have kids. My kids actually spend a lot of time with my kids, by the way.
Well, actually it's okay most of the time, but when a crisis flares up and either kids or one of the businesses, then it Gets can be quite a little bit overwhelming.
So it's like triage all the time.
It is kind of like triage. Our rocket business and the car business are pretty hard in the best of times, and these are not the best of times.
You don't like wings? I don't like wings for things that go to space where there is no air, I think.
I mean, my understanding of the reason
the wings were on the space shuttle
was so they could land where they wanted to.
Oh, okay. So let me correct the misconception then. A blunt body, sort of a capsule, gumdrop style thing, is a controlled landing, in fact, because you still have a lift vector. So you use offset center of mass to create sort of a tilt in the capsule, and that actually creates a lift vector. And that lift vector, you typically be lift over drag of 0.2 to 0.3, but that's plenty enough to steer you where you want to go. And in fact, even at Apollo, when they didn't have GPS and they were really dealing with very primitive electronics, their landing accuracy was a 1 mile radius. And of course, you can get much better than that with GPS and all that other stuff. In fact, the only error is the wind drift. That's really the only meaningful error. And if you do steerable shoots or put some like a little propeller that popped out or something like that, you could drop the capsule on the numbers on the Runway, just like you could drop, just like a parachutist can steer their flight down to a very accurate location. I think you just sort of like flare it just before you get to the bottom, just like a parachutist. And there you are.
Next question in the back.
I was there several years ago in
the Mojave Desert when Spaceflight 1 took off for the maiden voyage.
I was wondering, first of all, what
was SpaceX's involvement in that program? And do you guys have any plans for taking up space? Civilians in the space?
We didn't have any involvement with the Berber 10 spaceship one, except that I'm a trustee of the XPRIZE foundation and I provided a little bit of the funding to the Ansari X Prize that they won. And I was there for one of the flights. So. And it's actually, you know, it's great that it was one, but it is worth pointing out that there's a significant difference between a suborbital flight and an orbital flight. Because space kind of seems like, well, space is all the same thing. But if you, if you look at the energy required to get to space versus the Energy required to get to orbit. It's, they're very different orders of magnitude. You need an ideal velocity of roughly Mach 25 to get to orbit, Mach 3 to get to space. If you define space as say 50 miles up. And so that's a pretty big differential. But it's bigger than that because the kinetic energy goes with the square of the velocity. So you need 625 units of energy to get to orbit, nine units of energy to get to space. So about one and a half percent of the energy, one versus the other. So the requirements are really way, way different. Yeah, so you need in fact it's only just barely possible to escape Earth's gravity well, just barely. If you look at the size of Saturn 5 for example, and that ultimately took two people to the surface of the moon. One plus one who was orbiting the moon. That was a really gigantic vehicle. I mean it's like the size of an office building. And it got two people to surface the moon.
Why do you think multi planetary existence is important? Excellent question. So okay, so you have to say, well how do you decide that anything is important? So there's, I think the lens of history is a helpful way to distinguish more from less important things. And the further out you zoom, the more you can distinguish the less important from the more important. And if you take a look at the whole 4 billion year history of Earth and the evolution of life itself and say, well, what are the really big milestones in the evolution of life itself? And you can point to obviously single celled life and multicellular life, differentiation into plants and animals, movement of life from the oceans to land, the mammals, consciousness, sort of, those are the biggies and those stand above I think the parochial things concerns of humanity. But I think on that scale would also fit life becoming multi planetary. I think it would be at least comparable to life going from the oceans to land. Arguably more so because at least oceans, land could be a gradual affair. If we got uncomfortable, you hop back in the ocean. It's a lot harder to go over to travel a billion miles over irradiated space and then land on a hostile environment and create a self sustaining and growing life ecology. That's really, really hard. And in fact this is the first time in the 4 billion year history of life itself that it is even within the realm of possibility. So I think therefore if something is important to be important enough to figure on the scale of the evolution of life itself, it should be at least considered, say worth about as much money as we spend on lipstick you know, maybe not as much money as we spend on healthcare, that's a lot, but enough, you know, maybe north of cosmetics or something. And yeah, so you know, I think we should spend a little bit of our resources doing that and that's just a wise bet for life as we know it. And yeah, so it just seems like that should make it important enough for a little bit of money, like maybe a half percent, half a percent of our GDP or something like that and that'll be enough to do it.
Anything you want to say on SolarCity?
SolarCity is doing great. Thank goodness. It is.
Tell the audience what it is.
Sure. SolarCity is the country's largest provider of solar power systems to homes and small businesses. So outside of the utility scale solar activity. And it was co founded and run by Peter and Lyndon Rive who are my cousins and interested, full disclosure. So I serve as the chairman there and I provide some advice strategically and on the product side. But thankfully it requires almost none of my effort. And those guys are just awesome in terms of their execution of SolarCity, having grown into a leadership position in the course of three years. So if anyone's thinking of getting solar call like 1-800- SOLARCITY, something like that, or 888, I'm not sure.
Yeah. Questions? Nice question.
So here I am. So how does that work? I mean, you've convinced the NASA to give you like a huge contract.
What story is behind that? Can you tell us? Can you share us that story a little bit? That's the one question that I have. And the other is you've been working on solar, you've been working on cleantech or on cars, you've been working on space. So you're transforming society in all those projects.
So how does that fit? That's the two questions. Well, definitely PayPal. I mean I was completely out of PayPal, well, almost completely out of PayPal when I started SpaceX. And then from a business standpoint, my time is really split between SpaceX and Tesla. Almost no time. I spent almost no time on SolarCity because it's just running so well by itself and the guys there are just doing a great job. This really not much I can add to what they're doing. So going to the NASA question, it took us a long time and a lot of effort to convince NASA to rely on us. And when we won that cargo resupply services contract, basically value ranging from 1.6 to $3.1 billion, we competed against Boeing Lockheeden aligned tech systems actually there were all three of them together against us. So there's a sort of a partnership called Planet Space which is basically just a. It was Boeing, Lockheed in line tech systems against SpaceX we want so. Or at least NASA felt confident enough to give us that deal. And preceding that it had been sort of six years of working to gain their confidence and we'd won a preceding contract which was called the COTS contract, commercial overall transportation services to demonstrate progress in that direction. But I have to give NASA a lot of credit here because without that Cox contract it would have been very difficult for us to compete for the cargo resupply services contract. They've been helpful in our advisory capacity and our financial capacity. So I think we're very grateful to NASA and appreciative of everything that they've done because we wouldn't be in a position to have won that Calgary SPY contract without their help.
During that microsecond each day that you actually have to contemplate other activities. What are you dreaming of now?
Yeah, I mean I really, you know, my mind is full just dealing with SpaceX and Tesla and in family matters. But I mean there are a few areas. I mean, I think at some point in the future, if you're interesting to take a look at fusion, that's a tough problem and it's something that I think we could solve. But you know, I'd say me, I mean, I think humanity could solve that problem, but it is a very tough one. And maybe there's something I could, where I could be helpful there and that's just completely speculative. I'm not, I mean I could be totally wrong. Success may not be one of the possible outcomes.
Hey, if you can get me to sit on 3,000 laptop batteries, you can get me to sit on a fusion reactor.
Yeah, well, fusion, I think some scale is needed for fusion probably. Although there's some ideas for having smaller scale fusion. I'm not talking about cold fusion, but kind of fusion at sort of a nanoscale if you will, like basically very small amounts of fusion in a little container. But it is a very hard problem. And then I have an idea for double decorating highways, which I think I thought a lot about when I'm driving to work in la. The highways, I mean it would just be, I think if you, if you create prefabricated sections of highway and did a very efficient kind of metallic structure that could withstand the worst earthquakes and the trick would be making it light and very strong and inexpensive. But I Think I know how to do that. And it's that sort of relatively mundane, but it would have a big effect on people's lives. And I have this sort of idea for an electric plane which I think could be pretty cool. Yeah, electric supersonic plane.
That's a lot of batteries.
That's a lot of batteries. It is. It is a lot of batteries.
Next question. By the way, I haven't heard any of this stuff before. This may be in print tomorrow. Yes.
So nobody says that's what I'm doing. You asked me in the Nano Sable split second of like, okay, I've been thinking a lot about the plain one, more than I should actually. I try to ban that from my mind. I'm talking to you about it. I got to stop myself from thinking about that one, because that's a very exciting one. I don't think you covered the X Prize, the status of the X Prize and two part question. What do you think about a bigger X Prize for battery technology in the us? Sorry, a bigger X Prize for what? Oh, battery. Battery, yeah. I think X Prize for battery technology would be great. If there's a sponsor like the federal government or anyone. I think it's great to incent outcomes rather than, you know, it's great to make bets on approaches, but it's also good to incent outcomes. And ultimately you care about the outcome, not the approach. And that's the good thing about prizes is they don't try to rely on some panel of experts to figure out what the approach is that's going to work. Because often those panels of experts are not the people who are going to figure out the innovations that result in the outcome you want. And that's basically why you have prizes. So, and as far as the X Prize is concerned, there's an automotive X Prize, there's a genomics X Prize for low cost sequencing of genes. There's the Google Lunar x Prize, which SpaceX is trying to help with a little bit by offering. The only discounted launches we offer are for the Google Lunar X Prize, actually. And yeah, so there's a bunch of stuff happening there and I think it's a good model. It should be emulated more. DARPA did a great example of a prize thing with the DARPA Grand Challenge. That was there's DARPHA Grand Challenge, DARPHA Urban Challenge for Autonomous vehicles. That's got to be one of the highest bang for buck items that DARPHA has ever done. Because I guarantee if you made that like a DoD contractor and had like, you know, Lockheed and Raytheon and all the usual suspects bet on it. It would have been like $2 billion and they'd still be working on it, you know. So anyway, I think there's a lot of room for prizes and it should be more often.
One more question then. I have one.
Given the range of technologies and areas you've touched, I'm curious what your take on robotics is. It almost seems like on robotics. On robotics, exactly. It seems close enough to what you've done, but I haven't heard you talk about it. Well, you know, Tesla does use robotics to a limited extent in its production today, particularly on the battery pack side because you've got so many cells, almost 7,000 cells, that some robotic assistance is important in making the battery pack. And we'll soon see a lot more of that as Tesla scales up. So robotics makes a big. It's great for mass manufacturing, for space exploration. Obviously we've seen great evidence paid by robotics as well with the Mars Exploration Rovers. And there's a really big rover going called Mars Science Laboratory and that was supposed to launch soon, but it's going to be a couple years before that goes. That's about the size of like a Volkswagen. So I mean, I think there's a lot of room for robotics in a lot of fields and that'll increase and continue in both automotive and space and other areas. But at the end of the day, you know, I think we still need to make life multi planetary. It can't just be sort of sending droids out there. I'm pro life in that sense. So I think robotic asteroids and robotic preparation. But we also need life going beyond Earth as well. I was just curious from a perspective of making people's lives better. I was just curious if that is an area that you thought about going through in a nanosecond. I haven't really thought about robotics personally, but just not to say that I don't think there are lots of things that could be automated and where there could be robots that help people in their daily lives. You know, I'm sure there'll be a continued expansion of the whole iRobot type thing beyond vacuum cleaning. So yeah, yeah, I think it's a great area.
I have one last question for you. I followed your career for a long time, known you for a long time. Yeah, you know, for many, many years. You were very, you were very successful, but largely anonymous.
Yeah, you know, I, for a long time, right. I was underground.
I've seen you walk, you could walk the streets of Oxford and Nobody knew who you were. I saw you.
I think I could still do that, by the way.
Well, but less and less in the last couple years, you've become increasingly a public figure, a celebrity, and your name starts popping up now in gossip pages and websites and that sort of thing. How are you dealing with that?
Is it interfering with your ability to do what you do?
I don't like it when people think wrong things. I mean, I'm like far from flawless, so I'm like. But I don't like when people think wrong things about me. And I guess the. I must say I don't really like the sort of celebrity element. I don't like when people sort of try to write things that are sort of trivialities that don't actually why I write about that. Obviously people find that kind of interesting or some people do, hopefully not many. And I don't know, sometimes people say wrong things that concerned that, well, what if my kids read that because they're five and they're starting to read and that's probably the most concerning thing. I'm not too worried about it from a business standpoint because most people that I interact with, particularly if they've known me for a while, they know what's true and what's not true. And in a lot of cases they don't care. Even if it was true, they don't care. But I do does concern me if my kids were to read something that was just not true.
You understand? As Tesla continues to be successful and as SpaceX begins to assume the role of the space shuttle, you begin to become something like Henry Ford and Werner von Braun combined. And that's a level of celebrity few people ever know. And are you ready for that?
I'm probably not ready for that. I, I'm not a naturally extroverted person. In fact, I used to be horrendous at public. I mean, I'm not that great as it is, but I used to be really horrendous and just sort of shake and be unable to speak, but I kind of learned not to do that. So I mean, I'd much rather just be doing engineering and stuff and design. So that's really what I like to do and I'm happy to. And I like doing things like this which are, which are fine, but. And you know, if you're in the car business, you got to sell cars and stuff, so I got to go out there and be promotional. But there are other people at Tesla that actually are much better speakers and sellers of the car than I am, I think.
Well, that's hard to believe. Anything else you want to tell these folks out here?
Talked about a lot, I thought. There's some really good questions from the audience, actually.
I mean, I don't know. Wish us luck? I don't know. Something like that. I don't know. I mean, I'm not free, I'm not superstitious, but you never know. I mean, there could be some divine entity that sort of. There is. Then I hope that that entity is favorable.
And worst comes to worst, you already know how to live on a dollar a day.
Ladies and gentlemen, the uber entrepreneur, Elon Musk.
Elon, Mike, thank you so much for being here. We know that you have very busy schedules, both of you. We very much appreciate you taking time to speak with us this evening. And as a very small gesture of thanks, we have a wonderful Churchill Club T shirt for you. Please wear it in very good health and thank you all for coming. Look forward to seeing you at the next Churchill Club program. And by the way, there are 13 letters in Churchill Club. Good night.