Tesla, Inc. 2021 Annual Meeting of Stockholders

Thanks, Martin. Well, welcome to the 2021 Annual Shareholders Meeting here in virtual form this year. We hope next year that we'll be able to have our regular in-person gathering just like we have over the last decade. Since we last met as a shareholder group in September of 2020, a lot has happened at Tesla. I want to just recap some of the things that have happened over this last 12 months. So in the 12 months that ended September of 2021, we've delivered over 800,000 vehicles. We've also started new production lines in Shanghai. We've commenced the pilot production of our own in-house battery cells and on top of that we've constructed two new Gigafactories on two different continents, including the one that we're here today in Texas. But maybe most importantly, our mission of accelerating the world's transition to sustainable energy remains at the center of what we do. Over the last 12 months, Tesla has continued to help shift the public perception of electric vehicles. And it wasn't too long ago that many people were still questioning the future of EVs. I would say that today that's no longer the case. There is no doubt that the transition to sustainable transportation and the transportation industry is turning electric. In many places around the world, you can't drive down the street without seeing many Teslas, which to me is an incredibly proud thing and a testament to our progress. While our performance to date has surpassed many common expectations, we believe that we're only at the beginning of what the long journey ahead that we have. As we disclosed in our impact report this year, by 2030 we're aiming to sell 20 million electric vehicles per year and deploy 1,500 gigawatt-hours of energy storage per year. Our mission is clear: the automotive sector and the energy sector have to become fully electric. There's no question about it. While producing and selling half a million cars in the last calendar year is more than most expected, we need to continue to grow exponentially to create a true impact for the planet and for our shareholders. I also want to acknowledge that Tesla's achievements so far and our future aspirations would simply not be possible without the unrelenting efforts of our amazing employees. Each and every one of them, who globally now number almost 100,000, are doing everything that they can every day in the name of our mission. While our investors might recognize a handful of Tesla executives or directors, we know that Tesla's success is due to the creativity, the ingenuity, and the sheer hard work of our tens of thousands of employees globally. As we expand into a truly global manufacturer, we are committed to making sure that we employ, grow, and retain people with a passion for what we do and are aligned with our mission and our values and culture globally. I also want to acknowledge and thank my fellow Tesla board members who have been unwavering in their commitment to Tesla to help grow, guide, and evolve the company and its governance practices. And I especially want to call out and thank Antonio Gracias as this will be his last shareholder meeting as a board member. After 14 years of unrelenting support and being on the board, he's made a significant part of Tesla's journey and a key member of the board for all of those years. Antonio, we appreciate everything that you've done for the company and we will miss you. And lastly, I wanted to say thank you to you all, our shareholders. You are an intrinsic part of our journey and this unique journey. We're proud to say that our shareholder base is probably the most committed, most active, and most engaged base I've ever seen. Thank you for spreading the word for us, for being with us through our ups and downs, and we wouldn't be here or where we are today without your support. And we are focused on continuing to deliver to our mission and for you for many years to come. And so now I will hand it over back to Martin, who's the chair of our meeting today. Thank you.

Thank you. Can you hear me? That's all right, yes we can hear you. Okay, thank you. Almost 90% of Fortune 500 companies have adopted annual election of directors, widely viewed as a corporate governance best practice. The annual election of directors makes directors more accountable to shareholders and improves performance and company value. Here's what a one-point proposal said when they voted in advance: shareholders should be able to participate in frequent elections of all board members, preferably on an annual basis. This proposal should also be evaluated in the context of Tesla's overall corporate governance. Shareholders cannot hold special meetings, act by written consent, or nominate directors through proxy access. At our 2020 annual meeting, 56% of shares voted in favor of my advisory proposal eliminating supermajority requirements. The board is now letting you vote to repeal those supermajority requirements through proposal number four. However, notice the board takes no position on this measure. That probably means Elon Musk and his inner circle are voting against it. Without this measure, obtaining a 67% approval rating for the board's proposal to move to two-year terms or mine to move to one-year terms will pass. This is essentially a way for the board to look like they want to increase the frequency of elections without actually doing it. Our company's technology is second to none. Our company's corporate governance should meet the same high standards. Vote for proposal number five. Thank you.

Thank you. Tesla states in its 2020 Diversity, Equity, and Inclusion report that it is on a mission to accelerate the world's transition to sustainable energy. We at Calvert Research and Management heartily support this effort and understand how important it is to invest in companies that are leading the charge to a net-zero economy. However, we also know that it takes human resources to achieve these goals and have Tesla demonstrate how the company's human capital management strategy, and specifically its diversity, equity, and inclusion strategy, supports the level of innovation and collaboration necessary to achieve this goal. The business case for diversity is clear. Numerous studies demonstrate the benefits of a diverse corporate workforce. These include better financial returns, superior stock performance, and importantly, research shows that diverse and inclusive teams support more innovation. Tesla's 2020 DEI report lacked sufficient quantitative and qualitative information for investors to adequately compare the company's performance over time and relative to peers. What the report does reveal is that Tesla's leadership is 83% male and 59% white, despite having what the company describes as a majority-minority workforce, all at a time in which Tesla's customer base is evolving and growing more diverse. Calvert asks that Tesla's reporting include the process the board follows for assessing the effectiveness of the company's DEI programs and the results of that assessment. We also ask that Tesla disclose its full EEO-1 report, a comprehensive breakdown of Tesla's workforce by race and gender according to 10 employment categories, which is already collected and provided to the United States Equal Employment Opportunity Commission every year. In a DEI report, Tesla states we do the work required to ensure that our culture is as diverse and inclusive as it is collaborative and driven. However, in order to fully understand whether or not Tesla is executing well on its stated strategy, the company must be more transparent about its policies and practices and do the work to provide investors with reliable, consistent, and comparable data that we need to make informed investment decisions. We acknowledge that Tesla is committed to integrating DEI reporting into the company's annual impact report but want the board to understand that Tesla's disclosure lags far behind peers. In 2020, Calvert analyzed the top companies held in our core portfolio at that time. Less than 20% were disclosing EEO-1 data, including Tesla. Following our engagement, 70% of these companies have committed to disclosing their full EEO-1 report on an annual basis. As shareholders, we are concerned that Tesla's lack of focus on diversity, equity, and inclusion could hinder the company's ability to innovate in the future. We urge the board to commit to full disclosure rather than incremental, ineffective actions. Thank you.

Thank you. Hello, this is Christine Hall. Can you hear me? I am Dr. Christine Hall, founder and CEO at Nia Impact Capital. On behalf of Nia and our co-filers, I formally move proposal seven. This resolution requests that Tesla's board of directors oversee the preparation of a report on the impact of the use of mandatory arbitration on Tesla employees and on its overall workplace culture. Why is this report needed? After this week's headlines and many other employee allegations of racial discrimination, we as investors need a look under the hood. The use of mandatory arbitration limits employees' remedies when it comes to both harassment and discrimination, precluding employees from suing in court, often keeping underlying facts, misconduct, and case outcomes secret. These clauses may allow harassment and discrimination to continue hidden from other employees and from investors. Bias, discrimination, and harassment in the workplace create unknown and uncompensated risks for investors, inviting unnecessary legal, brand, financial, and human capital issues to a company. On the flip side, the benefits of a positive and inclusive company culture with diverse teams include access to top talent, better understanding of consumer preferences, fewer blind spots when it comes to leadership decisions, more informed strategy discussions, and improved risk management. A diverse workforce and the different perspectives it encourages has also been shown to produce more creative and innovative workplace environments. Of particular relevance to Tesla, research shows a strong link between diversity and revenue from innovation, where companies with above-average diversity produce significantly greater revenue from innovative products or services than those with below-average diversity. Many technologies with which Tesla may compete for recruitment and hiring, such as Adobe, Airbnb, Google, IBM, Intel, Lyft, Microsoft, Salesforce, and Uber, no longer use these policies. Tesla simply cannot rest on its laurels assuming its first-mover advantage will last. Given the allegations raised by over a hundred past employees—these racial slurs, discrimination in promotions, a retaliatory culture, and lack of response from human resources—investors are counting on Tesla to step up and make human capital management a priority. Tesla is a known leader in innovation and it's time now for Tesla to also lead when it comes to promoting a fair and inclusive workplace. Tesla's board is asked again to complete the requested report to determine if mandatory employee arbitration is in the best interest of Tesla, its employees, and its shareholders. Thank you.

Great, thank you. Good afternoon, Chair Denholm, board members, and fellow shareholders. The New York City pension funds are long-term Tesla shareholders with roughly 1.3 million shares representing nearly a billion dollars of capital at risk. Our proposal calls on the board to assign responsibility for strategic oversight of human capital management to an independent board committee that will: one, review corporate policies and practices on principle, strategy, and management of workforce-related matters, including those related to addressing workforce equity and inclusion and compensation for employees other than executive officers; two, oversee the extent to which Tesla's policy standards and requirements are applied consistently across its operations; and three, offer guidance on strategic decisions that may have an impact on the workforce. Investors are increasingly focused on the essential role that effective human capital management plays in creating long-term shareholder value and to the material risks created by poor human capital management practices, such as those exhibited by Tesla. That four of the five shareholder proposals at today's meeting focus on worker and human rights should serve as a wake-up call to the board. Under new SEC disclosure rules, companies are expected to include human capital measures and objectives that the company focuses on in managing the business. Many boards, including at Ford and GM, have signaled greater attention to human capital management by defining explicit oversight responsibilities in committee charters. In opposing proposal eight, the board claims that independent board committees already perform the requested functions. The board highlights the role of its compensation and audit committees play in overseeing workforce management and workforce issues. However, neither the compensation nor the audit committee lists these responsibilities in their charters or in the proxy statement. According to its charter, the compensation committee's responsibilities are limited to compensating executive officers and board members and administering the company's employee benefit plans. Finally, in opposing our proposals, the board also asserts that our supporting statement references one-sided allegations from media headlines lacking context and facts and we are drawing speculative conclusions from them. Let me now delineate some facts that underscore the need for the requested board responsibilities. In March of this year, the National Labor Relations Board upheld an earlier ruling that Tesla acted unlawfully when it fired a union activist, interrogated and disciplined workers, issued a new restriction in response to workers exercising their labor law rights, and by threatening workers against unionizing via a tweet from CEO Elon Musk. And just this week, a jury ordered Tesla to pay $137 million to a former worker over racist treatment. Unlike other Tesla employees who allege racial discrimination, the plaintiff was exempt from the company's mandatory arbitration policy that is the subject of proposal seven and able to pursue his case in federal court. Our fundamental concern is that Tesla's weak labor management practices pose material risks to the company's exponential growth. We expect the independent directors we elect to provide the oversight necessary to protect the long-term interest of the company, its employees, and its shareholders. We urge shareholders to vote for proposal eight. Thank you.

Thank you very much and good afternoon. I am Winifred Doherty, a member of the Sisters of the Good Shepherd, a global international congregation of Catholic sisters and partners in mission. Today I represent the Sisters of Good Shepherd New York as shareholders and the project participants of Bon Pasteur in the cobalt mines around Kolwezi in the Democratic Republic of Congo. A similar human rights proposal filed by the Sisters received nearly 25% investor support last year and we again urge all Tesla shareholders to support proposal nine, which requests that the board of directors commission an independent third-party report assessing the extent to which Tesla is effectively fulfilling its responsibilities in respect to human rights and engagement in responsible sourcing practices. Today I challenge the Tesla board and shareholders to apply the same efficacy, efficiency, and high-quality standards to the supply chain from source to factory to showrooms where Tesla's ingenuity and creativity excel in its latest models which delight the consumer. 2021 is the International Year for the Eradication of Child Labour. The UN agenda for sustainable development seeks to end child labour in all its forms by 2025. Under the UN Guiding Principles on Business and Human Rights, Tesla has a responsibility to respect human rights within company-owned operations and through their business relationships, including suppliers. Pope Francis in May 2019 urged that mining be at the service of the human person and their inalienable fundamental human rights, not vice versa. Having human rights compliance at the center of your activities, we ask that you acknowledge the harm done to people and planet through your current organizational model and recognize that today's world urgently needs social and environmental sustainability demanding a balance of economic growth and holistic well-being of people and planet. We invite you to join initiatives to advocate for better regulation and just enforcement of existing laws by all duty bearers, ensure all supply chains are ethical with zero tolerance of child labour, implement just working conditions, safety, fair wages, and hours for each and every person within the company, support with funding local initiatives that promote a sustainable and diversified economic development at the upstream of the supply chain, and finally complete the human rights assessment requested by proposal nine. Thank you.

All right, welcome to the annual shareholder meeting, coming to you live from Austin, Texas. So, we've had a fantastic year thanks to the great work of the Tesla team. I'd just like to start off by just thanking the team for the incredible work over the past year to get where we are. So, we have record vehicle deliveries, as we've already reported. But you can see that there's a pretty... I mean, I think this might be the fastest that any large manufactured object has grown. Yeah, certainly one of the fastest, perhaps the fastest. And it looks like we have a good chance of maintaining that into the future, really dependent on supplier challenges. So if basically if we can get the chips, we can do it. So hopefully this chip shortage will alleviate soon, but I feel confident of being able to maintain something like this at least about 50% for quite a while. The Model 3 became the best-selling premium vehicle globally. So if any premium vehicle... But I mean, I almost got arrested at one point for claiming that we'd do 5,000 a week, literally. Anyway, this is great. We think the Model Y will be the best-selling vehicle of any kind globally. So I think it will exceed the Model 3. I think we've got a good chance of it being the best-selling vehicle by revenue next year and then I think quite likely to be the best-selling vehicle of any kind numerically in 2023. So basically we need Austin to get online and Berlin to get online and reach full production and then I think that's going to happen. Cash. In terms of free cash flow generation, obviously we had some tough years back then. Things were looking a little dicey to say the least in 2017 and 2018. Don't want to go back there again. But we got through that and now things are looking really good. So I think we'll see continued strong cash flow generation, especially as you multiply unit volume times autonomy and increased efficiency in the factories. Because I think over time you'll see all manufacturers will make electric vehicles and eventually all manufacturers will make autonomous vehicles. And I think Tesla is open to licensing autonomy because I think autonomy will be such a significant lifesaver and preventer of injuries that it is not a technology we want to keep to ourselves. So I think it will be morally right to license it to other manufacturers if they would like to use it. And of course, we've made a lot of progress on cost reduction. And so despite our average selling price actually going down significantly because with the introduction of the Model 3 and Model Y, these are much lower-priced cars, we've managed to still do decently well on gross margin. So this is, you know, getting the average price down and gross margin up is very difficult, but we've managed to do that. So yeah, it's good. Our goal really is to make the cars as affordable as possible. We are seeing significant cost pressure in our supply chain and so we've had to increase vehicle prices at least temporarily, but we do hope to actually reduce the prices over time and make them more affordable. So yeah, unfortunately we've just expedited, like, I mean, the sheer amount of money we're spending on flying parts around the world is just not great, but hopefully temporary. And we need a lot of batteries, hence Battery Day, that's what this shirt means, very obtuse. But we are going to need a lot of batteries and this is going to be a combination of batteries from our suppliers. And in supplier discussions, you know, some of our suppliers have just asked me outright, are we going to just, you know, put them out of business or something? I'm like, not at all. As many cells as you want to make and supply to us at an affordable price, we will buy, no limit. I'm like, oh okay, so like, do you want to increase by 100? Sounds good to me. So the basic plan is we're really going to order a lot of, we have ordered a lot of batteries from suppliers, basically telling suppliers literally, go as much as you can make, we'll take. And we'll prioritize batteries for vehicles but then use any excess cells that we have in the Powerwall and Megapack. Because over time we think the demand for stationary storage is going to be at least as high as the demand for vehicles. So sustainable energy, primarily solar and wind, is intermittent. And so the wind doesn't blow all the time, the sun doesn't shine all the time, obviously. And so you need batteries to buffer that power. So the fundamental pillars of a sustainable energy future are basically solar and wind, those are the primary, stationary batteries, and electric transport. And if you have those three, then you have a sustainable energy future as long as the sun is shining, you know. So sometimes people ask me about fusion and I like it as an idea and by the way, I think it's totally doable. But there's a giant fusion reactor in the sky that shows up every morning and zero maintenance. So I'm like, sounds like a good deal, you know. I always catch a little bit of sunlight and power Earth. A shockingly small amount of land is needed to power Earth. It's like, you know, a couple hundred miles by a couple hundred miles of solar panels will power the entire United States. So it's like, okay, it's not that hard. And then I believe we calculated you only needed one square mile of batteries. So you may think like, wow, a lot of batteries, one square mile of batteries, it's not that crazy. So anyway, so we've got a plan to reduce the cost per kilowatt-hour of batteries. And our suppliers, you know, have similar plans. So this is really supplemental to our suppliers. We'll make cells, they'll make cells, we'll use them all. The fundamental good of Tesla, I think, is by how many years did we accelerate sustainable energy. This is the fundamental, I think, way to think of the value of Tesla. And so if we are able to accelerate sustainable energy by more years, that is good. Hence the need to grow quickly. We've got three new factories. Giga Shanghai has done an incredible job and Giga Shanghai now exceeds Fremont in production. So actually I'd like to just give a special hand to the Tesla China team. So it's the best quality, lowest cost, and also low drama, so it's great. And that said, we are continuing to expand our Fremont operations and expect to hopefully increase Fremont output by 50%. So, and that's still where we make all Model S and X's are made in Fremont. But it kind of makes sense, especially for the high-volume vehicles, to have production that's at least on the continent where the consumers are. Otherwise, it's just, it's also not good for the environment to be shipping cars, you know, several thousand miles. So the basic idea is have the high-volume vehicles be where the customers are, approximately at least. And then also great progress with building Giga Texas, which is where we are right now, and Giga Berlin-Brandenburg. So just a hand for those teams as well. And these factories will have cell production in them as well. So this will be really kind of raw materials in, cars out. So really, really big. Yeah, I mean, these things will be in like units of Pentagon, basically. Let's see, so impact report, there's a lot of, I think, interesting...

Stuff in our impact report, we go into, I think, quite a lot of detail on all things we're doing. And you know, Tesla is certainly a company that tries very hard to do the right thing in all respects. We try very hard to do the right thing in all respects. We don't always succeed, but if you're looking for a company where you say, 'Is that company really trying to do the right thing?' That is Tesla. Okay, we really try.

Okay, I mean, that's it. Anyway, so as I mentioned, we've got the three parts of a sustainable energy future: solar and wind, but I think primarily solar will be the main source of sustainable energy and energy in general. And then you need to store that energy with stationary battery packs, and then you need electric vehicles and electric airplanes and boats and whatnot. So yeah, that's great.

Yeah, and then the average life cycle emissions in the US, this is only going to get better as we move to a sustainable energy grid and electric vehicles. Then obviously we move to a fully sustainable energy economy, which is where we want to get to as quickly as possible. The sooner the better. And can there be a carbon tax? I mean, what the hell, you know? So people, someone said like, 'Oh, carbon tax, that would benefit Tesla.' I'm like, 'Yeah, but it would hurt SpaceX.' So how about the carbon tax? It's really needed.

So battery materials are definitely recyclable, but gas is not. CO2 is an extremely stable molecule. Mars' atmosphere has been primarily CO2 for billions of years. It's extremely stable. So sometimes people worry about methane. Do not worry too much about methane. Methane quickly breaks down into CO2. Methane is not a stable molecule. CO2 is extremely stable.

And of course you can recycle battery materials, so you can think of batteries as essentially high-grade ore. So you can either get your lithium and your nickel and the various constituents of the battery from rocks or from batteries. It's much better to get them from batteries. So batteries are basically high-grade ore. And Tesla has already started recycling, and there are lots of companies that are going to do recycling because it basically pays to do recycling for batteries.

So what we're seeing, you know, increased extreme weather events and there's like wildfires. And here in Austin, there was a massive snowstorm that turned the power off. I was actually in Austin for that snowstorm in a house with no electric, no lights, no power, no heating, no internet. Couldn't actually even get to a food store. If you could get to a food store, there's no food there. That went on for several days. However, if we had the solar plus Powerwall, if the car would have had lights and electricity, and actually if you had a Starlink internet, you'd have internet too. So all the things you need for a prepper, basically. Doomsday comes, yeah, it could be helpful.

So in factory safety, we've made huge improvements on factory safety. So we're now 18 percent better than the industry average. So this is great. It's always tough with safety as you ramp up production lines and as you start up factories, but then once it's in steady state, then the injuries naturally decline because people get used to it and you iron out the issues. And so we're seeing excellent factory safety in Tesla. And our goal is to have the safest factory on earth.

And then AI Day, I think it was important to change the fundamental perception of Tesla because people did, they sort of thought of Tesla as a car company. And yes, we made cars, but the AI portion part of Tesla was not well understood. Tesla is as much a software company as it is a hardware company. And we also do the chips. So we designed the Full Self-Driving inference computer. We're designing a training computer that's going to be able to, we think, be the most efficient neural net training computer in the world by far. And we're seeing a tremendous response. So daily applicants by role, as you can see, it's basically on the y-axis there. And then after AI Day, the AI applicants increased dramatically. So I thought that was a very successful day. Team did a great job.

And yeah, AI is going to be a very important part of the future. Self-driving is obviously one of the functions. And I also have mixed thoughts about AI. We've got to watch out for AI being a danger. But it's happening either way, so I guess if we help do it, we can try our best to make sure it is a positive, good AI, hopefully.

And then I'm excited to announce that we're moving our headquarters to Austin, Texas.

So just to be clear though, we will be continuing to expand our activities in California. So this is not a matter of Tesla leaving California. As I said, our intention is to actually increase output from Fremont and from Giga Nevada by 50 percent. So but we're just hitting the sides of the bowl, you know. I mean, if you go to our Fremont factory, it is jammed. I mean, it is jammed. It's like, whoa. And when we first went in there, it was like, you know, well, we're like a kid in his parents' shoes. It was ridiculous, like tiny s*** in a giant factory. And now we're like spamming a can here, like, how do we put more stuff? And it's tough for people to afford houses and a lot of people have to come in from far away. And so we'll take it as far as possible, but there's a limit to how big you can scale in the Bay Area. So here in Austin, and our factory's like five minutes from the airport, 15 minutes from downtown. And we're going to create an ecological paradise here on the Colorado River. It's going to be great. So Tesla's staying, continuing to expand in California significantly, but even more so here in Texas.

So with that, we can go to questions.

Okay, so when will Cybertruck production begin and at what rate will the ramp-up happen? Well, so this year has been just a constant struggle with part supply. So just to be clear, if we had like five extra products, we would not change our vehicle output at all because we were just basically limited by multiple supply chain shortages. So many supply chain shortages of so many types, not just chips. There were lots of supply chain shortages. So it really wouldn't matter if we had like the Semi or have a truck or anything, we would not be able to make it. And the Semi in particular needs a lot of cells. So it needs a lot of cells, a lot of chips. And so that will be, we got to have enough, otherwise it's pointless. So I think most likely what we'll see is Cybertruck start production next year and then reach volume production in 2023. And hopefully we can also be producing the Semi and the new Roadster in '23 as well. So we should be through our severe supply chain shortages in '23. I'm optimistic that will be the case.

Let's see, will we do a stock split? Well, maybe not yet. Maybe we'll consider a stock split at some point in the future, but I think we'll not quite do that quite yet.

Will we see 4680 battery cell production in Texas? I don't think we will see 4680 production in Texas this year, but we are making 4680s in California at our pilot plant, which is a big plant by normal standards. It's capable of 10 gigawatt-hours a year. So it's just a mile away from our vehicle factory in Fremont. So that factory will be able to make more than enough cells for Giga Texas to scale production of Model Y.

And I do want to emphasize, from the point at which a factory is able to start making cars to where it reaches high volume production is typically about a year, and that's considered very fast. So it takes longer, or at least in Tesla land, it takes longer to build the factory than it does to reach volume production once the factory is built. So like in Shanghai, we built the factory in 11 months, but to get to high volume production took about a year. And so I expect something similar here. We'll start production this year and we'll deliver, I'm confident we'll deliver some cars from Giga Texas this year, Model Ys, but we won't reach high volume production until probably the end of next year. So but then I also expect we will reach high volume production of the 4680 cell here in Giga Texas next year as well.

More factories. Man, it's hard to build a factory. I've said many times that prototypes are easy, production is hard. Like, you know, or whatever, it's like one percent inspiration, 99 percent perspiration. But I think for high volume production, it's like 99 perspiration. So I think we'll, I mean, we might start scouting for locations next year, but I think we can do a lot with Berlin and Austin and expanding in China and expanding in Fremont. So the nice thing is like having at least a factory in Europe and a factory in China, factory in North America, we at least have factories where for high volume products, they're on the continent where most of our customers are. This is great. So we do not, like one of the biggest challenges we had in Q3 was can we get enough ships? Like there was a huge ship shortage. So that was a challenge. And that boat that got stuck in the Panama, I mean the Suez Canal, caused havoc. So you know, these things, you don't expect these things, but they happen. So I don't know, we'll probably get new factory locations, let's investigate them next year, maybe make a decision in '23.

Does Tesla plan to offer dividends? We don't currently have plans for dividends. I do kind of feel like the time when a company offers dividends is, you know, it's kind of cresting the hill, you know, if you will. It's usually not, they've run out of things to invest in internally. You know, we've not run out of things to invest in internally by a long shot.

Can we provide a quarterly update on energy along with automotive? Yeah, I mean, we need to make more progress on energy. This year has been limited, like I said, the chip shortage. The same chips go into our stationary battery packs as in the cars, and we prioritize the cars. So you know, and we need the inverters for solar and that kind of thing. So you know, this year has not been a good guide for progress in energy. I think next year it will be probably a good guide, and we can start providing updates that I think people would interpret correctly, as opposed to, you know, having to explain, well, we either had to short cars or energy, and we picked cars.

Yeah, Model 2 is not a car. There's no Model 2. The 3 means E. So we were Model 3, we were trying to get the, we were going to call it the Model E, but then Ford threatened to sue us, and so we said, what's called the Model 3, you know. So it's S3XY instead of, you know.

Gigafactory is getting bigger with each iteration. Not all gigafactories will get bigger with each iteration, I think, but yeah, most of them will. They'll get more advanced and more efficient. And you're looking at sort of taking a first principles approach to manufacturing. You want to look at the volumetric efficiency of a factory. And the average speed of a factory is kind of like the rocket equation, where delta V is like exhaust velocity times the log of the start to end mass ratios. So I think it's something similar to that for a factory. And you could also think of it like a chip. Like, do you make chips get more out of chips by making them bigger or by bringing things closer together and increasing the clock speed? And actually, I think there's tremendous opportunity in factories to actually bring things closer together and increase the cycle time or clock speed. And there's actually, I think, tremendous opportunity to improve the efficiency of factories. And Tesla's long-term competitive advantage will be manufacturing. Because all cars will be electric eventually, all cars will be autonomous. The thing that's the hardest to, I think, sort of match Tesla on or copy is manufacturing. And so I think that will be the long-term advantage of Tesla.

Yeah, limiting factor growth is engineering. Yeah, there's really not a factory stamping out amazing engineers. So it's hard to, you know, you've got to basically recruit people, you got to kind of train them in the right way, and this just takes time. And sometimes companies think you could just hire anyone with an engineering degree, slap them together and get amazing stuff. This is not the case at all. Often adding more engineers to a program makes it go slower. So you know, and the excellence of an engineer matters tremendously. There are huge differences in engineering talent that boggles the mind. But I do wonder today, like if Nikola Tesla applied to Tesla, would we even give him an interview? I'm not sure we would. You know, it's like, we should obviously. So I, you know, that does concern me. Like I think we could do a better job of vetting resumes. And really we're just looking for evidence of exceptional ability, like not whether somebody graduated from a particular school or whatever. But like just three bullet points, evidence of exceptional ability. And do you say 'wow' after you read those three bullet points? Then great. That should be the approach.

I'm actually a big fan of the original VW sort of bus. That was really cool. And I haven't really seen the new one, but yeah, I mean, I think over time Tesla will make basically, you know, all major variants of a vehicle. Why not? You know, one in every significant category, I think.

So from far, I guess people can see these slides, right? So I need to read the question. Yeah, I think we're actually making rapid progress with Solar Roof. You know, so solar in general and energy in general got kind of shortchanged for a couple years there because we're desperately trying to make the Model 3 and reach volume production. So we just moved everyone from anywhere in the company that could possibly work on Model 3 was working on Model 3. It was all hands on deck, as you know. So there's just a couple years where we just, you know, if Model 3 fails, the whole company is dead. So we're just going to move everyone from solar, from everywhere to help with Model 3. So we're a couple years behind on that, but I think we're now making rapid progress with the Solar Roof and in particular with new home builders. Obviously the most efficient way to get a Solar Roof is to put a roof on once instead of doing retrofit, which is obviously fundamentally more expensive than doing Solar Roof on new homes. So we now have relationships with a number of new home builders and we expect that those to gather significant momentum. And then we're going to have a campaign which is kind of like, well, I'm dating myself here, 'I want my MTV.' So I want my Solar Roof, where is it? So you know, I think we'll just get people actively asking in your home developments, 'Well, does it have a Solar Roof and a Powerwall?' And you know, because then you generally generate your own power and you can help stabilize the rest of the grid using the Powerwall. And we're doing this in partnership with utilities. Like the thing that I think people need to appreciate is that there's a lot more electricity production that needs to occur as we move to an electric vehicle future. For two homes where both cars are electric, the power electricity usage will approximately double. And so if you don't have local power production at the homes with a battery, because the battery's got to buffer the power, otherwise if you just have solar without batteries, it causes these massive waves in the grid. And so you have to have the batteries to stabilize the grid. But those batteries can then act collectively to stabilize the whole grid. And that's software that we've developed that is, I think, of course going to go into Autobidder. That's going to be, I think, quite compelling. But you really need, for a sustainable energy future, you have to address electricity at the homeowner level. This is essential. But there will still be a very prosperous future for utilities because electric power will approximately double, and then if you transition heating to electric as well, it approximately triples. So this is a lot of work both at the local level of electricity distribution and at the utilities. Utilities got to expand and there's got to be solar and batteries at the homeowner level. But having Tesla solar with battery means that you have power no matter what. If the utility shuts you off or if for any reason, you still have power. When I was here in the Austin blizzard, it's like I was staying at a friend's house but he didn't have the Solar Roof and battery, so I'm sitting in the dark in the cold. And I was like, okay, it really brings home the need for the Solar Roof and battery. So anyway, I think Solar Roof will see massive growth in the years to come.

Yeah, the 10.2 is going out tomorrow night. Yeah. Anyway, this is too much inside baseball on FSD, but we're going to start rolling out the FSD Beta to all customers with a perfect safety driving record tomorrow night at midnight California time. And we'll see how that goes. And we want to be very cautious about the rollout. If that's looking good, then we'll, because there's like a little over a thousand people that have a perfect score, then we'll start giving it to people with 99, 98, 97, and so forth. We'll probably have to have some cutoff, you know, it's like 60, I don't know. But it's got to be, we're looking at people who are extremely conscientious drivers for the beta program. So but it's looking really good. I actually drove here from my friend's house I'm staying at in Austin, which is quite far away and has quite a complicated drive, and the car took me all the way from my friend's house to the Gigafactory with no interventions. So perfect drive, yeah.

All right, is that, are those all the questions? Or I guess we'll take some from the audience. Sure. Or you can just yell or whatever.

Oh, when will we not need to do any more mining for batteries? Basically, it'll be a while because we've got to extend the fleet. Like, so the fleet of cars out there is gigantic. There's about two billion cars and trucks in use in the world. And so that's a lot. So annual global capacity for vehicles is 100 million a year roughly, which kind of makes sense. Like, cars and trucks tend to last about 20 years before they go to the junkyard. So that's an important statistic to bear in mind. Like, even if all cars and all vehicles were electric tomorrow, it would still take 20 years to change out the fleet. So I think people don't, like, you see a lot of noise and sort of stories about electric vehicles, but the fleet is what matters. And still, it basically rounds down to nothing if you look at total fleet vehicles on Earth. And electric cars at this point, I think, are still well under one percent of the fleet. So, but I don't know, probably 30 years-ish, 34 years.

Yeah, and I think, clarify a few things that are sometimes misunderstood out there. Lithium is extremely plentiful. It is one of the most plentiful things on Earth. It is not rare at all. It's hard to avoid lithium. If you said, 'Where can we dig a bunch of rock that doesn't have some lithium in it?' you would have a hard time. It's in seawater, you know, it's basically lithium is a salt. So where is there salt? A little bit of salt pretty much everywhere. So there's lithium everywhere. So that's not an issue. Also, lithium is only like maybe one or two percent of the cell. And so the actual thing that matters is the cathode. And most of our, well actually, our higher long-range vehicles use a nickel-based cathode. And sometimes people think it's a cobalt-based cathode. No, cobalt is used in phones and laptops, but we use nickel because nickel has higher energy density for our long-range vehicles. But for our standard range vehicles and for stationary storage, I think all of that will move to iron-based iron cathodes. And iron is also extremely plentiful. Nickel is not rare, but there's, I don't know, somewhere maybe 10 to 100 times more iron than there is nickel. So moving to an iron-based chemistry, which is sort of finally at the point where it's competitive on range when combined with an efficient powertrain, I think that will be the vast majority of batteries in the future will be iron-based. So I do not see any shortages. It's just a question of making all the equipment to kind of process that into a cell and then into a pack.

Oh, off-planet factory. I like the way you think. So, how many years before Tesla's first off-planet factory? I mean, I'd like to see one before I'm dead. That would be cool. So I don't know, what have I got, like 40 years-ish, hopefully, before dead, basically. That'd be great.

What's my safety score? Oh, great question. I don't know actually. Yeah, I don't know what it is. I'll check. I'll check because I think mine just got turned on. Yeah, I'll find out. By the way, a safety score calculation is obviously imperfect. That's why I try to emphasize very much that it is beta, if not alpha, in safety score calculation. So it's going to get a lot of changes. Yeah, expect it to improve in its accuracy substantially over time. This is really just, it's a very early stage algorithm.

Oh, is there anything we do with the grid system here? Yeah, in fact, Tesla is doing a number of projects in Texas. The, we've got a large battery project, I believe in the Houston area. Yeah, it's Houston area. Sorry. But yeah, we're doing 100 megawatts in the Houston area. And we're talking to ERCOT about doing other major installations. The Tesla Megapack system is actually really great at dealing with power fluctuations. So if you look at power usage, it varies dramatically during the day. So you get, you know, particularly on a summer day or a winter day, if you've got electric heating or electric cooling, then you're going to see big spikes on hot or cold days. And so just even during the day you see the big variances. And then from when, like, you know, in order for a grid, if a power grid has no energy storage buffer, then it's as resilient as the worst second of the worst day of the worst year. So that's obviously not great. And they'll throw peaker plants in there, but if the peaker plant is reliant on natural gas and then people start using natural gas for heating, which is kind of what happened in Austin, people were using the gas to heat, then the peaker plants didn't have the gas. Like, okay. But batteries would work great. So if there'd been Tesla Megapacks here during the blizzard, the power would not have gone out.

Targeting capacity for the Megapack factory? No, I don't actually know what the target capacity is, but it's big. Okay, 40 gigawatt-hours. Yeah. Actually, that's an example of where we are expanding also. We're expanding manufacturing in California. So this is in Lathrop, California. We just opened a big Megapack production facility.

Sorry, it's difficult to hear. Tesla Insurance? Yes, so like the degree in which insurance is a regulatory labyrinth is insane. It was like designed to be hard, you know, the feeling you got. I mean, I don't know, but it certainly is very difficult. So there's a zillion applications and you have to wait for a bunch of time and it's become long and complicated. And a lot of it is state by state, most of it is state by state. So we're just processing applications in states across the country. And then the states also have different regulations, so you actually aren't legally allowed to offer the same insurance in every state. So you've got to adjust the software to be different every state. It's very complicated. But I think we'll be operating in Texas very soon. And like maybe in a month or something. Next week? Great. Phone a friend. So yeah, so Tesla Insurance goes live in Texas next week. And it was this month, but and then we have it in California. We're going to be upgrading the version in California because in California we want to have the same kind of real-time insurance where your insurance costs are based on your actual driving history, which is like the right way to do it. But we're currently not allowed to do that in California for some reason. So we're trying to get permission from the regulators to be allowed to give accurate scores for insurance. It seems like that's the thing you'd want to do. And then hopefully, I know we'll probably have most of the country next year aspirationally, that's our goal.

I can't be, we're really getting into the weeds here. So we're definitely going to be making Cybertruck here, and so probably the ATV too. So the ATV is an interesting design challenge because ATVs are pretty dangerous. And so we want to make an ATV that is the least dangerous ATV. So if you're going to ATV, well, you might as well have the least dangerous ATV, you know. So it'll have a really low center of gravity because the battery pack will be down low. And I think we can do some things with the suspension to just make it really hard to roll this thing, you know. So it'll, because when ATVs roll is when bad things happen. So it's going to be the ATV that won't roll. So it'll be cool. You gotta have one with a Cybertruck, you know.

Okay, so I'll take one last question. Oh, what about electric planes? Yeah, yeah. We have a lot on our plate here. But electric planes, yeah, I've been dying to do that for a decade, you know, honestly. But we've got, we had quite a few fish to fry here. Maybe one day, maybe one day, the electric plane. Battery energy density is improving every year, so that's an important metric to get the cell energy density to around 450, 500 watt-hours per kilogram and have it have a pack efficiency around 400 watt-hours per kilogram. That's when electric planes start to get interesting. So I don't know, it'd be a fun problem to work on at some point. But we've got a lot to do over the next few years, so we're going to focus on these things, get them right, and then maybe one day do that. All right, thanks everyone for tuning in. Thanks for being here.