23 Key Elon Musk & JB Straubel Highlights From 2016 Tesla Shareholder Meeting

One of the keys to good communication, in my eyes, is to open up and talk to people in an honest way as you would a friend. As you’ve probably already read, that’s one of the things that I think makes a lot of people love Elon Musk (one of several things). Still, he surprised me with Tesla’s approach to its 2016 shareholder meeting. The approach was to tell a super long story about Tesla’s history, alongside several other longtime Tesla employees who were invited onstage to tell some of their own favorite stories at different points along the timeline.

You can watch the entire video here. And below are some of the highlights in text.

Here were some of the goodies I really liked from the long intro:

1. When the Tesla Roadster prototypes were first used to give test drives at the Santa Monica airport, they were basically falling apart by the end, and JB Straubel and crew had to use ice water behind the curtains to cool the batteries at some point.
2. Nonetheless, despite expectation that they might get ~10 reservations for the Roadster, they got ~100 and were blown away and thrilled at such a high number.
3. As stated plenty of times before, Elon expected Tesla to fail. He figured it had ~10% chance of succeeding. As such, he didn’t want to take anyone else’s money and lose it, and so ended up putting ~99% of the initial investment into the company.
4. Other early employees didn’t seem to think it would succeed either. But they were into the idea and mission enough anyway to get onboard. 😀
5. When Tesla hire #9 was being interviewed for the job, she said that she was told the business plan was to grow to ~35 employees and to outsource almost everything….
6. The Tesla Roadster was initially supposed to be built off of AC Propulsion technology, but along the way, the Tesla team realized they had to re-do much of the technology in order to make it genuinely capable of production. As just two points regarding that, the AC Propulsion system was all analog (and as such, was unreliable, broke down a lot, and couldn’t easily be replicated), and batteries were even in the doors … not safe.
7. Going backward a bit, Elon noted at the beginning that he tried really hard to get the AC Propulsion guys to commercialize and mass produce an electric sports car. They were never interested, so Elon finally asked if he could do so and license their tech. Clearly, Elon later found out some of the reasons the AC Propulsion guys weren’t interested in trying to mass produce their tech….
8. You’ve probably heard about the Daimler Smart Car story before, but if not: In order to potentially bring Daimler on as an investor or business partner, Tesla determined it had to get a Smart Car (from Mexico — Tesla sent a guy down to Mexico with $20,000 to get one — since the cars weren’t available in the US) in order to electrify it based on a custom-designed battery and drivetrain JB and crew put together in ~3 months. The car packed all the torque of a Roadster into the Smart Car, and was thus pretty amazing. Daimler loved it, and the German company saved Tesla from premature death. Elon noted repeatedly that Tesla wouldn’t be around if it weren’t for Daimler.
9. Tesla decided to build the Gigafactory because the company basically had no other way to solve the problem of how to get enough batteries to meet its growth needs.
10. The Gigafactory also allowed Tesla to redesign how battery production was done, which was helpful since battery production has been focused around consumer electronics, production scales that match consumer electronics, and processes that match them. The Gigafactory provided a great opportunity to improve the production process of lithium-ion batteries for EVs.
11. Also, Tesla has now realized it can produce ~3 times more batteries in the same initial planned form factor of the Gigafactory than the crew initially expected.
12. Very importantly, Elon noted that the broad conception that the Tesla battery cells are the same as the 18650 cells used in laptops, etc., is actually wrong. The shape is the same, but the internals are different. Normal laptop batteries really aren’t suitable for use in a car, he noted.
13. Regarding the Model X, Elon said, “we’re almost there … in making the [falcon-wing] doors useful.” But he says it’s a software problem, and they are close to getting that all worked out so that the doors will function correctly.
14. Elon reiterated that the Model S and Model X will remain Tesla’s technology leaders, but that is not because Tesla is withholding features from the Model 3. It is because new technology is expensive and needs several iterations and economies of scale before it can be included in an affordable car.
15. Elon closed his long opening presentation by waxing poetic on how much more improvement can be made in improving the machines that build the machines than simply trying to improve the end product. It was really an excellent segment, and I’ll highlight it later one once the video is up.
16. Tesla just gets ~1% discount from Nevada for having the Gigafactory there, and that’s not cash up front but often just a reduction in taxes & fees the state wouldn’t even receive if Tesla wasn’t there. But Elon noted that the article title “Tesla Gets 1% Discount On Gigafactory From Nevada” wouldn’t get any clicks.
17. Only two American car companies haven’t gone bankrupt — Ford and Tesla.

Answers from the Q&A:

1. Tesla is going to have to charge for an extra option/package for free-for-life Supercharging with the Tesla Model 3. It seems the point is that, otherwise, Tesla wouldn’t be able to hit its $35,000 price target — Elon noted a need to decouple the costs of the cars and Supercharging. But the underlying aim of everything Tesla does is to make electric driving more affordable. That’s what it is aiming to do, in order to hasten a shift to sustainable transport.
2. JB & Elon both noted as well that people are undervaluing their time by trying to “take advantage” of free Supercharging rather than just charging at home. Elon attributed it to the habit of taking a car to the gas station, but noted how absurd it would be to take your phone somewhere to charge it … even if the charging was **%%free%%**!
3. Elon responded that Tesla could one day get into electric airplanes, but battery energy density isn’t quite there yet, and JB and Elon need to stay focused on their goal of advancing sustainable transport as efficiently and effectively as possible. They were asked a few times about this idea, and Elon clearly indicated that JB & Elon were about excited about the idea as anyone, but they have to stay focused and the technology isn’t quite ready for that yet. (Note that JB & Elon first had lunch because JB was trying to get Elon to invest in an electric airplane idea JB wanted to move forward with.)
4. “In the future, you can expect a wide range of products from Tesla,” Elon said after a lady requested a specific class of Tesla. Elon said he couldn’t talk about future models, but then gave the statement above with a tempting facial expression.
5. Elon is highly confident that Tesla/Panasonic Gigafactory battery cell production will be the best in the world, by far. Elon also seemed to be in great awe at the Panasonic machines used for this … which Tesla, unfortunately, can’t show off on tours.
6. “The amount of BS that’s in batteries is ridiculous. You can maybe believe 1% of what you read about batteries. Maybe 1%.”
7. “Every gas or diesel car driving down the road has a de facto subsidy on it” because of the externalities of pollution and CO2 emissions. (I feel like I wrote about that a few years ago….) Elon indicated a preference for a revenue-neutral carbon tax, so that there is no actual increase in taxes and the size of government, and to lower regressive sales taxes and increase carbon taxes.