“Excuse me. Next. Boring, bone-head questions are not cool,” Musk said in response to one analyst’s question.
Tesla’s first-quarter earnings call took a strange turn on Wednesday when CEO Elon Musk grew tired of taking analyst questions and instead threw it to a YouTuber and Tesla shareholder who had been granted access to the call.
“We’re going to go to YouTube. Sorry. These questions are so dry. They’re killing me,” Musk said to one analyst.
That analyst, Joseph Spak of RBC, asked about Model 3 reservations. As a reminder, the Model 3 is a critical mile-marker for Tesla’s shift to a mass market automaker.
“The first question is related to the Model 3 reservations, and I was just wondering if you gave us a gauge as maybe some of the impact that the news has had. Like, of the reservations that actually opened and made available to configure, can you let us know, like, what percentage have actually taken the step to configure?”
Let’s just say analysts aren’t happy. In the hours since the call, the stock shot down sharply.
Musk, who called a question Sanford C. Bernstein & Co. analyst Antonio M. Sacconaghi asked about capital expenditures “boring,” is coming off a difficult quarter with regard to Tesla’s Model 3 production.
The full exchange:
Sacconaghi: And so where specifically will you be in terms of capital requirements?
Musk: Excuse me. Next. Boring, bone-head questions are not cool.
Still, he’s celebrating the quarter since the company was able to beat Wall Street’s expectations for its losses and revenue — that’s in spite of posting a record-high loss of $710 million on $3.4 billion in revenue.
During the earnings call, Musk took multiple questions from YouTuber and Tesla shareholder Galileo Russell — atypical for Musk, who usually only takes one or two questions from each analyst.
Here are some of the more interesting things Musk did and didn’t address during the odd call:
Raising more money
Several analysts believe Tesla needs to raise some additional equity but Musk reiterated that he doesn’t want to.
In his letter to shareholders, Musk said in spite of missing his adjusted Model 3 production goals and its huge losses, the company will reach profitability in the second half of this year.
Replacing Tesla’s VP of Autopilot software
Tesla’s Autopilot department saw another executive departure at the end of April. Jim Keller, who led the software efforts for Tesla’s driver-assist feature called Autopilot, left to join Intel. Musk said they don’t plan on replacing him.
“The design of the Tesla hardware is primarily led by Pete Bannon, I should be clear… The lead designer of that is Pete Bannon, who is still with Tesla. And, of course, Andrej Karpathy is head of our AI team. So, we don’t plan to hire a replacement for Jim’s position.”
What he didn’t say was that Keller is the third in a slew of recent departures from the Autopilot department. Before Keller, Chris Lattner — who came to Tesla from Apple — and Sterling Anderson left the company in the last two years.
Launching a network of shared autonomous Tesla vehicles
Part of Musk’s second master plan is to launch a network that would enable owners to share their self-driving Teslas and make money off it. We’ve pointed out some of the challenges of that in the past.
Even though the company has yet to exhibit any fully self-driving capabilities — nor has it tested cars with a high level of automation on public roads (as far as we know) — Musk says he thinks Tesla will be technically ready to launch a network of autonomous vehicles by the end of next year.
“In order for that to be in place, we have to obviously sell full autonomy and we’re making really good progress on that front. I believe that the current production of — vehicles that we are currently producing are capable of full autonomy with the only thing that would really be … needed … is a computer upgrade to have more processing power for the vision neural net.”
What’s the holdup, then? According to Musk, it’s the media. Musk said journalists are writing inflammatory headlines about safety issues around autonomous technology, and because of that the regulatory progress has been stalled.
“The thing that’s tricky with autonomous vehicles is that autonomy doesn’t reduce the accident rate or fatality rate to zero. It improves it substantially, but the reality is that even though … we think autonomy … reduces the probability of a death by 30 percent, which would be incredible because there’s like — broadly there’s over a million, I think 1.2 million automotive deaths per year.”
“And how many do you read about? Basically, none of them. However, if it’s an autonomous situation, it’s headline news, and the media fails to mention that. Actually, they shouldn’t really be writing the story, they should be writing the story about how autonomous cars are really safe, but that’s not the story that people want to click on.”
“So they write inflammatory headlines that are fundamentally misleading to the readers. It’s really outrageous.”
What Musk failed to mention is that, first, there is no fully autonomous vehicle on the road today to assess the safety of, and second, a federal agency is still investigating a recent Tesla crash that led to the death of a driver. Autopilot is not fully autonomous, to be clear. But this version of advanced cruise control could still be found at fault in this fatality.
When it comes to safety, Musk repeatedly cites a 2017 federal investigation into a fatality that involved a Tesla vehicle that had Autopilot engaged and says it found that Autopilot reduces crash rates by as much as 40 percent. But that’s not exactly accurate, as Reuters first reported. The U.S. National Highway Traffic Safety Administration said that it did a “cursory comparison” of crash rates before and after Autopilot was introduced but did not evaluate whether Autopilot was engaged during the instances of a crash.
“NHTSA performed this cursory comparison of the rates before and after installation of the feature to determine whether models equipped with Autosteer were associated with higher crash rates, which could have indicated that further investigation was necessary,” the agency said in a statement.
Opening up Tesla charging infrastructure to other companies
Musk said he’d be willing to open up the Tesla supercharger network to other automakers so long as they pay the share of the costs of the network based on usage and are able to connect to the chargers.
“So this is something we’re very open to, but so far none of the other carmakers have wanted to do this,” he said.
When asked whether this would give up a competitive moat, Musk replied: “I think moats are lame.”
“It’s nice, sort of quaint in a vestigial way,” he continued. “If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness.”
On the safety of Autopilot
Musk said miles driven with Autopilot are steadily increasing — “something on the order of one-third of highway miles” driven in Teslas — and that the company will begin publishing its safety statistics on a quarterly basis.
“And one of the common misimpressions [sic] is that when there is, say, a serious accident on Autopilot, people for some reason think that — or some of the articles think that it’s because the driver thought the car was fully autonomous and it wasn’t, and we somehow misled them into thinking it was fully autonomous. It is the opposite case.”
“When there is a serious accident, almost always — in fact, maybe always, the case that it is an experienced user and the issue is more one of complacency. Like, they get too used to it. That tends to be more of an issue. It is not a lack of understanding of what autopilot can do.”
The NHTSA investigation in 2017 indeed concluded that the driver in a fatal collision in May 2016 became too reliant on Autopilot.
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