Liz Gannes

Recent Posts by Liz Gannes

Tech Renaissance Man Elon Musk Talks Cars, Spaceships and Hyperloops at D11

Elon_musk1

Elon Musk dreams big. It’s hard not to get taken along for the ride — whether it’s a soon-to-launch cross-country Supercharger network that allows Tesla drivers to cross from Los Angeles to New York, an in-the-works reusable rocket that will help pioneer the colonization of Mars, or a hypothetical replacement for high-speed rail called the Hyperloop.

He was the evening speaker at D11 on Wednesday, where he said a mainstream Tesla is three to four years out, shook off electric car naysayersannounced the new nationwide Supercharger network, explained why he’s so excited about Mars, shared his views on immigration and how they diverged from FWD.us and tried to convince other smart folks to join him in doing big-picture stuff.

Here’s the liveblog:

Elon Musk is co-founder, CEO and product architect of Tesla Motors. He’s founder, CEO and CTO of SpaceX. Back in the day, he helped start PayPal. And in his spare time, he’s chairman of the just-IPOed residential solar company SolarCity. He’s kind of a techie superhero.

Tonight, Musk is the evening attraction at D11, in conversation with Walt Mossberg and Kara Swisher about launching reusable rockets, persevering through years of electric car setbacks, Tesla’s recent turn as a stock market darling, the future of clean energy, pesky reporters who question his cars’ performance in the cold and all sorts of other things.

Walt: You’re involved in several cutting-edge things, let’s start with the electric car. Why are you in that business and do you think it can be profitable?

Musk: The reason for Tesla is not because I wanted to get a return on investment. Today we’ve got quite a high market cap, so it may seem obviously a good thing to have done, but for many years people regarded this as stupid or insane or both.

Starting a new Internet company would have been like falling off a log. But existing carmakers were not doing it themselves. General Motors recalled its EV1s, took them to a junkyard and crushed them while people held a candlelight vigil (as depicted in “Who Killed the Electric Car”). There’s a lesson: If people hold a candlelight vigil, maybe you shouldn’t cancel your product.

The reason for Tesla was to create a compelling long-range electric car that people would buy.

Kara: But why the electric car?

Musk: I think it’s important that we transition to sustainable transport. Eventually we’ll face extremely high gasoline costs and the economy will grind to a halt if we don’t.

If you take the same source fuel and burn it at the power plant you get two to three times efficiency than in the car, because you’re not constrained by mass and volume, and you can reuse the waste fuel.

And we have to find sustainable means of electricity anyways — so the obvious means of transport is electric.

Kara: But this is crazy and difficult.

Musk: If I had a dollar for every time someone brought up Delorean or Tucker I wouldn’t have needed to IPO.

Personally, I didn’t think I could be incrementally useful in the Internet arena, so I looked to energy and interplanetary exploration.

Walt: Talk about the appeal and cost of Tesla cars.

Musk: People think of electric cars as a subsidy, but it’s actually less than gasoline cars. If you price in environmental costs, it’s much higher. It’s like half a trillion dollars.

(I’m not sure he quite made this argument well enough, but he basically says people would be buying way more electric cars if they were properly subsidized.)

Today, credits for electric cars for air pollution apply to just about 40 percent of the U.S. population.

Walt: There are a lot of Tesla owners here in the audience, probably a large portion of your customer base.

Musk: Thank you! And thanks especially to Tony Hsieh of Zappos who has bought more than anybody.

Kara: But how do you make this mainstream?

Walt: When will there be a $30,000 Tesla?

Musk: Probably three to five years. Every new technology needs three or so iterations to get to the mass market. Remember the cellphone from “Wall Street”? It was expensive and terrible. And now you can have a supercomputer in your pocket for 100 bucks.

Also, the car will probably be 20 percent smaller than the Model S, and an order of magnitude bigger production.

Walt: And then when would Tesla be profitable without subsidies?

Musk: By the end of this year. We’re expecting 25 percent gross margins absent of credits. Well, including consumer tax credits, but not subsidies.

Kara: Why aren’t other car companies racing to keep up with you?

Musk: I think our first-quarter results will help. They had written off the Tesla Roadster as a niche product for techno-geeks (another shout-out to the audience) but we’ve moved beyond that. After the Roadster, so many people called bullshit on the Model S it was ridiculous, but then we brought it to market. Then they said you’ll never make a profit, and then we did that. So I hope they will observe there is a trend here.

We’re also making drive trains for Mercedes and Toyota. The big challenge is to convince them that it’s more than a niche product, that electric cars should be a mainstream item.

Walt: What about concerns about charging stations and range?

Musk: We’re planning to announce something about that tomorrow.

(Walt, Kara and the crowd egg him on to announce it tonight.)

Musk: We have something cool called the Supercharger. Okay, I might as well let the cat out of the bag. So the Supercharger technology we developed because regular charging is slow and not effective for long-distance travel.

But when people buy a car they’re buying a sense of freedom that they can go wherever they want and not feel fettered.

The announcement: There’s going to be a dramatic acceleration of the Supercharging network. It’ll be tripled. We’ll put the map live tomorrow.

(Some back and forth about “good reviews” and “accurate reviews” of Tesla products, in reference to the NYT review.)

You’ll be able to drive from LA to New York just using the Supercharger network.

We’ll be both increasing the density and the scope of the network.

Walt: Even if you only drive your car commuting to work, you want that sense of freedom that you could go further if you wanted to or had to.

Musk: Since Tesla software updates automatically, the maps will be pushed automatically in the car and you’ll be rerouted to a Supercharger from wherever you are.

Kara: But seriously, about the NYT review, what was the deal with your response?

Musk: Well, I actually thought about my response for some time. But we started to see a decrease in cars sold in that region after the review. The article really played to people’s fears about electric cars — that they’ll run out, and that they don’t work out in the cold. And that’s not true. Norway is our largest market. The single biggest purchaser of Tesla cars is an ophthalmologist who lives above the Arctic Circle.

Walt: Part of reviewing a product is opinion, but part of reviewing is facts and specs. People have a right to their opinion.

Musk: The datalogs showed too many mistakes. It lacked credibility.

If we didn’t speak out against it, that article would have lived forever, and people would have gotten the wrong impression of the car. Ultimately the NYT public editor agreed the article was wrong but didn’t think it was intentional, but I don’t think there’s any way it was not intentional.

Walt: On to space. What is your ultimate goal with SpaceX?

Musk: The goal is to improve rocket technology and space technology until we can send people to Mars and establish life on Mars. I agree this is an unlikely outcome, but if we don’t keep improving technology every year, we won’t get there.

(Some banter about George H. W. Bush wanting to go to Mars back in the day but it would have cost a trillion dollars.)

Kara: Is this some sort of Star Trek thing for you? What was the impetus?

Either we spread Earth to other planets, or we risk going extinct. An extinction event is inevitable and we’re increasingly doing ourselves in.

We want to have a future where humanity is exploring the stars, and where what you see in the movies comes true.

Walt: Are you looking into warp drive?

Musk: Actually … You can’t exceed the speed of light, but it’s theoretically possible to warp space itself such that space is moving.

Walt: Is that in the fourth quarter or next year?

(Big laugh)

Musk: Warp may not come to fruition, but if we have a base on Mars, that gives us the chance of achieving something like warp drive.

Kara: But listen, Scotty and Spock, let’s talk about now.

(Banter about how the new Star Trek is actually pretty good.)

Musk: The challenge now is reusability. In order to have a breakthrough you have to have a fully reusable rocket. We’re hopeful to have it in the first stage in the next couple years and that’s three-quarters of the cost.

Walt: What are the dangers of space?

Musk: What could possibly go wrong?

(Big laughs)

We’re not violating any laws of physics. It’s difficult but achievable. If you look at various planets, Mercury’s too close to the sun, Venus is still pretty hot, and then Mars is on the other side and colder than Earth, but it actually gets above room temperature on Earth on a hot day in the summer. So we could export our greenhouse gases …

Walt: We could bring all the GM cars there!

Musk: Mars is a fixer-upper of a planet, but we could make it work. (Great line.)

Kara: So if you died on impact, it’d be worth it.

Musk: All things considered, if you could die anywhere, it’d be kind of cool to die on Mars. The driver is that the future has a good chance of being better than the present. I think it would be so much better not to be confined to Earth.

Kara: But SpaceX is also a business?

Musk: Yes, we gotta pay the bills. We’re contracting privately and bringing cargo back and forth from the Space Station for NASA.

The cost of the propellent in the rocket is only .3 percent of the vehicle. Think about a commercial aircraft — you don’t want to buy a new plane every time you book a flight.

Kara: You’re a busy guy. Who are your heroes?

Musk: Obviously Tesla. I like all the obvious people you could imagine. Even Edison, which some people are surprised by, given that I run a company called Tesla. Einstein, Newton, Darwin.

Walt: So more scientists than IT era.

Musk: No, I admire anyone who has worked hard to accomplish a great thing. Steve Jobs, Bill Gates, Larry Page.

Walt: And probably many, many journalists.

Musk: I have nothing against journalists — I’m here!

Kara: Are you a car guy?

Musk: I don’t talk about this much, but I do actually still own a a 67 Series 1 E-Type Jag.

(Reminiscing about a TV show called “Silicon Valley Goldrush” filmed in 1999 when Musk was buying a McLaren.)

Walt and Kara: What do you think about photosharing and Vine selfies, given what you’re doing?

Musk: I actually am not dismissive of things like photosharing apps. There’s a lot of things that provide a small amount of value to a lot of people and that sums it up in some way. Sharing with friends and family is great; if that puts a high value on a company, so be it.

What I do think would be great is if some of those people would go to other arenas to use their talents.

He doesn’t want credit for SolarCity.

Also, he wasn’t sure about coming to the conference because he doesn’t actually do all that much that’s “digital.” Suggests we change the name from “All Things Digital” to “All Things.”

Audience question: Can you talk about the Hyperloop?

Musk: I can’t talk about that quite yet but it’ll be big news. There’s a Tesla announcement around June 20 … at some point after that will be a good time to talk about it. For those that aren’t aware, the basic idea is will there be a better way to travel quickly from LA to San Francisco than high-speed rail. The high-speed rail that’s been proposed will be the slowest bullet train in the world and the most expensive, and it’s a little depressing.

Even if I’m wrong about the economic assumptions behind the Hyperloop, it would be a really fun ride. It’s a cross between a Concorde and a rail gun and an air hockey table.

(Okay, not getting much more detail, but people seem very intrigued.)

Q: What about commercial spaceflight?

Musk: Through the work we’re doing with NASA, that will probably happen in two to three years.

Q: What do you think about immigration and STEM recruiting?

Musk: I think we should have some form of immigration policy where we can recruit top people that go to our own universities. We should have them stay here. With respect to STEM in general, to the degree that there are exciting technologies, that’s what brings people in. The best example in history is probably the Apollo program. I think it’s really important to have those projects that kids can read about in school and aspire to.

Walt: What happened with Mark Zuckerberg’s FWD.us, which you joined and then left?

Musk: I supported it initially but I think the methods that were employed was a little too much of the Kissinger-esque realpolitik. I think we shouldn’t give into the cynicism of politics, we should fight the cynicism. And if we don’t, we’ll get the political system we deserve.

Q: What about traditional car companies and oil companies?

Musk: I hope they join in, and Tesla competes with them well, and we deserve to continue to be around. We’re doing our best to convince them to join.

As for the oil companies, the tricky thing is the way the system is set up, because we have this tragedy of the commons with the CO2 emissions and the atmosphere, it’s hard to ask the CEO of an oil company to act against their best interest. In fact, if they do, they might get fired by their shareholders. The right thing to do is to change the rules of the game so they change their behavior, which is why I’m a big believer in the carbon tax.

I have a hard time condemning oil and gas companies because the current system incents them to do bad behavior.

People may think taxes have a negative effect on the economy, but it really doesn’t. We don’t need to change the amount of money raised to run the federal government, we just need to change where it comes from.

(He recommends reading a book called “Merchants of Doubt” for more on this line of thinking.)

Q: Even without a reusable rocket, you’ve reduced the cost to orbit with incremental improvement. When did you realize that opportunity existed, and are there parallel opportunities in other areas that you’re not chasing?

Musk: When I started SpaceX, I thought the most likely outcome was that it would fail. But what gave me a clue that we could make a significant breakthrough was looking at the cost of a rocket. I looked at what a rocket was made of, the materials. And that was a remarkably small number — maybe 1 or 2 percent of what rockets actually cost. So clearly people were doing something silly in putting those materials together. So we were able to make it for much less.

But I wasn’t convinced about reusability until three years ago. Now I’m fairly certain it’s achievable but we have a long way to go.

Q: What innovation will Tesla bring in terms of car service? What will the dealership network be?

Musk: Service has been my main focus at Tesla for the last three or four months. We had some pretty nightmarish service situations in the January-February timeframe, but things have gotten better. We were supposed to have three service centers in LA, but we didn’t have the permits for two of them, so we were operating at one-third capacity. I don’t know if I have any brilliant insights, but we have to have really good diagnostic tools — and we have an advantage with the car’s intelligence so we can query the car before it even comes in — and we’re building a fleet of service loaners and valet service.

And that’s a wrap.

Full D11 Conference Coverage


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