How Elon Musk Took Tesla To Hell And Back With The Model 3


The last time, at least in the
US, any car company achieved mass manufacturing was about a hundred
years ago and then Tesla. The issue is definitely not coming up
with a car design, it is absolutely all about building
the production system. The difficulty and value of
manufacturing is under appreciated. It’s like relatively easy to make
a prototype and extremely difficult to mass manufacture a vehicle
reliably and at scale. In 2003, a Silicon Valley startup called
Tesla Motors came up with an ambitious plan that would
transform the auto industry. Founders Martin Eberhard and Marc Tarpenning
set out to redefine the electric car. Cars that everyone
would want — affordable, environmentally friendly and fast. Their master plan started with a
low volume of expensive but alluring electric sports cars. In 2004, well-known entrepreneur and
SpaceX CEO Elon Musk invested millions of his own money
and eventually became CEO. You’re not just buying a sports
car, you’re actually helping pay for development of the
mass market vehicles. In less than 10 years,
Tesla released the groundbreaking Roadster, Model S and Model X, all paving
the way for its first affordable electric car, the Model 3. By 2016, Musk and
Tesla looked unstoppable. Tesla has received almost four
hundred thousand orders from its latest car, the Model Three Sedan. But over the next year, the
company struggled to simply make cars. Tesla was plagued by manufacturing
woes, financial losses and volatile decision making
from its CEO. This has been an incredibly
long and difficult journey. It’s been an enormous amount
of blood, sweat and tears. Today, Tesla forges ahead with
lofty promises and new vehicles, despite endless lawsuits, mounting
competition and inconsistent manufacturing goals. But Wall Street doesn’t
seem to mind. Tesla now at session highs. It is up twenty one percent for
the day above nine hundred dollars a share. The ambitions have never been
bigger and the stakes have never been higher for Elon
Musk and Tesla. We created Tesla to make
a difference in the world. The world desperately
needs sustainable transport. We want to show that electric cars
are in fact, better than gasoline. Tesla was founded in 2003 and they
weren’t founded by anyone who had any automotive experience. It was consumer electronics, software
and battery tech guys. When we started Tesla, there was
two things in the world everybody knew about electric cars, they’re
dead and they suck. Nobody wants to drive one,
that’s why they’re dead. They’re slow, short range. They’re ugly. If you look at the
original business plan we wrote for Tesla, we describe in great
detail the Tesla Roadster. And we said once this car’s successful,
the next car we should make, it’s either a large SUV, an
expensive SUV or a large sedan. The sedan market
is enormously large. It’s much, much bigger than the
sports car market, the Roadster market. And then below that is the
sort of, you know, Model 3 segment of that market. And if you’re gonna
have a big impact, you have to play there. But you can’t
start there because the capital requirements are just too vast and
you don’t know what you’re doing. You know, you have to learn and
develop the technology along the way. Everything was hard, everything. We were inventing from scratch. This was something that’d
never been done before. We had customers literally say, like,
this is the most exciting thing I’ve been involved in, even though on
some level they just wrote a check, but they believed in the
vision enough to write that check. And now they’re participating in this
process that we were going through. And then
we encountered Elon. Martin and Mark knew that the
only other person, perhaps lunatic enough to start something this ambitious
and join the sort of EV mission with them would be
a guy like Elon Musk. Part of the PayPal mafia, he had
made a good deal of money in software, payment tech, and sold
that company to eBay. And he was out in Southern
California working on an equally ambitious business, SpaceX. One of the great things about pitching
to Elon in this context is that, a lot of times we would pitch
to the VCs and to other, you know, angels and they would say what
you’re trying to do is so crazy. You know, you’re trying to make
an electric sports car, that’s insane. And we are pitching to
somebody who is actually trying to make rocket ships. And so,
you couldn’t really say that. Right in context, Hh was like,
oh, yeah, I got that. Now next, we have Martin Eberhard, who
is the CEO of Tesla Motors. And of course, this is one of
the great cars, Tesla Roadster, an electric car that gets two hundred
and fifty miles per charge. A test of this one. You hear how silent it is. There’s no sound. You can have a car
that’s quick and you can have a car that’s electric. But having one
that’s both is how you make electric cars popular. I was voted off the island
and in a rather rude way. When I left Tesla, we had
just, the Roadster was essentially finished and I’d been doing nothing but Tesla
for five years and I thought it’s gonna be another five years. And Martin wasn’t there anymore,
it wasn’t as much fun. Sports car maker Tesla Motors. Reuters is reporting this Silicon
Valley electric vehicle is planning to go public soon. If it does,
it would be the first U.S. automaker to go public since
Ford did back in 1956. Tesla is best known for its
one hundred nine thousand dollar all electric Roadster. At the time Tesla came to us
in the government, they were actually looking for a loan in order to
build their first facility to create sedans. We ended up lending Tesla
four hundred sixty five million dollars. And the real premise of that
was to be able to get that industry, the electric car
industry, up and running. And even to this day, I would
argue that we wouldn’t have hybrid cars and electric cars to the extent that
we had if this had not proven out to be a successful
transaction and a successful business opportunity. If we were just making the Roadster and
doing powertrain business, we’d be profitable as a company, but we’re
in a massive expansion mode. The latest model of the electric
car is rolling off Tesla’s assembly line in California today. The Tesla Model S, delivery
starting today in Fremont, California. Tesla is showing off its newest
vehicle, it is called the X. Tesla unveiled its
Supercharger network. Musk says Tesla may start construction on
three sites as well for its giant battery factory
or Gigafactory. You don’t just want to be betting
on this stock, you want to be pushing all in on Tesla. For investors, Tesla has been a wild
ride for a lot of reasons. If you look at the history of
Tesla shares, they really took off starting around 2010 all the
way up through 2013. That’s when Elon Musk first said, I’m
going to build the Model S and then I’m going to
build the model X. And he laid out a game plan. And when the Model S first came
out, people might have been skeptical beforehand. But when the reviews came in
that this is a solid vehicle that changes the game plan in terms
of how far you can drive an electric vehicle and what it feels
like to drive an electric vehicle, that’s when shares of
Tesla took off. Over the last couple of years,
shares of Tesla have been extremely volatile. People sometimes get carried
away with our stock. You know, honestly. If you care about the long term Tesla,
I think the stock is a good price. If you look about the
short term, it’s less clear. Well, I’ve been calling
it a cold stock. I said last night it’s
like a wide receiver. I mean, you want them in your fantasy,
like what am I going to say? It’s a fantasy
stock that’s reality. I think we have to continue to
take a wait and see mode. Tesla is so highly
valued at this point. You know, Tesla is still a small
car maker in a small niche market. The problem for some investors when they
look at Tesla is that they see a company that continues to
burn through cash and they constantly are asking themselves, when will this
company turn a profit and sustain a profit? It’s not enough to be profitable for
one quarter in the eyes of some investors. They want to see a
company that is solidly profitable quarter after quarter
after quarter. Tesla has been in its stock. It’s been a story stock. There’s been a lot of, you
know, sentiment and positive sentiment around its CEO and founder, who’s
a massive holder, 22 percent ownership in Tesla. Elon Musk has made himself into
the face of the brand. Tesla fans love him and
follow his every business. Mr. Musk, how are you? Congratulations on the promotion. Thank you very much. Those Merlin engines are fantastic. Oh thank you, got an
idea for an electric jet. You do? Yeah. Then
we’ll make it work. I really deeply believed in the vision
that the company had and the vision that Elon had set,
which was accelerating the world’s transition to sustainable energy. That’s what inspired me to join. And I think that’s what inspired
many people at Tesla to join. I did get to meet Elon a
couple times, which was so exciting. The first time I ever saw him, he
was wearing a Duff shirt from The Simpsons, their beer brand. And I was like this dude’s cool. I already know that. Where you from, boss? Michigan. Oh Michigan, you’re in
the car business? Uh no, no. Printing. Elon Musk. Elon Musk? Tesla Elon Musk? Yeah. Wow. I love space. I love the idea
of space exploration. So all of his
SpaceX stuff fascinated me. The solar power, just pretty much
everything that Elon has done, I absolutely loved. So the idea of working
for him and having his name on my paychecks was just
so cool to me. What an honor to meet you. I’m such a fan of Tesla
and SpaceX, all your companies. I’m Howard Wolowitz, Caltech. Nice to meet you Howard. To
the extent that Tesla benefits from Elon’s many side projects, and SpaceX
is not a side project, SpaceX is a massive focus for him,
it’s a big, serious company. I think you could probably
categorize Boring Company, Neuralink, OpenAI, Hyperloop, Pravda and a memes
web site, whatever else is coming out of his
imagination as side projects. But there is an argument that what
is good for his celebrity is good for the company. People see him
as this great visionary genius that’s very into the details of all
these companies, when in reality, I really see him as a great champion
of these causes and a great motivator of people and a great
identifier of talent, and he relies on these people to keep
his public perception alive. But some investors question whether
he has enough operational expertise and focus on Tesla to lead
the company in the role of CEO. Elon Musk has some
good news for you. He tweeted a cheaper mass-market Tesla
will start at thirty five thousand dollars. The company will
begin taking pre-orders for the Model 3 in March. Don’t get too excited, Musk cautions
production won’t begin for about two years. Then going from the S and
the X, we finally come to we’ve come to step three or the final step
in the master plan, which is a mass market affordable,
affordable car. Do you want to see the car? Well, we don’t have
it for you tonight. I’m just kidding, of course. Or you will not be able to buy
a better car for thirty five thousand dollars or even close. One astonishing thing about the launch of
the Model 3 was how many preorders came in immediately after
the company unveiled this. The total number of orders for the Model
3 in the past 24 hours has now passed a hundred
and fifteen thousand. We found dozens of people
lined outside the automaker’s Chelsea showroom, hoping to put their name
on the list for $1,000 dollars. Potential buyers can reserve one
of Tesla’s new affordable vehicles. I got up at 4 in the morning to
come here to put money down on a car that I have not seen
because it’s a Tesla. Model 3 could be the first model
that really opens up electric cars to the masses, to the mass market. The reason I say that is Tesla
has gotten hundreds of thousands of deposits on this car, the likes
of which, numbers that is, we’ve never seen happen
with electric cars. It could be a tipping point not
just for Tesla, but for the automotive industry. The Model 3 was
a huge turning point for Tesla because they’re starting to get
into economies of scale. Manufacturing a car that is intended
for the masses instead of your early adopters and people that want
to drive a beautiful sports car is a completely different affair than
making a niche high end vehicle. Now how are we
going to make these cars? OK. Good question. Going from
announcing a vehicle to actually building it, it was a very short
period of time, so short that I think Tesla realized this is not going
to happen as quickly as we expected. Tesla had lots of pressure,
to produce a low cost car. And as soon as the design of
the vehicle was at least viable enough to show the public and viable enough
to know that it could be produced, it was released
to the public. Most manufacturers don’t release cars
that early, they don’t release the whole vehicle, they don’t give
specs, they don’t give prices. When that happened, the manufacturing part,
how to build the car, was first really being thought of. So when, when are deliveries? Well, they’re next year. So I do feel fairly confident
that it will be next year. Welcome back, everybody. Today, Tesla
is making the first deliveries of its Model 3. And this is
the day that Tesla fans and customers have been waiting for. The delivery
of the first Model 3s. The first of Tesla’s Model 3
is getting delivered over the weekend, but most buyers will have to wait
at least a year before getting behind the wheel of
Elon Musk’s latest creation. Production grows exponentially, so in
August there should be a hundred cars, September
above 15 hundred. And then what happens after that? Well, eventually, by the end of
December, the production rate, at least according to Elon Musk,
will be twenty thousand vehicles. Thing that’s gonna be a major challenge for us over the next
six to nine months is how do we build a huge number of cars? Frankly, we’re gonna be
in production hell. The Model 3 was expected to be in
mass production by the end of 2017. It wasn’t. It was a disaster. And so you had for a year,
production hell where Tesla was struggling to just build these cars for all
these people who had deposits down. When I said manufacturing hell and
supply chain hell on Friday, I meant it. I mean, you know, but we
know this, signed up for it, not blaming hell, because we
bought the ticket. One of the things which I think
Tesla does which is maybe a detriment to it, is it tries to
do everything itself and in-house. In the Model 3 process, we decided
we were gonna build cars better than any other auto manufacturer out
there instead of just building what was sort of industry
standard and guaranteed to work Tesla’s plan for innovating manufacturing
was all about technology. They seem to think that humans were
the problem and that if you just had robots in there,
everything would be better. We did go too far on the
automation front and automated some pretty silly things. We tried to automate
the placement and bonding of fluff to the top of the
battery pack, which is ridiculous. So we had Flufferbot, which
was really an incredibly difficult machine to make work. Machines are not
good at picking up pieces of fluff. Tesla eventually removed most
of the automation that delivered parts to the line, and they ended
up going to an industry standard of moving them by pallet and fork
truck and things of that nature, because it was way more reliable,
had less issues and complications in terms of bringing
it up to scale. We started running Model 3 a
lot, I would say, November-December of 2017. February-March we started ramp, the ramp
up of Model 3 and we started running a lot of Model 3s. There were probably 500,000 orders of the
Model 3, so we knew there was a lot of pressure under
us to get those cars out. A lot of us, I think, were willing
to do what it took to get those big numbers out because we really
wanted this company to succeed. In the process, they were so desperate
to get that back on track, they ended up building a
factory in a tent. They ended up making this outdoor
line that is one hundred percent done by humans. There’s no robots. They don’t they don’t do anything. We have a couple hydraulic lifts,
stuff to help assist us with putting tires on the car, putting the glass
on top, but it is an 100 percent manual line for
the Model 3. The company is under tremendous pressure to
crank out as many cars as possible. And so it creates a
workplace that can be very chaotic, that is, you know, making
changes on the fly. You have workers who are being
thrown into positions where they say they haven’t been trained for. They’re getting hurt on the job. They’re working tremendously long hours
and they’re struggling to keep up with these demands. I myself had two instances of
heat exhaustion, one which was taken care of, the other one which I
was left to basically suffer it out until I literally walked off the line
and went outside for 45 minutes because I looked like
I’d taken a shower. And I was in my paint suit
and I was soaked through and through. I had to walk out
because I was sick. I got written up for it,
for walking off the line. Even though I had 20 text messages
to my boss telling him, you guys are going to carry me out
of here on a stretcher. I think we should scrutinize them
if they’re really doing something fraudulent and they’re doing like
punishing people or slaving them. But things happen at the workplace. Working conditions are hard. When I worked at Tesla, we worked at
the end of the assembly line in a room that had
no ventilation, no windows. We had, you know, crappy
cereal, we had crappy coffee. I’m not saying no one cared. But most people were not saying, well,
that’s not why I’m here, I’m not here for the cereal, I’m
not here for the coffee. I’m here to change the world. They were supposed to be building half
a million of those cars a year at the Fremont factory by the end
of 2018, and they still aren’t there yet. As they’re trying to get the Model
3 production off the ground, Elon Musk makes a grand announcement that
Tesla is going to acquire a business that he also
helped co-found, SolarCity. Then there’s Tesla today, offering
to acquire SolarCity, and this stock deal valued it up to $2.8 billion. Musk is the chairman,
the largest shareholder of both companies, as you know, and
he’s calling the combination a no-brainer. We think there’s really a
huge opportunity here to have a highly integrated, sustainable energy company
that answers the whole sustainable energy question from generation
of power to storage to transport. What is with the
timing of this deal? We’re also talking about SolarCity
shares, which are perhaps not nearly as high as they have been
over the course of the past couple of years. All I can say is
this, that SolarCity would have gone even lower if he hadn’t made this bid. On paper, what Elon Musk
laid out made sense. He was going to use SolarCity to
ramp up sales of solar panels at home to push the development of
solar technology that could be used in a number of different venues. That hasn’t happened. This is sort of
the integrated future. You’ve got a electric car,
a Powerwall and a solar roof. The key is that it needs
to be beautiful, affordable and seamlessly integrated. I think we really started to
see some of the the wheels come off, no pun intended,
with the acquisition of SolarCity. And that, I think, really brought
to light how intertwined Elon’s personal wealth, personal interest, ego
and brand were in this company. The directorships of others
and the potential conflicts are quite significant. Lyndon Rive, who’s
the CEO and co-founder, and Peter Rive are brothers,
they’re both Musk’s cousins. John Fisher’s fund is a SpaceX
investor, of course, another Musk company. Jeffrey Straubel is a Tesla
employee and a SpaceX investor. Nancy Pfund was a director at Tesla
prior to it having gone public. By the way, Tesla did an
offering six weeks ago, those shareholders must not be particularly happy, though
one wonders whether he had any idea he was going to do this. It just felt a little bit too
convenient that Tesla got to absorb this company that he had funded and
was run by his cousins and was going to add enormous financial
strain to Tesla and enormous complexity at a time when it already
had a lot of complexity to deal with. This is the worst corporate
governance I’ve ever seen in my career in a company. The SolarCity bailout is just an
abomination and they should be held to account for that. And they
shouldn’t be liable for that, because it was nothing but a bailout. Let’s stay focused on SolarCity. I mean, I love Tesla by the way, I
own a Tesla myself so it’s – love the car, but lets stay focused. Exactly. Tesla has gone from production
hell to delivery, logistics hell. That tweet was in response to
a customer complaint about a delivery delay. But in truth, if in fact
that’s the case, that is progress for the company. One problem for Tesla
as it’s trying to deliver these vehicles is that they’re supplying
customers around the world from one plant in California. Other automakers rely on outsourced
delivery companies that will take your car from the factory to the
dealer and make sure everything’s in good order. Tesla’s doing
it all themselves. In fact, they don’t
work with dealers. They run all their own
stores and service centers. We had wanted a Tesla for a
long time and we were pretty excited about it and it just made
sense for our new commute. But we took delivery in the dark and
we didn’t really get to see the vehicle until the next day. The next day I took it to work,
it was a bright, sunny day and unfortunately it showcased what was
an absolutely horrendous paint job like, I have no idea how they
got it off the line, how they would put it into the
hands of a customer. I mean, it was insane. Now the
Tesla has hundreds of thousands of cars on the road and they’re
going after a mainstream consumer instead of just early adopters. They have a much
higher service burden. And the problem is they haven’t
really scaled service in tandem with that. I was fed up with Tesla
completely to the point to where today, if they want to touch my
car, they’re not allowed to touch my car. I’ll do my own
work on my car now. As soon as I exceeded my
warranty period, the help, kindness, interactions all went away. I was treated like I didn’t
even really own a Tesla. So in terms of the service part
of Tesla, I do get nervous. When many owners try to schedule
a service appointment, the service centers are stretched thin and appointments
could be weeks out before a car gets into service. The reason why I started my YouTube
channel was to kind of demystify Teslas in general. Tesla wasn’t
really sharing much information about them in terms of what’s inside
of them and how they worked. So I figured to myself, people
may actually be interested in this. So as I started tearing into the
car more and more, I started taking detailed photos of
things, detailed videos. This blue connector goes
back in the door. And just kind of
took off from there. This is my Tesla parts storage. This is where all the used parts
or crash parts, I save every little piece. I worked at Tesla from May
of 2009 through February of 2013. I started out as a service
manager for the Seattle area. Part of the reason people are
having trouble getting their cars repaired is there
aren’t enough parts. Now specifically with the Roadster,
there aren’t any parts. And with the newer models, there
just isn’t enough parts coming off the assembly line or being reproduced to
fix the cars that are in the body shops. There’s a local body shop
here that has, at times, has over 100 Model 3s
that need paint work. I have no problem with
them being vertically integrated. I have no problem with them running
things the way that they do for cars that are in warranty. But if they want to be in
the mass market, unless they’re going to run every single service center in
every single little small town, there’s no way it’s acceptable to
have people for minor issues drive and kill an entire day to go
to the service center and get free Keurig coffee. The genesis of the
electrified garage was such that a lot of people started reaching out
to me because of the YouTube channel, people that wanted to get
issues resolved with their Teslas. And at the time, Tesla was super
busy, they didn’t have time to get people in for appointments. So they started reaching out to me
and saying, hey, Tesla’s too busy to take a look at this or I
own a salvaged vehicle, can you take a look at my electric vehicle? We’re hoping the demand is really
strong and we’re hoping to grow this into more of a franchise
type business and almost work alongside Tesla to actually repair a lot of
their vehicles as well, because at this point, they need all the
help that they could get. One thing Tesla has done to
address the gaps between service centers that may be far apart and hard
for customers to come into is to launch this mobile ranger service. These are technicians that come to
you, customers who can get their issues fixed by the mobile service
love it, but they can’t do everything. Over the last year, Tesla
ramped its service locations by about 20 percent. And again, Tesla is expecting about
a five fold increase in the number of cars that it’s
going to be shipping. So we’re just not sure that the
ramp is going to be significant enough. Service totally matters
to Tesla’s long-term success. The proposition for the customer of a
Model 3 is buy at your own risk. This might
come with problems. At the scale it is at now with how
many Model 3s that are out in the market, and who its core customer
is, there are enough people out there to buy it with that caveat,
but that grace period isn’t going to last forever. And so Tesla does
need to sort these problems out before it becomes truly mainstream. I talked to a lot of people who
have Tesla vehicles and service is a problem. And you know, everybody’s, “Oh
Tesla service is a problem.” Microsoft had no customer
service for years. Google had no customer
service for years. Apple customer service, until they
got the stores, was mostly non-existent. Right? This is not a Tesla unique
problem, this is an industry unique problem. Technology companies aren’t
good at service, period. Stop calling out Tesla for this
because they’re a tech company. They’re not really a car company. The cheaper models like the Model
3, they’re all over the place. You just have to have a service.
Tesla needs to step up and provide them that service
that they deserve. And if they provide the
service they deserve, Tesla’s unstoppable. Let me tell you, this is going
to blow this staircase out of the water. I mean, this car will
leave a Ferrari in its dust. I think Elon’s Eloness has
increased over the years. Yeah, I mean, if you wanted to
describe Elon Musk in a nutshell, I don’t think he would
fit in a nutshell. It’s like Elon Musk has been beamed
down from another planet to show us mortals how to run,
how to run a company. Elon Musk is a divisive
character because he’s a difficult personality. Sometimes he’s extremely chummy
and he’s the best person to be around. And you love his
points of view and his opinions and the things he says,
and he’s actually funny. Other times, he’s a complete dick. There are times when he
is arrogant and obnoxious and insulting. Of the reservations that
have actually opened and made available to configure. Can you let
us know like what, how, what percentage have actually taken
steps to configure? We’re going to go
to YouTube. Sorry. These questions are just so dry. They’re killing me. How many executives
or top executives have left this company in the
last couple of years? By some estimates, it’s between 40 and
50 who have left the company under Elon Musk’s watch over
the last couple of years. Most people confuse Elon’s management style
with his vision in a sense. So what Elon’s trying to do
is trying to inspire people to come work on a
really difficult problem. In my opinion, at least he runs
into issues, is trying to do that while at the same
time maintaining operational excellence. I’ve been on a couple of meetings
with Elon Musk where people that have disagreed with him have no longer,
you know, you never saw them the next day for going that way. And that’s what Elon Musk does. We’re going that way and either you’re
going that way or you’re not going. He’s a great innovator,
he’s a great visionary. I don’t necessarily think
he’s a great leader. I don’t even have a desk or
an office anymore, I just basically, I’m just basically standing on the
production floor and occasionally meeting in a conference room. We have seen
him at the end of the line wearing a Tesla t-shirt and steel
toed boots and safety glasses and bump cap, working with the
people, doing the physical labor. When the S and X were launched,
he was, he literally had a sleeping bag at the end of the line
because he didn’t even want to leave. He was there so often working on the
cars just to make them right and to make sure that they were as
good as they could possibly be and that production was working. He was there all the time. He
slept there and it was true. If your CEO has to be fixing
problems on the production line, no matter how brilliant he is or how
great his solutions are, there’s a systemic failure that’s taken place
to reach that point. The whole point of running a giant
company is to make sure that the whole thing runs as much as
possible in an orderly fashion, an efficient fashion, in a profitable
fashion, without requiring the constant personal attention of
any one person. He should find a partner as quickly
as possible who serves the same role at Tesla that Gwynne Shotwell
does at SpaceX, a stabilizing force and making that company made up
of humans who have to work together as good as
Tesla’s cars are. Another Twitter rant
from Elon Musk. This time it’s
about media companies. He accuses them of hypocrisy and
says the public no longer respects them. Elon Musk, for most of
his career at Tesla, has embraced Twitter. He believes it is his
direct way of communicating with customers, with fans, and
to take on critics. I think Elon spends too much time
obsessing about the media and the media’s views on him. The media has mostly been
extremely helpful to Tesla. It’s free marketing for
the company, essentially. Tesla has a lot of fanboys who
have their own kind of media setups, whether they be influential Twitter
accounts or YouTube channels or blogs that don’t do anything except
tell the world how wonderful Elon Musk is. So we tend to have a lot
of people that are huge fans and a lot of people that just hate us. And I’m hoping over time we can
convince some of the people that hate us to hate us less. I don’t think that we felt that
production was going to kill the company as much as, I think
if anything, we thought that Elon’s stupidity with Twitter would
kill the company. The race to rescue a teenage soccer
team stranded in a flooded cave in Thailand continues. The options to get them out are few,
and all of them are quite risky. He called a guy with
probably zero basis a pedophile. He called him out on Twitter.
He repeated it to the media. These are not the behaviors
of some milquetoast, traditional chief executive. We start with the tweet heard
round the world, or at least around Wall Street. CEO Elon Musk
creating chaos with a single tweet, quote, “I’m considering
taking Tesla private. Four hundred twenty dollars funding secured”,
which led to the stock soaring and then being halted
and then soaring once again. Let’s go to Leslie Picker. With
one tweet, he created stock price movements of huge amounts
both up and down. Let’s get right to your top money
in business story this mornin g, and that is Tesla.
The stock is tumbling. It is down almost
10 percent right now. It’s all on news that broke
late yesterday, the SEC suing the company’s CEO and founder,
Elon Musk, for fraud. The SEC alleges that Elon Musk
made false and misleading tweets in August where he said he was
considering taking Tesla private at four hundred and twenty dollars and
that funding was secured. Let’s get to our corporate story of
the morning, I should say, of the weekend. Tesla founder and CEO Elon
Musk and the SEC, reaching a settlement deal. He gives up the
chairmanship for three years. Two new independent directors will be
appointed to the Tesla board. Both Elon Musk and Tesla
both paying $20 million fines. And this is the
most interesting one. There will be oversight by a
committee of Elon Musk’s communications. I guess this means we’re not going
to get as many Twitter bombs in the middle of the night as we’ve
seen over the last couple of years. That was a 20 million dollar tweet. That’s 20 million dollars that could
have been doled out in profit-sharing or any other way. You saw the confrontation with
the SEC, which whenever entrepreneurs in the valley start attacking
the government or regulatory authorities or traditional stakeholders
in a way that’s counterproductive, it ends up being a
big problem for a company longer term. It shows that they’re
so looped into the vision that they’re not thinking about the
pragmatic operation and functioning of the business. He’s got an oversized
personality which gets him in trouble on Twitter occasionally. But he also has a vision and
he’s pushing not just his employees, but he’s pushing the industry. Tesla shares tanking Friday after a
bombshell interview with CEO Elon Musk. Shares plunging 9 percent right
into a bear market, again on track for its worst
week since March. Billionaire Elon Musk of Tesla and
SpaceX fame Like we’ve never seen him before. Smoking pot on YouTube. Tesla CEO Elon Musk appearing on
a podcast with comedian Joe Rogan last night, overnight. And yes, he smoked up. Take a look. So is that a joint? Or is it a cigar? No. OK. It’s marijuana
inside of tobacco. OK. So it’s like posh pot tobacco. Yeah, you never had that? Yeah,
I think I tried one once. Come on, man. You probably can’t because
stockholders, r ight? I mean, it’s legal,
right? Totally legal. OK. How does that work? Do people get upset at you
if you do certain things? I’m not touching this stock
at this point in time. The stock has clearly not found
its footing by any stretch. Elon is absolutely off his rocker,
whether it’s tweets or whatever he’s recently doing. I mean, maybe the pressure is getting
to him, but his behavior just seems odd. Tesla founder and CEO
Elon Musk sitting for a rare interview with Lesley Stahl on
this Sunday’s 60 Minutes program. I want to be clear, I
do not respect the SEC. I do not respect them. But you’re abiding by
the settlement, aren’t you? Because I respect
the justice system. There are people who who say
that the company cannot survive without you. I don’t think that’s true. Yeah. And there are people who
say the company cannot survive with you. Haha, that’s hilarious. They say it because of the
way you acted over the summer. D oing things that
seemed impulsive un-CEOish. Well, first of all, I am somewhat
impulsive and I don’t really want to try to adhere
to some CEO template. That’s just the character
that Elon is. And it’s really difficult to sto
p him being like that. I don’t think he’s ever going to. He’s a divisive figure because
he is a divisive person. Those who are here and those who
are watching, thank you very much for your support over the years. It’s been a hell of a ride. And I love you too. I love you too. All cars being produced have the,
have all the hardware necessary, compute and otherwise,
for full self-driving. I feel very confident predicting
autonomous robo-taxis for Tesla next year. I just keep finding that it’s
a three ring circus with the guy and it’s it’s kind of
annoying, but he’s exciting. I mean he’s P.T. Barnum, OK? You know, Barnum did
pack the seats. Yeah, but he is P.T. Barnum, P.T. Musk. Elon Musk and Tesla used
to talk up the green angle. Now, the focus is
shifting to autonomous. We care about
one thing, self-driving. And we expect to be confident enough
from our standpoint to say that we think people do not need to
touch the wheel, look out at the window, sometime probably around the
second quarter of next year. When I first started at Tesla autopilot
was this very new concept for them. It was something that wasn’t in
their branding when I bought my car in 2012 at all. I’ve never felt that that was
a core part of Tesla, autopilot. But it has become that now. The complete version of autopilot is
already in the market for sale, even though the features
are not available. He’s great at turning consumers
into investors as well. A man in Minnesota is blaming
his car crash on Tesla’s autopilot feature. A Tesla sedan in autopilot
mode crashed into a parked police cruiser yesterday in Laguna Beach,
California, which is in Orange County. Thousands of people in the
Almaden Valley were without power tonight after a Tesla crashed
into a power pole. There it is right
there, sparking a fire. She was on automatic
pilot when it happened. Tesla’s autopilot has been both a great
promise, as well as a huge headache for this company. Teslas, they’re electric vehicles. Fire departments are still figuring out how
to put out a pure battery electric fire. The other question
is how much Tesla’s autopilot systems were involved in
a crash potentially. This is frontier technology, people
are trying to understand it. So Tesla is weathering
a lot of scrutiny. The other challenge with autopilot is
the question of whether or not drivers were fully briefed, were fully
aware of the limitations of the technology. Did drivers understand
that this technology could be used in certain select situations? Or did they go into this thinking, I
can take my hands off the wheel anywhere? It’s better
cruise control . A true self-driving car would be one
that I could say, go to the school, pick up the kids
and take them to writing. We don’t even know how
far we are from that. I don’t know if you know
that Roomba ships 2 million autonomous vacuum cleaners a year. I think at some level, the Roomba
and the self-driving car are at about the same level. Another thing that’s challenging to them
is the build up of lawsuits. Any growing automotive company is
going to see this. But Tesla is dealing with a pretty
high volume of lawsuits from small claims to stockholder litigation. Elon Musk scoring a legal win, all
related to a tweet he posted more than a year ago. That SolarCity deal remains
controversial to this day. There’s stockholder litigation against Tesla
that alleges it was a bad deal that never
should have happened. So the fact that he survived the
crash when he made eye contact for them to save them is haunting. He built that plant in 10 months. That’s extraordinary. The future of
any car company is inextricably tied to the future of
the auto industry in China. China is about 12 to 15
percent of Tesla’s car sales globally. And China is a very
exciting market for them. Their penetration in the auto, especially
in the battery EV market, is still very, very low. So I think they can have
a long way to go. I feel a successful Gigafactory 3 in
China would allow Tesla to shift much of the production for rest
of world and maybe potentially even North America, i f
the economics makes sense. The Chinese customer loves the look
and feel of the vehicle. Elon Musk is sort of a beloved
character there, and it’s a luxury brand in a market
that values luxury brands. Tesla is a company with grand plans,
a grand vision, but they don’t yet have the proof that Elon Musk
and his team can get there consistently. Look, can this company
viably and economically make cars going forward? We believe the
world’s going electric. We believe that they’re showing increasingly
that they can make these cars profitably. That makes us feel modestly better
about the stock, l onger term. Tesla it was like, it was like
listening to a call from a real company that made cars
and made money. The stock price literally influences
the future of this company. As long as there are enough believers
and Musk can raise capital, I wouldn’t count him out. I don’t think this
is about Elon anymore. I think this is about what’s going
on in the market with cars. You know, consumers are going
towards premium and sustainable solutions, they’re willing to
pay for that sustainability. Tesla hitting an all time high
after reporting it delivered 367,000 cars last year. Tesla today on track to open
at a new record high. C ompany announces a program to build
the Model Y SUV at its Shanghai Gigafactory, delivering its first China built
Model 3 cars to the public, and during that ceremony, i f
you haven’t seen it by now, Musk expresses his joy by dancing
onstage, proceeding to strip off his jacket, reveal a t-shirt with
a cartoon of the factory. The stock surging and posted its
first ever back-to-back net profits. Earning two dollars and 14 cents
a share in the fourth quarter. The estimate in the
street, a buck 72. So well above expectations there. Revenue also coming in better
than expected at 7.3 8 billion dollars. In six months, Tesla
has almost quadrupled. And dollar trading volume yesterday was
a record for an individual stock. I just can’t
believe this frickin’ stock. It’s insane. This is a big
separation from what you know, those of us like to pull out
the calculators and and look at reality. The valuation is absurd. The balance sheet is a disaster. I don’t think their total addressable
market is big enough for the company to capitalize on. And sooner or later, those balance
sheet obligations are going to come back to bite them. He changed
the conversation on Tesla from one about whether it can meet its obligations
and meet its goals to one of, what’s the future? Is there going to
be bulletproof pickup trucks? Is it going to be a factory
in China that’s spitting out hundreds of thousands of cars on its way
to millions of cars a year? That’s a lot of expectation
and excitement for Tesla. I think global warming is a
very serious issue and it’s something that we have to address, and the only
way to address that is, is to come up with a car that
doesn’t add carbon emissions to the environment. And I think the way
to do that is with electric vehicles. Our goal all along has been to
try to get the rest of the car industry to go electric. So it’s extremely rewarding to see that
the rest of the industry is going electric. This is great. Great. This is just the start for
Tesla, and I think that when they really want to drum up demand for
these cars, they can start turning on the burners and start
to see results pretty quickly. We saw this with
the Prius in California. It started off as a very
California centric car for eco-minded middle class people and has spread
all over the world now. But the Prius is not a sexy car. It’s not really a desirable car. The Model 3 is a sexy car. Tesla earning top marks in new
crash tests by the Insurance Institute Highway Safety. The Model 3, the
first of Tesla’s vehicles to win that top safety rating. It’s a bit
of a vindication, we should say, for the company and for Elon Musk,
which, of course, was accused of making some misleading safety claims
by the National Highway Traffic Safety Administration. Would Ford and GM and all
these companies be producing electric cars if Tesla hadn’t done it
first and showed them how? He’s pushed all these legacy
companies to begin to innovate. That is a good thing.
Tesla could die tomorrow. They could run out of money, they
could close up and disappoint all of their investors tomorrow, and they
would still have been a force for good on the planet because
of all these legacy companies that they pushed. Musk it turns out is a
great CEO when he can get out of his own way, and that seems
to be what he’s doing. If the Model 3 w as Tesla’s
biggest turning point to date, there’s so much that has to go right to make
that car and the next batch of projects a success. Oh my god, well maybe that was a little too hard. You know, I think there are a lot
of things these days that are very difficult to predict. Tesla is probably
easier to predict, and I still have no idea whether or
not they’re going to succeed. You look back 10 years from
today to 2010, we will produce approximately a thousand times more cars
in 2020 than we produced in 2010. A thousand. So, where will we be in 10 years? Very exciting to
consider the prospect. Today, w hen people think of electric
cars, they think of, well, of course it’s faster than
other cars, it’s electric. And that’s because of what we did. We changed the way the world thought
about electric cars as what they could be, and we restarted the
EV revolution in the world. There were no car companies, at
least of any significance , making electric cars when we
when we started Tesla. And now they all are.
Every one of them.

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