马斯克2017州长会议纵论大局

0:08Good afternoon and welcome Elon. Oh, I was gonna take off my ties. All right if I do that I I came in with a tie, but then I was like That's good Well, thanks for having me appreciate your your being here today Hey, you know, it's when I'm with you. It's difficult to know where to start

0:34Let's start just What drives you? What is it that when you wake up in the morning, do you see a problem and you want to solve it? I think the thing that drives me is that I want to be able to think about the future and You feel good about that so That you know we're doing what we can to Have the future be as good as possible to be inspired by what is likely to happen,

1:11and to look forward to the next day. So that's what really drives me, is trying to figure out how to make sure that things are great, and I'm gonna be so, and that's the underlying principle behind Tesla and SpaceX, is that I think it's pretty important that we accelerate the transition to sustainable generation and consumption of energy.

1:45It's inevitable, but it matters if it happens sooner or later. And then SpaceX is about helping make life multi-planetary and doing what we can to continue the dream of Apollo and ultimately make contribution to life becoming multi-planetary. Let's talk a little more about that. I think everyone is very interested in that.

2:14When you say making life multi-planetary. That's exciting. It is exciting. So what's your vision there? I think particularly for Americans, you know, Like, think about America is a nation of explorers. People came here from other parts of the world that chose to give up the known in favor of the unknown.

2:41So I think exploration, like United States is a distillation of the human spirit of exploration. And so that's why it appeals to Americans so much. You can see this when, say, there was a shuttle tragedy, and seven people died. And that's terrible. But a lot of people die all the time.

3:04Why do we care so much? Because it was the dream of exploration that was dying along with those people. That's why. No, and I'm one of those that probably, like many of you, remember exactly where you were when that tragedy happened. So you have 30 plus governors here today, and we're very excited about your willingness to be with us.

3:30And you hopefully heard me talk a little bit about my initiative, which is being ahead of the curve. What do you tell us as governors? What should we be thinking about in terms of innovation and developing public policy for the future? Well, it's sure it's important to get the rules right.

3:53And, you know, sort of in terms of legislative and executive actions, you know, it's sort of like, you know, if you think of, say, like professional sports or something, if you You don't have the rules right if the game isn't set up properly, it's not going to be a good game. So it's really important to get the rules right.

4:26I think it's worth noting that I think still in the United States the rules are still better than anywhere else. But it's very easy to put something in place which is an inhibitor to innovation without realizing it. So in terms of the regulatory environment, it's always important to bear in mind that

4:55regulations are immortal. And they never die unless somebody actually goes and kills them. And then they get a lot of momentum. So a lot of times, regulations can be put in place for all the right reasons. But then nobody goes back and gets rid of them afterwards when they're no longer make sense.

5:19And there used to be a rule in the early days when people were concerned about automobiles, because that was a pretty scary thing. See a carriage just going wrong by itself. You never know what those things might do. So there were rules where you had to, in a lot of states, where you had to carry a lantern in front of the automobile.

5:36It had to be like 100 paces ahead of the automobile. There had to be someone with a lantern on a pole. I'm like, OK. But you really get rid of that regulation. And they did. So it was really awkward. So just regulations, even if done correctly, and being right at the time, it's always important to go back and scrub those periodically to make sure they're still sensible, and they're still serving

6:04the greater good. I think in terms of tax structure, what is economically incented and what is noneconomically incented, just make sure that the incentive structure is correct. I think I'm saying just totally common sense things here. But it's economics 101. whatever you incent will happen. So if you incent one thing, that thing will tend to happen more

6:33than the other thing. If you send another thing, that thing will happen. And so the economics should favor innovation. And this is particularly important to protect small to medium-sized companies because it's sort of like trying to grow a tree in a forest. Like it's real hard for a new company to grow.

6:59When it's just a seedling or a sapling, it needs a lot more protection than if it's a giant red word or something like that. So it's very important to give support to small and small to medium sized companies on the innovation front. And they're the ones that needed more than the big companies.

7:22And I think this point, Tesla's almost a big company, biggest company anyway. So I favor supporting smaller companies in Tesla, relatively speaking. What would your response be? Because there are critics out there with regard to incentives. And that's right. And Tesla has been, and I can speak from experience,

7:46the beneficiary of incentives, economic incentives, with regard to the gigafactory. Sure. What would you tell those people? Yeah, I think. Well, first of all, as you know, those incentives were a little overstated. In the case of the gigafactory, it's a $5 billion investment capital investment to get that factory going.

8:15And I didn't actually know this until we did the press conference. Actually, over 20 years, the Nevada incentives added up to 1.3 billion. I actually didn't even know this. But it's not. Now he's telling. Literally I learned to have the press conference. I'm like, really? No, but I mean, the thing is that they took what added up over 20 years and made it sound

8:41like Nevada was writing us a 1.3 billion dollar check. I'm still waiting for that track. It's much better to get lost in the mail, I don't know. So, you know, this is the way the press works, of course. So if you divide 1.3 billion by 20, then it's like, okay, Tesla's on average receives a sort

9:07of a tax. Well, it's basically sales and use tax abatement is what it amounts to. So it tells me it's like on the order we get on the order of 50 to 60 million of sales and use tax abatement over 20 years. And but this is for something which has a $5 billion capital cost just to get going and

9:34then would have to generate about $100 billion over that period of time to achieve a $1.3 billion tax benefit. So essentially it's a little over 1% over that period of time, and that's great, okay? But it's not, you know, it's not like it's not the way it was characterized in the press.

10:02If, because if put in the proper context, it sounds like, okay, well, that's neat, you know, it's about 5% helpful on setting up the factory and about 1% helpful over the next 20 years. Cool. That actually sounds pretty reasonable. And yeah, so that was helpful. But there are a lot of other factors as well.

10:26And we actually had slightly bigger incentive packages from some other states that were But we factored in how quickly could we get the Gigafactory into operation, what were the risks associated with that progress, what would be the logistics costs over time of transferring battery packs and power trains to a vehicle factory in California.

10:57And all of those factors weighed together is what led us to make the decision in favor of Nevada. And working with your team was great. I was very forward leaning. And a big part was also just like making sure you feel really welcome within the state. So that's sort of what would let us make the decision

11:28for the Gigafactory. And then we have another factory in New York doing solar panels. Also, actually, it will be the biggest solar panel producer in North America when it's done. And then we expect just to establish probably at least two or three more Gigafactories in the US in the next several years, as well as a couple overseas.

12:01But the overall objective of Tesla is really, what set of actions can we take to accelerate the advent of sustainable production and consumption of energy? And I think the way I would assess the historic good historic good of Tesla is in terms of how many years of acceleration was it.

12:24And if we can accelerate sustainable energy by 10 years, that would be a great success. Even if it was only five years, that would still be pretty good. That's the overarching optimization. So you've talked about interplanetary travel and sustainable energy and the vehicles a little bit.

12:50What would you want things to look like in five to 10 years associated with energy and with autonomous vehicles, electric vehicles? Well, I think things are gonna be, they're gonna grow exponentially. So there's a big difference between five and 10 years. My guess is probably in 10 years, more than a half of new vehicle production is electric

13:32in the United States. And China's probably going to be ahead of that because China's been super pro-EV. I don't think a lot of people know this, but China's environmental policy is way ahead of the US. Like, they're mandate for renewable energy. the US. I think this, sometimes people are under the impression that China is either dragging

13:53their feet or somehow behind the US in terms of sustainable energy promotion. But they're by far the most aggressive on earth. It's crazy. I mean, in fact, the coalition of Chinese car manufacturers just wrote the Chinese government to beg for them to slow down the mandate. It's like too much.

14:15They need to make 8% electric vehicles, I think, like next year or in two years or something. They can't physically do it. So China is by far the most aggressive on electric vehicles and solar. So that's a common misconception that they're not. There's one Google search way to figure this out, but it's really pretty straight, pretty

14:40easy. And in 10 years, man, I think, yeah, yeah. So half of all production, I think, will be be be be, I think almost all cars produced will be autonomous in 10 years, almost all. It will be rare to find one that is not in 10 years. That's going to be a huge transformation. Now, the thing to bear in mind though is that new vehicle production is only about 5% the

15:13size of the vehicle fleet. So you think about how long does the car truck last and they last 15 to 20 years. So before they're finally scrapped. So new vehicle production is only roughly at most 1 15th of the fleet size. So even when new vehicle production, say, switches over to electric or to autonomous,

15:39that still means the vast majority of the fleet on the roads is not. It'll take another five to ten years before that becomes the majority. The majority of the fleet becomes EV or autonomous. But if you were to say go out 20 years, a well-mingly things are electric, autonomous, So well-maintly.

16:02Fully autonomous? Fully autonomous. So no one will have to touch the steering wheel if there is one? There will not be a steering wheel. 20 years? It will be like having a horse. People have horses, which is cool. So having a regular car will be like having a horse? Is that what you're saying?

16:28Yeah. Yeah. There will be people that have, you know, non-autonomous cars, like people have horses. It's just, would be unusual to use that as a mode of transport. Yes, all right. Let's talk about the energy piece and rooftop solar and storage. Yeah. So the, I mean, first of all, it's important to appreciate that the Earth is almost entirely

16:57solar powered today. And in the sense that the sun is the only thing that keeps us from being at roughly the temperature of cosmic background radiation, which is 3 degrees above absolute zero. For one for a sun would be a frozen dark ice bowl. And the amount of energy that reaches this from the sun is tremendous.

17:21It's 99% plus of all energy that Earth has. And there's this energy we need to use to run civilization, which to us is big, but compared to the amount of energy that reaches us from the sun is tiny. So it's very easy, like it actually doesn't take much. If you wanted to power the entire United States with solar panels, it would take a fairly

17:51small corner of Nevada, Texas, Utah, anywhere. It's the only need about 100 miles by 100 miles of solar panels. It's probably entirely United States. And then the batteries you need to store that energy to make sure you have 24-7 power is one mile by one mile. One square That's it. I showed the graph of the image of this where this is what 100 miles, 100 miles

18:28looks like. A little square on the U.S. map. And then there's a little pixel inside there. And that's the size of the battery pack that you need to support that. Real tiny. So you talked about 20 years from now, none of us, well some people still be using horses or what would be zero?

18:50But it's so rare. So what will the energy piece look like? I mean, what will there be transmission lines? Will there be a need? Yeah, I think the... So there's... Use of energy is roughly divided into three areas. And they're more or less equal at a high level. There's about a third of energy is for transportation of various kinds, about a third is used for electricity, about a third

19:21is used for heating. So if you want to have, and then of the electricity production, call it something in the order of 10% depending upon how you count it is renewable, maybe 15% today. So that means that there's a massive amount of solar that would need to be produced and connected in order to be fully sustainable. Because fully sustainable means you're tackling

19:52transport, nonrenewable electricity generation and heating. So that means that we'll need to be a combination of utility scale solar and rooftop skips. Solar combined with wind, geothermal hydro, probably some nuclear for a while, in order to transition to a sustainable situation, which means really for the most part massive, massive growth in solar.

20:26And it's going to be important to have rooftop solar in neighborhoods because otherwise you that they'll need to be massive new transmission lines built. And people do not like having transmission lines go through the neighborhood. They really don't like that. I agree. So you want to have some localized energy production combined with utility.

20:53So what rooftop solar, utility solar. And that's really going to be the solution from a physics standpoint, that I can't see any other way to really do it. I have people talking a lot about fusion and all that, but the sun is a giant fusion reactor in the sky. It's really reliable.

21:13It comes up every day. If it doesn't, we've got bigger problems. Somebody asked me to ask you this. We talked about workforce today, but they ask me, are robots going to take our jobs, everybody's jobs in the future? How much do you see artificial intelligence coming into the workplace?

21:40Well first of all, I think on the artificial intelligence front, you know, I have exposure to the very most cutting edge AI. And I think people should be really concerned about it. I keep sounding the alarm bell, but you know, until people see like robots going down the street killing people like they don't know how to react, you know, because it seems so

22:06ethereal. And I think we should be really concerned about AI. And I think we should, this AI is a rare case where I think we need to be proactive in regulation instead of reactive. I think by the time we are reactive in AI regulation, it's too late. And normally the way regulations are set up is that a whole bunch of bad things happen.

22:33There's a public outcry. And then after many years, a regulatory agency is set up to regulate that industry. And there's a bunch of opposition from companies who don't like being told what to do by regulators. Anyway, it takes forever. That in the past has been bad but not something which represented a, you know, fundamental risk

23:05to the existence of civilization. AI is a fundamental risk to the existence of human civilization. In a way that car accidents, airplane crashes, faulty drugs, or bad food were not.

23:25They were harmful to a set of individuals within society, of course, but they were not harmful to society as a whole. AI is a fundamental existential risk for human civilization. And I don't think people fully appreciate that. It's not fun being regulated. It's not pretty irksome.

23:51But in the car business, we get regulated by Department of Transport, by EPA, and a bunch of others. And this regulatory agency is in every country. in space, we get regulated by FAA. And if you ask the average person, hey, do you want to get rid of the FAA? And just take a chance on manufacturers, not cutting corners in the aircraft, because profits were down that quarter.

24:26I was like, hell no. That sounds terrible. So I think even people who are pretty extremely like the libertarian free market, they'd be like, yeah, we should probably have somebody keeping an eye on the aircraft companies, making sure they've both a good aircraft and good cars and that kind of thing.

24:49So I think there's a role for regulators that's very important. And I'm against over-regulation, for sure. But I think we better get on that with AI in front of. And so there'll certainly be a lot of job disruption. Because what's going to happen is, Roas will be able to do everything better than us.

25:19I mean, all of us. Yeah. I'm not sure exactly what to do about this. It's like the scariest problem to me, I'll tell you. And yeah, so I really think we need to go a regulation here just to ensure the public good is served. Because you've got companies that are racing, that they kind of have to race to build AI, or they're going to be made uncompetitive.

25:58Essentially, if your competitor is raising the world AI and you don't, they will crush you. So then you're like, ah, we don't want to be crushed. So I guess we need to build up two. That's where the regulators come in and say, hey, guys, you all need to really just pause and make sure this is safe.

26:21And like when it's cool and working with it and the regulator to convince that it's safe to proceed, then you can go. But otherwise slow down. But you kind of need the regulators to do that for all the teams in the game. Otherwise the shareholders will be saying, hey, why aren't you developing AI faster?

26:43Because your competitor is. Like, OK, we better do that. Anyway, so it's like, I mean, there's like some of the 12% of jobs are transport. Transport will be one of the first things to go fully autonomous. But when I say everything, like the robots will be able to do everything. Bar nothing.

27:06Let's move back to rolling out the Model 3 this year, right? How many orders would that kind of look like? Yeah, it's going well on that front. We got, I don't know, I think if somebody orders a Model 3 today, they'd only get it probably late next year. We just, actually just ordered production.

27:31We made the first production unit last week. And the thing that is not well appreciated about cars and any kind of new technologies, how hard it is to do the manufacturing. is vastly harder to do the manufacturing by factor of 100, like 100, than to make that car, to make one of something.

27:58With maybe 50 or 60 people, we could make a prototype of practically anything in six months. Now, the manufacturing thing, we need 5,000 people to spend three years, and that's considered really fast. So, a manufacturer does this kind of S-curve, where it's excruciatingly slow at first, and

28:20then it grows exponentially. And then, people tend to extrapolate on a straight line. So if it's real slow at first, they say, oh, it's real slow, look at that. They're only going to make five cars a week forever. Like, nope. It'll be 10 cars a week, then 20 cars a week, then 40 cars a week, then 5,000 cars a week,

28:40eventually. just goes crazy fast. So we're hoping to get to something like 5,000 cars a week by the end of the year. Well, I wanted to give an opportunity for some of the governors to ask questions and perhaps some audience questions. I was told that you'd be willing to do that.

29:02So, governors, any questions for Elon? Governor Scott. Well, thank you very much. We in Vermont have partnered with Tesla in terms of a power pack in our homes. And it's for $15 a day. You can rent this for 15 years and it'll carry power as a backup generation device for 12 hours.

29:25And it's been really, really interesting from my perspective. But I'm curious about vehicles and where we're going in the future or how far in the future do the cars themselves become the charging device like the roof and decklids and hood or do the batteries get so efficient that you don't need that and then you just power

29:48up for a week or something like that. Where are we going in the future with battery storage? Yeah, I think the future is just there's three legs to the stool. There's electric cars, there's a stationary battery pack and solar power. Those three things, you can have a completely sustainable energy future.

30:08That's all that's all is needed on the solve on the solar front. Like said, it's going to be a combination of rooftop solar and utility scale solar. You'll need both because of the enormous amount of electricity. And then one of the things that's that's been missing, I think up till now is having rooftop solar that looks good and

30:29isn't an, you know, that's where we got this solar glass roof. that we're developing and we're doing any different styles so that it matches the aesthetics of a particular house or it's a regional style that's I think that's actually pretty important and The conventional flat panel solos will for flat roofs and for commercial will be the way to go

31:00But yeah, and putting solar panels on the on the card itself Not that helpful because the actual subs area of the car is not very much and cars are very often indoors. And so it's the least efficient place to put solar is on the car. Just wondering about maybe a wrap of some sort, is that make any sense in the future?

31:22Like a wrap of solar around either a building made of a solar panel or a wrap of a vehicle, actually being the solar panel but being the components of the vehicle itself? I don't think so. I'll scrap that idea. It's just way better to put it on a roof, for sure. I really thought about this.

31:46I pushed my team about, isn't there some way we could do it on the car? I mean, technically, if you have some sort of transformer-like thing which will pop out of the trunk like a hard-top convertible And just like ratchet solar panels over the whole surface of the car, extending, let's put the entire, say, square footage of a parking space, provided you're in the sun.

32:15That would be enough to generate about 20 to 30 miles a day of electricity. But that is for sure the expensive, difficult way to do it. Governor Berger. So thought about it. Maybe we should. Elon, thanks for being here. With your background in payment systems, you understand the important role of security and transactions.

32:41And now that you've got... I think security is a huge concern. Like cyber security? Yes, and in the vehicles you're building now, we're incredibly complex software systems. I mean, the car is really a rolling piece of software. It is. It's like a laptop on wheels. Yes. So share with us a little bit about your thoughts on cyber security and how we protect each other.

33:01about protecting society when you got a rolling fleet of... I think one of the biggest risks for autonomous vehicles is somebody achieving a fleet wide hack. In principle, if somebody was able to hack, say all of the autonomous Teslas, they could say, I mean, just as a prank, they could say, like, Sanimal to Rhode Island.

33:24The former, across the United States. And they'd be like, well, okay, that would be the end of Tesla. And a lot of angry people in Rhode Island, that's for sure. So we got to make super sure that Fleet White Hack is basically impossible and that if people are in the car that they have override authority on whatever the car is doing.

33:52So if the car is doing something wacky, you can press a button that no amount of software can override that will ensure that you gain control of the vehicle and cut the link to the servers. So that's pretty fundamental. Within the car, we actually have, even if somebody gains access to the car, there are multiple

34:15subsystems within the car that also have specialized encryption. So the powertrain, for example, has specialized encryption. So even if some of you would gain access to the car, they could not gain access to the powertrain or to the braking system. But it is my top concern from a security standpoint that tells us making sure that fleet wide

34:39hack or any vehicle specific hack can occur. They have the same problem with cell phones. It's kind of crazy today that we live quite comfortably in a world that George Orwell would have thought was super crazy. We all carry a phone with a microphone that could be turned on really at any time without

35:06our knowledge with a GPS that knows our position and a camera and all of our personal information. We do this willingly and it's kind of wild to think that that's the case.

35:28So the phone, like Apple and Google kind of have the same challenge of making sure that can not be a fleet wide hack or a system wide hack of phones or a specific hack. So that's our tough concern. Yeah, it's gonna become bigger and bigger concern. I think Tesla's, I don't know what to have fate here, but Tesla's pretty good at software compared to the other car companies.

36:00And so I do, I think it's gonna be a bit, like an even bigger challenge for the other car companies to ensure security, yeah. Thank you. Governor Deu Guard. Thank you Governor. Mr. Musk, thank you for speaking to all the governors today. It's an honor to have you here. One question I had, we saw when gasoline prices went to three and a half

36:25dollars a gallon. There was a big jump in interest in hybrid vehicles and you saw those vehicles become very much in demand. And then as gasoline prices have fallen, you've seen a reversal of that. And I'm wondering to what extent you have a concern about the future of electric vehicles in the face of those very low prices.

36:47Can you speak to that? Well, the economics, they kind of set the slope of the curve. So there's no question in our mind whatsoever that all transport with the ironic exception of rockets will go fully electric. everything, planes, trains, automobiles, well, trains are already electric, all ships, and

37:19a bit of this question of what the timeframe is. And the economic incentive structure drives that timeframe. That's really what it amounts to. You know, there's, the big challenge is that there's an unpriced externality in the cost of fossil fuels. So, the unpriced exunality is the probably weighted harm

37:55of changing the chemical constituency of the atmosphere and oceans. Since it is not captured in the price of gasoline, it does not drive the right behavior. You know, it would be like if tossing out garbage was just free. And you know, there was no panel. You'd just do as much as you want.

38:21And like, streets would be full of garbage. So, and we regulated a lot of other things, like sulfur emissions and nitrous oxide emissions, that kind of thing. It's done a lot of good on that front. With CO2, it's tough because there's so many vested interests on the sort of fossil fuel side.

38:44And sometimes I think those guys feel like kind of hard done by because it wasn't obvious when they were creating their oil and gas companies that it would be bad for the environment. And they worked really hard to create those companies. And then they feel like, well, now they're being kind of attacked on moral grounds when they didn't originally

39:06start those companies or we'll build them up on bad moral grounds. And it is true that we can't instantaneously change to a sustainable situation. But then those guys will also fight pretty hard to slow down the change. And that's really what I think is morally wrong. Governor Bevin and then Governor Hutchinson.

39:29And we'll take a couple, and then Governor Hickenlooper, and then we'll take some audience questions. Governor Bevin. Elon, Elon, thank you for being here. Short version of the question, and then slightly longer. The short version is, do you ever feel pressure by others' expectations of you and your endeavors

39:49in light of the progress you've made thus far is the short version? And more specifically, when you look just at Tesla alone, and you look at a company with a $54 billion valuation, and seemingly by typical market metrics, no justifiable reason for that. What do you think? I'm just saying, I'm curious, I'm just in all seriousness, do you feel a concern ever that your intellect

40:16and your intellectual curiosity and your ingenuity cannot be matched by those that are trying to commercialize it? Does that ever affect how you think or decisions that you make? Well, it is actually a finer, quite tough when there are very high expectations. I try to actually tamp down those expectations as, you know, to be possible.

40:42In fact, I've gone to record several times as saying that the stock price is higher than we have any right to deserve. And that's for sure true based on where we are today and have been in the past. So the stock price obviously reflects a lot of optimism about where Tesla will be in the

41:05future. And now the thing that makes that quite a difficult emotional hardship for me is that those expectations sometimes get out of control. And I hate disappointing people. And so I'm trying real hard to meet those expectations. But that's a pretty tall order. And a lot of times, rule not really not fun, I have to say.

41:36All that less fun than me seeing. I mean, I don't ever sell any stock unless I have to for taxes. So, you know, to probably, I'm not gonna take money off the table. I'll be the last, I'm gonna down with shit. So, I'll be the last to it. But, yeah, I mean it's, I really wouldn't recommend anyone start a car company.

42:13I really wouldn't recommend it. It's not a recipe for happiness and freedom. Thanks, Governor Bevin. Governor Hutchinson. Mr. Musk, Asa Hutchinson of Arkansas, thank you for your frank observations about exploration. You know, I look at the spirit of invention and the spirit of exploration, which is really

42:39the hallmark of America. What is your comment on NASA? Its mission. I was in Congress. I supported NASA, but I always feel like it's floundering does not have the support of the American people that's needed. What's your comment on NASA's mission and what advice would you give us?

43:00Sure. Well, first of all, I should say I'm a big fan of NASA. In fact, at one point, my password was I love NASA. Literally, that was my password. And, you know, I think the, NASA does a lot of good things for which it doesn't get enough

43:25credit. And that the public, I guess, doesn't know that much about. Like, you know, most mayors of the public, they're not really into hard science, you know. It's like not, it's not the thing they're tuning in for most of the time. I love heart science, you know, but it's not that popular.

43:47So, but there's great things in terms of the telescope, like the Hubble and the James Webb and the, you know, the rovers on Mars and the, you know, the outer solar system, those are all like really great things. But to get the public excited, you got to get people in the picture.

44:10It's just a hundred times different if there are people in the picture. If there's some criticism of NASA, it's like important to remember people in the picture, if you want to get the public support. If you talk to a scientist about that, I'm like, well, where's the science in that?

44:34You're not getting it. That's not why people are giving you money. It's not that's I mean it's a little bit of the reason but the serious scientists are like people just make things more expensive Like why we have people like okay. Well, why do we have people at all? anywhere Sometimes the scientists are the ones who just don't understand even like smart people but like so you got to have something that's gonna to fire up the fire, fire people up and get them really excited.

45:09And like, I think if we had a serious goal of having a base on the moon and sending people to Mars and said, okay, this is, we're going to be outcome oriented. How are we going to do this? Okay, we got to change the way contracting is done. You can't do these like cost plus contracts, cost plus sole source contracts because then

45:31the incentive structure is all messed up. So as soon as you don't have any competition, well, okay, there's no essential urgency goes away. And as soon as you make something a cost plus contract, you're incenting the contractor to maximize the cost of the program because they get a percentage.

45:47So they never want that gravy train to end and they want to make it, and they become cost maximizers. And then you have good people engaged in cost maximization because you just gave them incentive to do that. And told them they'll get punished if they don't. That's what happens.

46:04So it's critically important that we change the contracting structure to be a competitive commercial bid, make sure that there are always two, at least two entities that are competing to serve NASA, and that the contracts are milestone based with concrete milestones. PowerPoint presentations do not count.

46:29Everything works in PowerPoint. Okay. I have a teleportation device. Look, here's my PowerPoint presentation. So milestone-based, competitive commercial contracts with competitors. And then you've got to be prepared to fire one of those competitors if they're not cutting it and recompete the rest of the remainder of that contract.

46:51And by the way, NASA's actually already done this. And they did it with the commercial cargo transportation to the space station. Then that was a case where NASA actually, I'm not if they thought it would work or not work, but they didn't have the budget to do anything else. So they're like, OK, we're going to try this competitor commercial milestone-based contracting, and it worked great.

47:18And they awarded it to two companies, to SpaceX and a company called Kistler. And SpaceX managed to meet the milestones. Kisla did not, so then NASA recompeded the remainder of the contract to orbital sciences, then orbital sciences got across the finish line. So now NASA's got two suppliers for taking

47:39cargo to the space station, and it's a great situation. Same thing for commercial crew to the space station. NASA competed that. In the commercial crew case, it's SpaceX and Boeing and it's also a good situation. So now, like, I can tell you, like the SpaceX team is like, we're going to do this before Boeing. That's for sure. And then like I

48:04read out the Boeing team, they're like, what are you going to do before SpaceX? That's good. It's a good forcing function to get things done. But that, I can't tell you how important that contracting structure is. That is nine day. There's way too much in government, which is where it's a sole source, cost plus contract.

48:29That just, again, economics 101, whatever you incent, that will happen. And people shouldn't be surprised. It's like, oh, you just, you know, said, okay, if that company manages to find some excuse to double the cost of the contract, they're going to get double the profit because they're

48:45getting a percentage. So they're going to do exactly that. They're not going to say no to requirements. So the government will come up with some set of requirements. 90% of them could make a lot of sense and 10% of them will call the price of the project. For those 10% of the requirements in a cost plus contract, the contract will always say

49:09yes. There could be a future for you in government contracting at the state level. Yeah. Let's go to Governor Hickenlooper and then Governor Ducey. So, I think like most governors, I find it so refreshing to have the unbridled truth. I do suspect every time you say publicly that the stock price is higher than we have any

49:28right to believe, I'm going to guess you probably get some calls from investors suggesting that maybe you don't say that so frequently. Yeah, that's true. I wanted to go back just briefly because I think I wrote this down that you said that artificial intelligence is the fundamental existential risk facing civilization.

49:48should I get that close to the public? In my opinion, it is the biggest risk that we face as a civilization is artificial intelligence. And so to a group of leaders, what would you advise that we should, how should we be addressing something that's such a large landscape and yet obviously so important?

50:08I think that the, you know, one of the roles of government is to ensure the public good and to, that dangers to the public are addressed. So that, hence the regulatory thing, I think the first order of business would be to try to learn as much as possible. To understand the nature of the issues, to look closely at the progress that is being made, and the remarkable achievements of artificial intelligence.

50:39I mean, last year I go, which is quite a difficult game to beat, that people thought would never be beaten with by a computer. That could be like a computer would either never beat the best human player or that it was 20 years away. And last year AlphaGo, which was done by DeepMind, which is a kind of a Google subsidiary, absolutely

51:06crushed the world's best player. But now I can play at the top 50 simultaneously and crush them all. Just like that pace of progress is remarkable. And you can see more and more coming out. I grew robotics. You can see robots that can learn to walk from nothing, you know, within hours, like way faster than any biological being.

51:44But the thing that's most dangerous is, and it's the hottest to kind of wrap, kind of get your arms around because it's not a physical thing, is kind of a deep intelligence in the network. He said, well, what home could a deep intelligence in the network do? So we'll start a war by doing fake news

52:16and spoofing email accounts and fake press releases and just by manipulating information. The pen is lighter than the sword. So, I mean, as an example, I want to emphasize, I do not think this actually occurred. This is purely a hypothetical that I'm digging my grave here. But you know that there was that second Malaysian airliner that was shot down on the Ukrainian

52:53Russian water, and that really amplified tensions between Russia and the EU in a massive way. Well, let's say if you had an AI that was where the AI's goal was to maximize the value of portfolio of stocks, one of the ways to maximize value would be to go long-long defense short on consumer, start a war.

53:21And then how could I do that? Well, you know, hacking into the Malaysian Airlines aircraft routing server, a routed over a war zone, then send an anonymous tip that an enemy aircraft is flying overhead right now. Let's go to Governor Ducey and then we'll have, after Governor Ducey, we'll finish

53:52our gubernatorial questions and then two questions and we quick questions are one audience question and we'll be done. We're running short on time. Governor Ducey. Thanks Elon. I really enjoyed your comments today and as someone who has spent a lot of time in his administration trying to reduce and eliminate regulations I was surprised by your suggestion to bring regulations before we

54:14know exactly what we're dealing with with AI. You know and I've heard the example used if I were to come up with a colorless, odorless, tasteless gas that was explosive, people would say, well, you have to ban that and then we'd have no natural gas. So you've given some of these examples of how AI can be an existential threat, but I

54:39still don't understand as policymakers what type of regulations beyond slow down, which typically policymakers don't get in front of entrepreneurs or innovators? Well, I think the first order of business would be to gain insight. Right now the government does not even have insight.

55:02And I think the right order of business would be to stand up regulatory agency, initial goal, gain insight into the status of AI activity, make sure the situation is understood once

55:20it is, then put regulations in place to ensure public safety. That's it. And for sure, the company is doing AI, most of them, not mine, will squawk and say, hey, this is really going to stifle innovation blah, blah, it's going to move to China, it won't. And it won't because it has Boeing move to China.

55:44Nope. They're Boeing aircraft here. Same on cars. And so it's the notion that if you establish regulatory regime that companies will simply move to countries with lower regulatory comments is false on the face of it because none of them do. Unless it's really overbearing, but that's not what I'm talking about here. I'm just talking about, you know, making sure

56:13that there is awareness at the government level. I think once there is awareness, people will be extremely afraid as they should be. audience question. We'll take the first hand that came up right here. Thanks Elon, Inafried with Axios. Early on in this administration you had argued pretty

56:44vociferously that it was best to engage and better to be in the room than not be in the room. Then when the president decided to pull out of Paris you said that was kind of the last straw and you were gonna drop off. What drove you to that and if you were still speaking to him today what would you say to the president?

57:03Well, I thought it was worth doing, you know, trying hard to, you know, do what's worth trying. I got a lot of flack from multiple fronts for even trying. I mean, some guy ran at billboards and like, attacking me and like full page ads in the New York Times and whatnot, just for being on the panel.

57:32And in every meeting I was just trying to make the arguments in favor of sustainability. And sometimes other issues like we need to make sure that our immigration laws are not unkind or unreasonable. And did my best. And I think in a few cases I did actually make some progress which gave me some encouragement to continue.

58:01But then I just really think that the Paris Accord, man, if I stayed on the Councils, then I'd be essentially saying that that wasn't important, but it was super important, because I think the country needs to keep its word. And that's, it's not even a binding agreement. So we could always slow it down.

58:27The argument that there would be job losses, well, we could see if there are job losses before we exit the agreement. And maybe there won't be job losses. Maybe there will be job gains. But yeah, there's just no way I could stay on after that. So, you know, it did my best. All right, well, everybody, if you would please join me in thanking Elon for being here today.

58:52All right? Thank you. someone with a lantern on a pole. Well, you're like, okay, but you really get a row of that regulation. And they did, you know. I think it would really be awkward. So just regulations even if done correctly and being right at the time, it's always important

59:23to go back and scrub those periodically to make sure they're still sensible and they're still serving the greater good. I think in terms of tax structure, what is economically incented and what is not economically incented, just make sure that the incentive structure is correct.

59:42I think I'm saying just totally common sense things here. But it's economics 101. Whatever you incent will happen. So if you incent one thing, that thing will tend to happen more than the other thing. You said another thing, that thing will happen. And so the economics should favor innovation.

1:00:10And this is particularly important to protect small to medium-sized companies, because it's sort of like trying to grow a tree in a forest. Like it's real hard for a new company to grow. When it's just a seedling or a sapling, It needs a lot more protection than if it's a giant red word or something like that.

1:00:32So it's very important to give support to small and small to medium-sized companies on the innovation front. And they're the ones that needed more than big companies. And I think this point has almost a big company, a bigish company anyway. So I'd favor supporting smaller companies in Tesla, relatively speaking.

1:01:00What would your response be? Because there are critics out there with regard to incentives. And that Tesla has been, and I can speak from experience, the beneficiary of incentives, economic incentives with regard to the gigafactory. What would you tell those people? Yeah, I think well first of all as you know the those incentives were a little overstated

1:01:29the In the case the gigafactory it's a it's a five billion dollar investment capital investment to get that factory going and I Didn't actually know this into by the weather. I didn't I didn't know this until we did the press conference actually that that over 20 years the Nevada incentives added up to 1.3 billion I actually didn't even know this.

1:01:54But it's how he's telling. Literally alerted at the press conference. I'm like, really? No, but I mean, the thing is that they took what added up over 20 years and made it sound like Nevada was writing us a $1.3 billion check. And I'm still waiting for that check. So I'm not going to get lost in the mail.

1:02:14I don't know. So this is the way the press works, of course. So if you divide 1.3 billion by 20, then it's like, okay, Tesla's on average receives a sort of a tax. Well, it's basically sales and use tax abatement is what it amounts to. So Tesla gets like on the order, we get on the order of 50 to 60 million of sales and

1:02:47use tax abatement. a good afternoon and welcome, Elon, I was going to take off my ties. If I do that, I

1:03:03came in with a tie but then I was like, tell them it's a bit tight. Then we'll both be more comfortable. That's good. Well, thanks for having me. Appreciate your being here today. When I'm with you, it's difficult to know where to start. Let's start, just what drives you? What is it that when you wake up in the morning, do you see a problem and you want to solve

1:03:33it? I think the thing that drives me is that I want to be able to think about the future and you feel good about that. So that we're doing what we can to have the future be as good as possible, to be inspired by what is likely to happen, and to look forward to the next day. So that's what really drives me, is trying to figure out how to make sure that things

1:04:14is great and I'm going to be so. And that's the online principle behind Tesla and SpaceX is that I think it's pretty important that we accelerate the transition to sustainable generation and consumption of energy. It's inevitable, but it matters if it happens sooner or later. And then SpaceX for the future.

1:04:45Well, it sure is important to get the rules right. And in terms of legislative and executive actions, it's sort of like, if you think of, say, like professional sports or something, if you don't have the rules right, If the game isn't set up properly, it's not going to be a good game.

1:05:19So it's really important to get the rules right. I think it's worth noting that I think still in the United States the rules are still better than anywhere else. But, you know, it's very easy to put something in place which is an inhibitor to innovation without realizing it. So in terms of the regulatory environment, it's always important to bear in mind that

1:05:52regulations are immortal, and they never die unless somebody actually goes and kills them, and then they get a lot of momentum. So a lot of times regulations can be put in place for all the right reasons, but then nobody goes back and gets rid of them afterwards when they're no longer going to make sense.

1:06:14You know, and there used to be a rule in the early days when people were concerned about automobiles because that was a pretty scary thing. characters going wrong by itself. You never know what those things might do. So there were like rules where you had to, in a lot of states, we had to carry a lantern in front of the automobile.

1:06:33I had to be like 100 paces ahead of the automobile. It is about helping make life multi-planetary and doing what we can to continue the dream of Apollo and ultimately make contribution to life becoming multi-planetary. Let's talk a little more about that. I think everyone is very interested in that when you

1:06:57say make your life multi-planetary. Yeah, that's exciting. It is exciting. So what's your vision there? I think particularly for Americans, you know, like think about America is a nation of explorers. came here from other parts of the world that chose to give up the known in favor of the

1:07:22unknown. So I think exploration, like United States is a distillation of the human spirit of exploration. So that's why it appeals to Americans so much. You can see this when, say there was a shuttle tragedy, and seven people died, and that's terrible but you know a lot of people die all the time but why do we care so much

1:07:48because it was the dream of exploration that was dying along with those people that's why. No and I'm one of those and probably like many of you remember exactly where you were when that that tragedy happened so you have 30 plus governors here today and we're very excited about your willingness to be

1:08:10with us and you hopefully heard me talk a little bit about my initiative which is being ahead of the curve. What do you tell us as governors? What should we be thinking about in terms of innovation and developing public policy?