[0:00:00] I know each governor has a vision for his or her own states, and we have a responsibility to enact policies to help our citizens and our states thrive. So I've asked Elon to join us today to share his thoughts on how governors can not only stay ahead of the curve, but become innovation governors. So with that, please join me in welcoming Elon Musk.
[0:00:42] Well, good afternoon and welcome, Elon. Oh, I was going to take off my tie. Is that all right if I do that? I came in with a tie, but then I was like told it was a good tie, so. Then we'll both be more comfortable. That's good. Well, thanks for having me. Appreciate your being here today. You know, when I'm with you, it's difficult to know where to start. Let's start just what drives you.
[0:01:12] 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 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.
[0:01:44] 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 are great and going to be so. And that's the underlying principle behind Tesla and SpaceX, is that...
[0:02:12] 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 is about helping make life multi-planetary and doing what we can to continue the dream of Apollo and ultimately
[0:02:41] How do you make a contribution to life becoming multi-planetary? Let's talk a little more about that. I think everyone is very interested in that when you say making life multi-planetary. That's exciting. It is exciting. So what's your vision there? I think particularly for Americans, think about America is a nation of explorers. People came here from other parts of the world
[0:03:11] I chose to give up the known in favor of the unknown. So I think exploration, I think the 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 a lot of people die all the time. But why do we care so much?
[0:03:40] Because 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 tragedy happened. So you have 30-plus governors here today, and we're very excited about your willingness to be with us. And you hopefully heard me talk a little bit about my initiative, which is being ahead of the curve.
[0:04:11] Us as governors, what should we be thinking about in terms of innovation and developing public policy for the future? Well, it sure is important to get the rules right. In terms of legislative and executive actions, it's sort of like if you think of, say,
[0:04:43] 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. So it's real 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.
[0:05:12] It's very easy to put something in place which is an inhibitor to innovation without realizing it. In terms of the regulatory environment, it's always important to bear in mind that regulations are immortal. They never die unless somebody actually goes and kills them, and then they get a lot of momentum.
[0:05:42] 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 no longer make sense. There used to be a rule in the early days when people were concerned about automobiles because that was a pretty scary thing, to see a carriage just going around 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.
[0:06:10] And I had to be like 100 paces ahead of the automobile. There had to be someone with a lantern on a pole. I'm like, okay. But you should really get rid of that regulation. And they did, you know. Because that would really be 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 the greater good.
[0:06:40] 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. I think I'm saying just totally common sense things here. It's economics 101. Whatever you incent will happen. If you incent one thing, that thing will tend to happen more than the other thing. If you incent another thing,
[0:07:10] 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. 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.
[0:07:38] than if it's a giant redwood or something like that. So very important to give support to small to medium-sized companies on the innovation front. And they're the ones that need it more than big companies. And I think at this point Tesla is almost a big company, a biggish company anyway. So I'd favor supporting smaller companies than Tesla.
[0:08:08] Relatively speaking. What would your response be? Because there are critics out there with regard to incentives. And Tesla has been, and I can speak from experience, the beneficiary of incentives, economic incentives with regard to the gigafactory. Sure. What would you tell those people? Well, first of all, as you know, those incentives were a little overstated.
[0:08:38] In the case of the Gigafactory, it's a $5 billion capital investment to get that factory going. 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.
[0:09:03] Now he's telling. Go ahead. Literally, I learned it at the press conference. I'm like, really? 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. I'm still waiting for that check. Did it get lost in the mail? I don't know. This is the way the press works, of course.
[0:09:33] It's basically sales and use tax abatement is what it amounts to. We get on the order of 50 to 60 million of sales and use tax abatement divided over 20 years.
[0:10:03] But this is for something which has a $5 billion capital cost just to get going, and then 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...
[0:10:32] The way it was characterized in the press. Because if it's put in the proper context, it sounds like, okay, well, that's neat. 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. And we actually...
[0:11:02] We had slightly bigger incentive packages from some other states that were offered, 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?
[0:11:31] And 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. It was very forward-leaning. And a big part was also just making sure you feel really welcome within the state.
[0:11:59] That's sort of what led us to make the decision for the Gigafactory. And then we have another factory in New York doing solar panels. Actually, it will be the biggest solar panel producer in North America when it's done. And then we expect to establish probably at least two or three more Gigafactories in the US in the next several years.
[0:12:29] As well as a couple overseas. But 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 of Tesla is in terms of how many years of acceleration was it.
[0:12:59] If we can accelerate sustainable energy by 10 years, I would consider that to be a great success. Even if it was only five years, that would still be pretty good. That's the overarching optimization. You've talked about interplanetary travel and sustainable energy and the vehicles a little bit. What would you want things to look like in five years?
[0:13:29] What do you think will happen in five to ten years associated with energy and with autonomous vehicles, electric vehicles? Well, I think things are going to be, they're going to grow exponentially. So there's a big difference between five and ten years. My guess is probably in ten years, more than a half of new vehicle production is electric in the United States.
[0:14:08] China is probably going to be ahead of that because China has been super pro-EV. I don't think a lot of people know this, but China's environmental policies are way ahead of the US. Their mandate for renewable energy far exceeds the US. I think sometimes people are under the impression that China is either dragging their feet or somehow behind the US in terms of sustainable energy promotion.
[0:14:35] They're by far the most aggressive on Earth. It's crazy. In fact, a coalition of Chinese car manufacturers just wrote the Chinese government to beg for them to slow down the mandate because it's too much. They need to make 8% electric vehicles, I think, next year or in two years or something. They can't physically do it. China is by far the most aggressive on electric vehicles and solar.
[0:15:06] But that's a common misperception that they're not. There's one Google search way to figure this out, by the way. It's really pretty straight, pretty easy. So in 10 years, man, I think, yeah. So half of all production, I think, will be EV. 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.
[0:15:37] 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 size of the vehicle fleet. So you think about how long does a car or truck last? And they last 15 to 20 years before they're finally scrapped. So new vehicle production is only roughly at most 1 15th of the fleet size.
[0:16:07] So even when new vehicle production, say, switches over to electric or to autonomous, that still means the vast majority of the fleet on the roads is not. It'll take another, you know, five to ten years before that becomes majority, the majority of the fleet becomes EV or autonomous. But if you were to say go out 20 years, overwhelmingly things are electric, autonomous, overwhelmingly.
[0:16:37] Fully autonomous? Fully autonomous. So no one will have to touch the steering wheel if there is one? There will not be a steering wheel. In 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? Yeah. Yeah. And there will be people that have...
[0:17:07] You know, non-autonomous cars like people have horses. It 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. First of all, it's important to appreciate that the Earth is almost entirely solar-powered today in the sense that the sun is the only thing that keeps us from
[0:17:38] Being at roughly the temperature of cosmic background radiation, which is three degrees above absolute zero. For one person would be a frozen dark ice ball. And the amount of energy that reaches us from the sun is tremendous. It's 99% plus of all energy that Earth has. Then there's this energy we need to...
[0:18:06] It's used to run civilization, which to us is big, but compared to the amount of energy that reaches us from the sun is tiny. It's very easy. It actually doesn't take much. If you wanted to power the entire United States with solar panels, it would take a fairly small corner of Nevada, Texas, Utah, anywhere. You only need about 100 miles by 100 miles of solar panels.
[0:18:37] It's part of the entire 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 mile. That's it. I showed the graph or image of this where this is what 100 miles by 100 miles looks like. It's like a little square on the US map.
[0:19:07] 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, Will, you talked about 20 years from now, none of us, well, some people will still be using horses. It won't be zero. Yeah. It's too rare. So what will the energy piece look like? I mean, will there be transmission lines? Will there be a need? Yeah, I think the... So there's...
[0:19:36] Use of energy is roughly divided into three areas. They're more or less equal at a high level. There's about a third of energy is used for transportation of various kinds. About a third is used for electricity. About a third is used for heating. So if you want to have, of the electricity production, call it something in the order of
[0:20:07] 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 transport, non-renewable electricity generation, and heating. So that means there will need to be a combination of utility-scale solar,
[0:20:38] And rooftop 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. And it's going to be important to have rooftop solar in neighborhoods because otherwise you're going to...
[0:21:08] There'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. And I agree. So you want to have some localized energy production combined with utility. So you want rooftop solar, utility solar, and
[0:21:34] That's really going to be the solution from a physics standpoint that I can't see any other way to really do it. People talk a lot about fusion and all that, but the sun is a giant fusion reactor in the sky. It's really reliable. It comes up every day. So if it doesn't, we've got bigger problems. Somebody asked me to ask you this. We talked about...
[0:21:59] How much do you see artificial intelligence coming into the workplace? Well, 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.
[0:22:31] I keep sounding the alarm bell, but until people see robots going down the street killing people, they don't know how to react because it seems so ethereal. I think we should be really concerned about AI. AI is a rare case where I think we need to be proactive in regulation instead of reactive because I think by the time we are reactive in AI regulation, it's too late.
[0:23:03] And normally the way regulations are set up is that a whole bunch of bad things happen. There'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...
[0:23:34] Something which represented a fundamental risk to 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. They were harmful to...
[0:24:02] 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 can be pretty irksome, but in the car business, we get regulated.
[0:24:30] by Department of Transport, by EPA, and a bunch of others. And there's regulatory agencies in every country. In space, we get regulated by FAA. But 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 on the aircraft because profits were down that quarter?
[0:25:01] I was like, hell no. That sounds terrible. So, you know, I think even people who are pretty, you know, 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 build a good aircraft and good cars and that kind of thing. So, you know, I think there's a role for regulators. That's very important.
[0:25:30] And I'm against over-regulation, for sure. But I think we better get on that with AI, pronto. And there'll certainly be a lot of job disruption. Because what's going to happen is robots will be able to do everything better than us. I'm including, I mean, all of us, you know. Yeah. I'm not sure exactly what to do about this.
[0:26:05] This is really the scariest problem to me, I'll tell you. I really think we need government regulation here, because this is ensuring the public good is served. Because you've got companies that are racing, that kind of have to race to build AI, or they're going to be made uncompetitive.
[0:26:32] Essentially, if your competitor is racing to build AI and you don't, they will crush you. Then you're like, we don't want to be crushed. I guess we need to build it too. That's where you need the regulators to come in and say, hey guys, you all need to really just pause and make sure this is safe. When it's cool and the regulators are convinced that it's safe to proceed, then you can go. Otherwise, slow down.
[0:27:02] But you kind of need the regulators to do that for all the teams in the game. Otherwise, the shareholders will be saying, like, hey, why aren't you developing AI faster? Because your competitor is. Like, okay, we better do that. Anyway, so it's like, I mean, there's something like 12% of jobs are transport. Transport will be one of the first things to go fully autonomous.
[0:27:33] But when I say everything, like the robots will be able to do everything, bar nothing. Let's move back to you're rolling out the Model 3 this year, right? How many orders? What is that going to look like? Yeah, it's going well on that front. We've 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 started production.
[0:28:06] I made the first production unit last week. And the thing that is not well appreciated about cars and any kind of new technology is how hard it is to do the manufacturing. It is vastly harder to do the manufacturing by a factor of 100, like 100, than to make one of something.
[0:28:33] With maybe 50 or 60 people, we could make a prototype of practically anything in six months. Now to manufacture that thing, we need 5,000 people to spend three years, and that's considered really fast. So manufacturing does this kind of S-curve where it's excruciatingly slow at first, and then it grows exponentially. But people tend to extrapolate on a straight line.
[0:29:03] So if it's real slow at first, they say, oh, it is real slow. Look at that. They're only going to make five cars a week forever. I'm 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 eventually. It 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.
[0:29:31] 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 will carry power as a backup generation device for 12 hours.
[0:30:00] 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 deck lids and hood? Or do the batteries get so efficient that you don't need that and then you just power up for a week or something like that? Where are we going in the future with battery storage?
[0:30:28] Yeah, I think the future is there's just three legs to the stool. There's electric cars, there's a stationary battery pack, and solar power. With those three things, you can have a completely sustainable energy future. That's all that's needed. On the solar front, like I said, it's going to be a combination of rooftop solar and utility-scale solar. You'll need both because of the enormous demand for electricity. And then one of the things that's
[0:30:58] What's been missing up until now is having rooftop solar that looks good. That's where we got the solar glass roof that we're developing. We're doing it in different styles so that it matches the aesthetics of a particular house or regional style. I think that's actually pretty important.
[0:31:26] The conventional flat panel solos for flat roofs and for commercial will be the way to go. Putting solar panels on the car itself, not that helpful because the actual surface area of the car is not very much and cars are very often indoors. It's the least efficient place to put solar is on the car. Just wondering about maybe a wrap of some sort.
[0:31:56] Does that make any sense in the future, like 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 the roof, for sure. I really thought about this, and I pushed my team about like, isn't there some way we could do it on the car?
[0:32:26] Technically, if you have some sort of transformer-like thing which will pop out of the trunk like a hardtop convertible and just like ratchet solar panels over the whole surface area of the car, extending for the entire, say, square footage of a parking space, provided you're in the sun, that would be enough to generate about 20 to 30 miles a day.
[0:32:55] But that is for sure the expensive, difficult way to do it. Governor Burgum. Still thought about it. Maybe we should. Elon, thanks for being here. With your background in payment systems, you understand the important role of security in transactions. I think security is a huge concern. Like cybersecurity. Yes, and the vehicles you're building now are incredibly complex software systems. I mean, the car is really...
[0:33:26] 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,
[0:33:56] I mean, just as a prank, I could say, like, send them all to Rhode Island. From across the United States. And they'll be like, well, okay, that would be the end of Tesla. And there'll be a lot of angry people in Rhode Island, that's for sure. So we've got to make super sure that a fleet-wide hack is basically impossible, and that if people are in the car, that they have override authority on...
[0:34:25] Whatever the car is doing. So 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 subsystems within the car that also have
[0:34:54] Specialized encryption. So the powertrain, for example, has specialized encryption. So even if somebody were to gain access to the car, they cannot gain access to the powertrain or to the braking system. But it is my top concern from a security standpoint at Tesla is making sure that fleet-wide hack 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...
[0:35:25] We all carry a phone with a microphone that can be turned on really at any time without our knowledge with a GPS that knows our position and a camera and kind of all of our personal information. We do this willingly.
[0:35:56] And it's kind of wild to think that that's the case. So the phone, like Apple and Google kind of have the same challenge of making sure there cannot be a fleet-wide hack or a system-wide hack of phones or a specific hack. So that's our top concern. Yeah. It's going to become a bigger and bigger concern. Tesla's, I don't want to tempt fate here,
[0:36:30] Tesla is pretty good at software compared to the other car companies. And so I do think it's going to be an even bigger challenge for the other car companies to ensure security. Thank you. Governor Dugard. 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.
[0:36:56] We saw when gasoline prices went to $3.5 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. Can you speak to that?
[0:37:26] 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, a lot of trains are already electric. All ships.
[0:37:56] But it's a question of what the time frame is. And the economic incentive structure drives that time frame. That's really what it amounts to. And the big challenge is that there's an unpriced externality in the cost of fossil fuels. So the unpriced externality is the probably weighted
[0:38:29] What is the harm of 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. It would be like if tossing out garbage was just free, and there was no penalty, you just do as much as you want, then the streets would be full of garbage.
[0:39:01] And we regulated a lot of other things like sulfur emissions and nitrous oxide emissions and 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. And sometimes I feel like those guys feel 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.
[0:39:31] 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 start those companies or build them up on bad moral grounds. And it is true that we cannot instantaneously change to a sustainable situation. But then those guys will also fight pretty hard to slow down the change. And that's really where I think is morally wrong.
[0:40:00] Go to Governor Bevin and then Governor Hutchinson. Then we'll take a couple, and then Governor Hickenlooper, and then we'll take some audience questions. Governor Bevin. Elon, thank you for being here. A 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 in light of the progress you've made thus far?
[0:40:27] 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,
[0:40:39] No justifiable reason for that. What are you saying? I'm just saying, I'm curious. In all seriousness, do you feel a concern ever that your intellect and 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, I find it quite tough.
[0:41:09] When there are very high expectations, I try to actually tamp down those expectations as to be possible. In fact, I've gone on 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 future.
[0:41:40] The thing that makes that quite a difficult emotional hardship for me is that those expectations sometimes get out of control. I hate disappointing people. I'm trying real hard to meet those expectations, but that's pretty total order. A lot of times, it's really not fun, I have to say.
[0:42:11] A whole lot less fun than it may seem. So, yeah. I mean, I don't ever sell any stock unless I have to for taxes. So, you know, to publicly, I'm not going to, like, take money off the table. You know, I'll be last. I'm going down with the ship. So, I'll be the last to do it. But, yeah, I mean, it's...
[0:42:46] Oh, I really wouldn't recommend anyone start a card company. I really wouldn't recommend it. It's not a recipe for happiness and freedom. Thanks, Governor Bevin. Governor Hutchinson. Mr. Musk, Asa Hutchinson from 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 the hallmark of America.
[0:43:16] 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, its mission, and what advice would you give us? Sure. 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.
[0:43:44] Literally, that was my password. And I think NASA does a lot of good things for which it doesn't get enough credit and that the public, I guess, doesn't know that much about. Most members of the public, they're not really into hard science. It's not the thing they're tuning in for most of the time.
[0:44:16] I love hard science, but it's not that popular. But there's great things in terms of the telescopes like the Hubble and the James Webb and the rovers on Mars and the probes to the outer solar system. Those are all really great things. But to get the public excited, you've got to get people in the picture.
[0:44:47] 100 times different if there are people in the picture. And if there's some criticism of NASA, it's important to remember people in the picture if you want to get the public support. But if you talk to a scientist about that, they're like, well, where's the science in that? You're not getting it. It's like, that's not why people are giving you money. I mean, it's a little bit of the reason.
[0:45:17] But the serious scientists are like, people just make things more expensive. Like, why do we have people? Like, okay, well, why do we have people at all? Or anywhere? Sometimes the scientists are the ones who just don't understand. They're like smart people, but like, you know. So you've got to have something that's going to fire up the, you know, fire people up and get them really excited. And like, I think if we had a serious,
[0:45:47] The goal of having a base on the moon and sending people to Mars and said, okay, we're going to be outcome-oriented. How are we going to do this? Okay, we've got to change the way contracting is done. You can't do these cost-plus sole-source contracts because then the incentive structure is all messed up. So as soon as you don't have any competition, well, okay, there's no sense of urgency goes away.
[0:46:14] And as soon as you make something a cost plus contract, you're incenting the contractor to maximize the costs of the program because they get a percentage. So they never want that gravy train to end, and they want to make it an end. 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. Essentially, that's what happens. So it's critically important that we change the contracting structure to be
[0:46:44] A competitive commercial bid. Make sure there are always 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. Everything works in PowerPoint. I have a teleportation device. Look, here's my PowerPoint presentation. So milestone-based, competitive.
[0:47:14] And then you've got to be prepared to fire one of those competitors if they're not cutting it, and re-compete the rest of the remainder of that contract. And by the way, NASA's actually already done this, and they did it with the commercial cargo transportation to the space station. And that was a case where NASA, you know, that NASA actually, I don't know if they thought it would work or not work,
[0:47:43] They didn't have the budget to do anything else. So they're like, OK, we're going to try this competitive commercial milestone-based contracting. And it worked great. And they awarded it to two companies, to SpaceX and a company called Kistler. And SpaceX managed to meet the milestones. Kistler did not. So then NASA re-competed the remainder of the contract to Orbital Sciences. And then Orbital Sciences got across the finish line. So now NASA's got two suppliers for
[0:48:13] Taking cargo 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 I think that's also a good situation. So now, I can tell you, the SpaceX team is like, we're going to do this before Boeing. That's for sure. And then I read about the Boeing team, they're like, we're going to do this before SpaceX. That's good.
[0:48:43] It's a good forcing function to get things done. I can't tell you how important that contracting structure is. That is night and day. There's way too much in government which is where it's a sole source cost plus contract. Again, economics 101. Whatever you incent, that will happen. People shouldn't be surprised. It's like, oh, you just, you know.
[0:49:12] I said, OK, 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 getting a percentage. So they're going to do exactly that. And also, 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 are cockamamie that double the price of the project. For those 10% of cockamamie requirements,
[0:49:41] In a cost plus contract, the contractor will always say yes. 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. But I do suspect every time you say publicly that the stock price is higher than we have any right to believe.
[0:50:05] 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. Did I get that close enough? In my opinion, it is the biggest risk that we face as a civilization is artificial intelligence. And so to a group of leaders,
[0:50:34] What would you advise that we should, how should we be addressing something that's such a large landscape and yet obviously so important? I think that the, you know, one of the roles of government is to ensure the public good and 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, you know, to understand.
[0:51:04] The nature of the issues, to look closely at the progress that is being made and the remarkable achievements of artificial intelligence. Last year, Go, which is quite a difficult game to beat, that people thought would never be beaten by a computer, that a computer would either never beat the best human player or that it was 20 years away.
[0:51:32] And last year, AlphaGo, which was done by DeepMind, which is kind of a Google subsidiary, absolutely crushed the world's best player. And now it can play at the top 50 simultaneously and crush them all. So just like that pace of progress is remarkable.
[0:52:04] And you can see more and more coming out in robotics. You can see robots that can learn to walk from nothing within hours, like way faster than any biological being. But the thing that's most dangerous is, and it's the hardest to kind of wrap, kind of get your arms around because it's not a physical thing,
[0:52:38] There's kind of a deep intelligence in the network. He said, well, what harm could a deep intelligence in the network do? He said, well, it could start a war by doing fake news and spoofing email accounts and fake press releases and just by manipulating information. The pen is mightier than the sword.
[0:53:07] I mean, as an example, I want to emphasize, I do not think this actually occurred. This is purely a hypothetical that I... I'm digging my grave here. But, you know, there was that second Malaysian airliner that was shut down on the Ukrainian-Russian border. And that really amplified tensions between Russia and the EU.
[0:53:36] 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 on defense, short on consumer, start a war. And then how could it do that? Well, hacking into the Malaysian Airlines
[0:54:06] Let's go to Governor Ducey and then we'll have...
[0:54:26] After Governor Ducey, we'll finish our gubernatorial questions and then two questions, then quick questions, or one audience question, and then 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 know exactly what we're dealing with with AI.
[0:54:53] 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 still don't understand, as policymakers, what type of regulations beyond slow down, which typically...
[0:55:22] 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. And 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.
[0:55:54] Once it is, then put regulations in place to ensure public safety. That's it. And for sure, the companies doing AI will, most of them, not mine, will squawk and say, hey, this is really going to stifle innovation, blah, blah, blah. It's going to move to China. It won't. And it won't because it's like, has Boeing moved to China? Nope. They're building aircraft here. Same on cars.
[0:56:25] And so the notion that if you establish a regulatory regime that companies will just simply move to countries with lower regulatory commons 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 making sure that there is awareness at the government level. I think once there is awareness,
[0:56:55] People will be extremely afraid, as they should be. One audience question. We'll take the first hand that came up. Right here. Thanks, Elon. Early on in this administration, you had argued pretty vociferously 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...
[0:57:28] That was kind of the last straw and you were going to drop off. What drove you to that? And if you were still speaking to him today, what would you say to the president? Well, I thought it was worth doing, trying hard to, you know, it was worth trying. I got a lot of flak from multiple fronts for even trying. When some guy ran at billboards and like attacking me and like full page ads in the,
[0:58:01] New York Times and what not. Just for being on the panel. 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.
[0:58:26] I did my best, and I think in a few cases I did actually make some progress, which gave me some encouragement to continue. But 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 a country needs to keep its word. And, you know, it's not even a binding agreement.
[0:58:58] So we could always slow it down. The argument that there would be job losses, well, we could see if there are job losses before we exit the agreement. 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, I did my best. All right, well, everybody, if you would please join me in thanking Elon for being here today. Thank you.
[0:59:44] Well, that was a treat, wasn't it?