Elon Musk Interview 2017: The Future The World & Technology (Transcript)

Think about America is a nation of explorers. People came here from other parts of the world, chose to give up the known in favor of the unknown. So I think exploration, I think 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 there was a shuttle tragedy, and seven people died. That’s terrible, but a lot of people die all the time, but why do we care so much? Because it was the dream of exploration that was dying, along with those people. That’s why –

Interviewer: You know, and I’m one of those, that probably like many of you remember exactly where you were when that tragedy happened. So you have 30 plus governors here today, and we’re very excited about your willingness to be with us. You’ve hopefully heard me talk a little bit about my initiative, which is being ahead of the curve. What do you tell us as governors, what should we be thinking about in terms of innovation and developing public policy for the future?

Elon Musk: Well, it sure is important to get the rules right. In terms of legislative and executive actions, you know, it’s sort of like, think of say, professional sports or something, if you don’t have the rules right. If the game isn’t set up properly, it’s not going to be a good game. So it’s real important to get the rules right.

It’s worth noting that I think still in the United States the rules are still better than anywhere else. 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, and they never die unless somebody actually goes and kills them, and then they get a lot of momentum. 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, seeing carriages going around by itself. You know, you never know what those things might do. So there were rules in a lot of states where you had to carry a lantern in front of the automobile, and it’d have to be a hundred paces ahead of the automobile, there’d have to be someone with a lantern on a pole, like, okay. But they should really get rid of that regulation, and they did, you know. So it would really be awkward. 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.

I think in terms of tax structure, what is economically incented, and what is non-economically incented, just make sure that the incentive structure is correct. I think I’m saying, just totally common sense things here, but it’s economics 101, whatever you incent will happen. So, if you incent one thing, that thing will tend to happen more than the other thing. You incent another thing, that thing will happen, and so the economics should favor innovation. This is particularly important to protect small to medium size companies, because it’s sort 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 than if it’s a giant redwood, or something like that. So, very important to give support to small to medium size companies in the innovation front. They’re the ones that need it more than big companies. I think at this point, Tesla’s almost a big company, the biggest company anyway, so I favor you know, supporting smaller companies than Tesla, relatively speaking.

Interviewer: 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. What would you tell those people?

Elon Musk: Well first of all, as you know those incentives were a little overstated. In the case of the Gigafactory, it’s a five billion dollar investment, capital investment to get that factory going. I didn’t know this until we did the press conference, actually that over 20 years, the Nevada incentives added up to 13 billion. I actually didn’t know this.

Interviewer: Now he’s telling, go ahead.

Elon Musk: I learned it at the press conference, I’m like, “Really?” I mean, the thing is that they took what added up over 20 years and made it sound like Nevada was writing us a $13 billion check. You know, I’m still waiting for that check. Did it get lost in the mail, I don’t know.

But you know, this is the way the press works, of course. Now if you divide $13 billion by 20, then it’s like Tesla’s on average, receives sort of a tax. Well, it’s basically sales and use tax abatement is what it amounts to. So Tesla, we get on the order of $50 million to $60 million of sales and use tax abatement, divided over 20 years. But this is for something which has a $5 billion capital cost, just to get going, and then it would have to generate about $100 billion over that period of time to achieve a $13 billion tax benefit. Essentially, it’s a little over 1% over that period of time, and that’s great, okay, you know, it’s not 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 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 powertrains to a vehicle factory in California?

All of those factors weighed together is what led us to make that decision in favor of Nevada, and working with your team was great. It was very forward leaning. I think a big part was also just making sure if you feel really welcome, within a state. 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. Then we expect to establish probably at least two or three more Gigafactories in the US, in the next several years, as well as a couple overseas. 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.

I think the way I would assess the historic good of Tesla is in terms of how many years of acceleration was it? If we can accelerate sustainable energy by 10 years, I would consider that to be great success, even if it was only five years, that would still be pretty good. That’s the overall chain of optimization.

Interviewer: So 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 to 10 years, associated with energy, and with autonomous vehicles, electric vehicles?

Elon Musk: Well I think things are going to be, they’re going to grow exponentially. So there’s a big difference between five and 10 years. You know, my guess is probably in 10 years, more than a half of new vehicle production is electric in the United States. China’s probably going to be ahead of that, because China’s been super pro EV. I don’t think a lot of people know this, but China’s environmental 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, but they’re by far the most aggressive on earth. It’s crazy, everything. In fact the Coalition for Chinese Car Manufacturers has brought the Chines 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. It’s like they can’t physically do it. So China’s by far the most aggressive on electric vehicles and solar, but that’s a common misconception that they’re not. There’s one Google search way to figure this out, by the way, it’s really pretty straight, pretty easy. In 10 years, man, I think, 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 10 years. That’s going to be a huge transformation. Now the thing to bear in mind though is that new vehicle production is only about 5% the size of the vehicle fleet. So you think about how long does a car or truck last? They last 15 to 20 years before they’re finally scrapped, so new vehicle production is only, roughly, at most 1/15 of the fleet size. So even when new vehicle production switches over to electric, or to autonomous, that still means the vast majority of the fleet on the road is not.

It’ll take another you know, five to 10 years before the majority of the fleet becomes EV or autonomous. If you were to say go out 20 years, overwhelmingly things are electric, autonomous, overwhelmingly.

Interviewer: Fully autonomous?

Elon Musk: Fully autonomous.

Interviewer: So no one will have to touch the steering wheel if there is one.

Elon Musk: There will not be a steering wheel. In 20 years, it will be like having a horse. People have horses, which is cool.

Interviewer: So having a regular car will be like having a horse, is that what you’re saying?

Elon Musk: Yeah. Yeah, and there will be people that have non-autonomous cars, like people have horses. It just would be unusual to use that as a mode of transport.

Interviewer: All right, let’s talk about the energy piece, and rooftop solar, and storage.

Elon Musk: Well 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 being at roughly the temperature of cosmic background radiation, which is three degrees above absolute zero. If it wasn’t for the sun, we’d be a frozen dark ice bulb. 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 the energy we need to use to run civilization, which to us is big, but compared to the amount of energy that reaches us from the sun is tiny.

Actually it 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 a hundred miles by a hundred miles of solar panels to power the entire United States. 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 image of this where, this is what a hundred miles by a hundred miles looks like.

It was you know, a little square on the US map, and then there’s a little pixel inside there, and that’s the size of the battery pack that you need to support that, real tiny.

Interviewer: Well, you talked about 20 years from now, none of us, well some people, will still be using horses, or –

Elon Musk: It would be zero. It’s so rare.

Interviewer: So what would the energy piece look like? I mean, will there be transmission lines? Will there be a need?

Elon Musk: The 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. Of the electricity production, call it something in the order of 10%, depending upon how you count it is renewable, maybe 15% today.

So that means that there’s a massive amount solar that would need to produced and connected in order to be fully sustainable, because fully sustainable means you’re tackling transport, non-renewable electricity generation, and heating. That means that we’ll need to be a combination of utility-scale solar, 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. It’s going to be important to have rooftop solar in neighborhoods, because otherwise there’ll need to be massive, new transmission lines built, and people do not like having transmission lines go through their neighborhood. They really don’t like that.

Interviewer: I agree.

Elon Musk: So you want to have some localized energy production, combined with utility, so you want rooftop solar, utility solar, and that’s really going to be the solution from a physics standpoint, but I can’t see any other way to really do it. Maybe I’ll talk a lot about fusion and all that, but the sun is a giant fusion reactor in the sky, and it’s really reliable, it comes up every day. And if it doesn’t, we got bigger problems.

Interviewer: Somebody asked me to ask you this. We talked about workforce today, but they asked me, are robots going to take our jobs, everybody’s jobs in the future? How much do you see artificial intelligence coming into the workplace?

Elon Musk: 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. 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. And, I think we should all 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. And normally the way regulations are set up is that, a while bunch of bad things happen, there is a public outcry, and then after many years a regulatory agency is set up to regulate that industry.

There is a bunch of opposition from companies who don’t like being told what to do by regulators, and it takes forever. That, in the past, has been, bad but not 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 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.

You know, it’s not fun being regulated, it’s not. It can be pretty irksome. But in the car business we get regulated by the 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 asked every person, “Hey, do you want to get rid of the FAA and just take a chance on manufacturers not cutting corners in the aircraft, because profits were down that quarter?” It was like, “Hell no, that sounds terrible.” So, you know, I think even people who are extremely 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.”

I think there’s a role for regulators, that’s very important, and I’m against over-regulation for sure. I think we’ve got to 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 do everything better than us. I mean, all of us, you know I’m not sure exactly what to do about this. This is really the scariest problem to me, I’ll tell you. I really think we need government regulation here, just because you’re 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.

Essentially, if your competitor is racing to build AI, and you don’t, they will crush you. So 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 working a bit, and the regulators are convinced that it’s safe to proceed, then you can go. But otherwise, slow down. You kind of need the regulators to do that for all the teams in the game, otherwise the shareholders will be saying, “Hey, why aren’t you developing AI faster, because your competitor is?” “Okay, we better do that.”

Anyway, there’s something like 12% of jobs are transport. Transport will be one of the first things to go fully autonomous. When I say everything, the robots will be able to do everything. Bar nothing.

Interviewer: Let’s move back to you’re rolling out the Model 3 this year, right? How many quarters, what is that going to look like?

Elon Musk: It’s going well on that front .We got, I think if somebody orders a Model 3 today, they’d only get probably late next year. We actually just started production, made the first production unit last week. The thing that is not well appreciated, something 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 factor of a hundred, like a hundred, than to make one of something.

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. 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, so if it’s real slow at first, they say, “Oh this is real slow, look at that. They’re only going to make five cars a week, forever.” Like, “Nope”. It’ll be 10 cars a week, then 20 cars a week, then you know, 40 cars a week, then 5,000 cars a week eventually. It just grows crazy fast, so we’re hoping to get to something like 5,000 cars a week by the end of the year.

Interviewer: Well I wanted to give an opportunity for some of the governors to ask questions, and perhaps some audience questions. I was told that you’d be willing to do that. So governors, any questions for Elon? Governor Scott.

Question-and-answer session

Governor Scott: Well thank you very much. We in Vermont have partnered with Tesla in terms of a power pack in our homes. For $15 a day, you can rent this for 15 years, and it’ll carry power as a backup generation device for 12 hours. It’s been really, really interesting from my perspective, but I’m curious about vehicles, and where we’re going in the future, or how far in the future, do the cars themselves become the charging device? Like the roof, and 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?

Elon Musk: I think the future, there’s just those three legs to the stool. There’s electric cars, there’s a stationery 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 amount of electricity. Then, you know, one of the things that’s been missing, I think up until now, is having rooftop solar that looks good. That’s where we got the solar glass roof that we’re developing, and we’re doing it in different styles, so that it matches the aesthetics of a particular house, or a sort of regional style.

I think that’s actually pretty important. The conventional flat panels solars 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. So it’s the least efficient place to put solar, is on the car.

Governor Scott: Just wondering about maybe a wrap of some sort…does that make any sense in the future? Like a wrap of solar around either a building made up of solar panel, or a wrap of a vehicle, actually being the solar panel, or being the components of the vehicle itself?

Elon Musk: I don’t think so.

Governor Scott: I’ll scrap that idea.

Elon Musk: It’s just way better to put it on the roof for sure. And I’ve really thought about this, I mean really, and I’ve pushed my team about, “Isn’t there some way we can do it on a car?” I mean, technically if you had some sort of transformer-like thing, which will pop out of the trunk, like a hard top convertible, and just 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 of electricity, but that is for sure the expensive, difficult way to do it.

Governor Burgum: Elon, thanks for being here. With your background on payment systems, you understand the important role of the security in transactions. And now that you’ve got–

Elon Musk: I think security is a huge concern, cyber security?

Governor Burgum: Yes, and the vehicles you’re building now are incredibly complex software systems. I mean the car is really a rolling piece of software.

Elon Musk: It is, it’s like a laptop on wheels.

Governor Burgum: Yes, so share with us a little bit about your thoughts on cyber security, and how we protect us. You talk about protecting society when you’ve got a rolling fleet of —

Elon Musk:  I think one of the biggest risks for autonomous vehicles, is somebody achieving a fleet-wide hack. You know in principle, if somebody was able to hack, say all of the autonomous Tesla’s, they could say, I mean just as a prank, they could say, “Send them all to Rhode Island,” from across the United States. They’d be like, “Well okay “. That would be the end of Tesla, and there’d be a lot of angry people in Rhode Island. That’s for sure.

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 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 specialized encryption, so the powertrain for example, has specialized encryption. So even if somebody would gain access to the car, they could only gain access to the powertrain, or to the braking system. But it is my top concern from a security standpoint that Tesla’s making sure that a fleet-wide hack, or any vehicle-specific hack can’t occur. They have the same problem with cell phones. It’s kind of crazy today that we live quite comfortably in a world that George Orwell would have thought is super crazy. 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 well kind of all our personal information.

We do this willingly, and it’s kind of wild to think that, that’s the case. The phone, like Apple, and Google, kind of have the same challenge of making sure there cannot be a fleet-wide hack, or system-wide hack of phones, or a specific hack. That’s our top concern. It’s going to become a bigger and bigger concern. I think Tesla’s, I don’t want to tempt fate here, but Tesla’s pretty good at software, compared to the other car companies. So I do think it’s going to be an even bigger challenge for the other car companies to ensure security.

Governor Daugaard: Thank you Governor. I must thank you for speaking to all the governors today. It’s an honor to have you here. One question I had, we saw when gasoline prices went to three and a half dollars 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. 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?

Elon Musk: Well the economics, they kind of set the slope of the curve. So there’s no question in my 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, but it’s questionable what that timeframe is. And the economic incentive structure drives that timeframe. That’s really what it amounts to. You know, and the big challenge is that there’s an unpriced externality in the cost of fossil fuels. The unpriced externality is the probability weighted 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.

You know, it would be like if tossing our garbage was just free, and there was no penalty. You could just do as much as you want, and trees would be full of garbage. 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 invested interests on the sort of fossil fuel side.

Sometimes I think those guys feel kind of hard done by, because you know, it wasn’t obvious when they were creating their oil and gas companies that it would be bad for the environment, and they worked really hard to create those companies. And then they feel like, well now they’re being kind of attacked on moral grounds, when they didn’t originally start those oil companies, or build them up on bad moral grounds. It is true that we cannot instantaneously change to a sustainable situation. Then those guys will also fight pretty hard to slow down the change, and that’s really where I think is morally wrong.

Interviewer: Governor Bevin, and then Governor Hutchinson and then we’ll take some audience questions. Governor Bevin.

Governor Bevin: Elon, thank you for being here. The short version of the question, then slightly longer. The short version is, do you ever feel pressured by other’s expectations of you, and your endeavors, in light of the progress you’ve made thus far, is the short version? And more specifically when you look just at Tesla alone, and you look at a company with a $54 billion valuation, and seemingly by typical market metrics, no justifiable reason for that. 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 be matched by those that are trying to commercialize it? Does that ever affect how you think, or decisions that you make?

Elon Musk: Well it is actually I find it quite tough when there are very high expectations. I try to actually tamp down those expectations to be impossible. 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.

Now the thing that makes that you know, quite a difficult emotional hotshot for me, is that those expectations sometimes get out of control. I hate disappointing people, and so I’m trying real hard to meet those expectations, but that’s a pretty tall order, and a lot of times, it’s really not fun, I have to say. 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 publicly, I’m not going to take money off the table. I’m going down with the ship. I’ll be the last to do it. I really wouldn’t recommend anyone start a car company. I really wouldn’t recommend it. It’s not a recipe for happiness and freedom.

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. What is your comment on NASA, its mission? I was in congress, I supported NASA, but I always feel like it’s floundering. It 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?

Elon Musk: Sure. Well first of all I should say, I’m a big fan of NASA. In fact. at one point my password was, ilovenasa. Literally, that was my password. You know, 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. I love hard science, but it’s not that popular.

There’s great things in terms of the telescopes, like the Hubble, and the James Webb, and you know the rovers on Mars, and the probes outer solar system. Those are all really great things. But to get the public excited, you’ve got to get people in the picture. It’s just a hundred times different, if there are people in the picture. You know, if there’s some criticism of NASA, it’s important to remember, people in the picture.

You know, if you want to get the public support. But if you talk to a scientist about that, they’re sort of like, “Well where is the science in that?” Like, 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, but the serious scientists are like, “People just make things more expensive.” Why do we have people? Okay, well why do we have people at all? Or anywhere? Sometimes the scientists are the ones who just don’t understand, even though they’re smart people.

So you’ve got to have something that’s going to fire people up, and get them real excited. I think if we had a serious 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 gotta 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. As soon as you don’t have any competition, well okay, substantial urgency goes away, and as you make somebody a cost plus contract, you’re incenting the contractor to maximize the cost of the program, because they get a percentage. So they never want that gravy train to end, and they become cost maximizers.

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 a competitive commercial bid. Make sure that 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, okay I have a teleportation device, look there’s my PowerPoint presentation.

So milestone based, competitive commercial contracts, with competitors, and then you’ve got to be prepared to fire one of those competitors if they’re not cutting it, and re-compete the rest of the remainder of that contract. By the way, NASA’s actually already done this, and they did it with the commercial cargo transportation to the space station. That was a case that NASA actually, an RF, they thought it would work or not work, but they didn’t have the budget to do anything else. They’re like, okay we’re going to try this competitive, commercial, milestone based contracting, and it worked great. They awarded it to two companies, to SpaceX, and a company called Kessler.

SpaceX managed to meet the milestone, Kessler did not, so NASA re-competed the remainder of the contract to Orbital Sciences, and then Orbital Sciences got across the finish line. Now NASA’s got two suppliers for taking cargo to the space station, and it’s a great situation.

The same thing for commercial crew to the space station. NASA competed that in the commercial crew case, it’s SpaceX and Boeing, and that’s also a good situation. Now, I can tell you the SpaceX team is like, “We’re going to do this before Boeing. That’s for sure.” Then like, I’ll bet at the Boeing team, “We’re going to do this before SpaceX.” That’s good, 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 where it’s a sole-source cost plus contract. Again, economics 101, whatever you incent, that will happen, and people shouldn’t be surprised. Okay, if that company manages to find some excuse to double the cost of the contract, they’re going to get double the profit, because they’re 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, but those 10% of cockamamie requirements in a cost plus contract, the contractor will always say yes.

Governor Hutchinson:  There could be a future for you in government contracting at the state level.

Interviewer: Let’s go to Governor Hickenlooper, and then Governor Ducey.

Governor Hickenlooper: 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. I guess you probably get some calls from investors suggesting that maybe you don’t say that so frequently.

Elon Musk: Yeah, that’s true.

Governor Hickenlooper: I wanted to go back, and 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?

Elon Musk: In my opinion, it is the biggest risk that we face as a civilization, is artificial intelligence.

Governor Hickenlooper: So, to a group of leaders, what would you advise? How should we be addressing something that’s such a large landscape, and yet, obviously so important?

Elon Musk: I think that you know, one of the rules of government is, is to ensure the public good, and that dangers to the public are addressed. Hence, the regulatory thing. I think the first order of business would be to try to learn as much as possible, to understand the nature of the issues, to look closely at the progress that is being made, and the remarkable achievements of artificial intelligence. I mean last year GO, which is quite a difficult game to beat, that people thought that a computer would either never beat the best human player, or that it was 20 years away.

Last year AlphaGo, which was done by DeepMind, which is kind of a Google subsidiary, absolutely crushed the world’s best player. Now it can play at the top 50 simultaneously, and crush them all. Just that pace of progress is remarkable, and you can see more and more coming up. Like the robotics, you can see robots that can learn to walk from nothing, you know within hours. Way faster than any biological being.

The thing that’s most dangerous is, and it’s the hardest to kind of get your arms around because it’s not a physical thing, is kind of a deep intelligence in the network. You say, well what harm could a deep intelligence in the network do? 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.

I mean, as an example, I want to emphasize, I do not think this actually occurred, this is purely a hypothetical that I… digging my grave here. You know, there was that second Malaysian airliner that was shot down on the Ukraine-Russian border, and that really amplified tensions between Russia and the EU, in an massive way. Let’s say if you had an AI that was hit with, AI is always to maximize the value of portfolio stocks, one of the ways to maximize value would be to go long on defense, short on consumer, start a war.

Then, how could it do that? Well, you know, hack into the Malaysian Airlines aircraft routing server, route it over a war zone, then send an anonymous tip that an enemy aircraft is flying overhead right now.

Interviewer: Let’s go to Governor Ducey, and then after Governor Ducey we’ll finish our gubernatorial questions, and then two questions, quick questions, or one audience question and then we’ll be done. We’re running short on time. Governor Ducey.

Governor Ducey: Thanks Elon, I really enjoyed your comments today. As someone who 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.

I’ve heard the example you 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. You’ve given us some of these examples, of how AI could be an existential threat, but I still don’t understand as policy makers, what type of regulations, beyond slow down, which typically policy makers don’t get in front of entrepreneurs or innovators?

Elon Musk: Well I think the first order of business would be to gain insight. Right now the government does not even have insight. The right order of business would be a standard regulatory agency, initial goal, gain insight into the status of AI activity, make sure the situation is understood.

Once it is, then put regulations in place to ensure public safety. That’s it. And, for sure, the companies doing AI, well most of them, not mine, will squawk and say, “Hey this is really going to stifle innovation, blah, blah. It’s going to move to China.” It won’t. It won’t because it’s like, has Boeing moved to China? Nope, they’re building aircraft here. The same on cars. The notion that if you establish regulatory regime, that companies will just simply move to countries with lower regulatory commerce, 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, people will be extremely afraid, as they should be.

Interviewer: All right, one audience question. We’ll take the first hand that came up. Oh, right here.

Audience: Thanks Elon. Ina Fried with Axius. 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 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?

Elon Musk: Well I thought it was worth doing, you know trying hard to do, it was worth trying. I got a lot of flack from multiple fronts for even trying. Some guy rented billboards attacking me, and full page ads in the New York Times, and what not, just for being on the panel.

You know in every meeting I was just trying to make the arguments in favor of sustainability, and you know sometimes other issues, like we need to make sure that our immigration laws are not unkind or unreasonable. I, you know, 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 counsel, then I’d be essentially saying that, that wasn’t important, but it was super important, because I think the country needs to keep its word. And, you know, it’s not even a binding agreement, 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, there’s just no way I could stay on after that, so, you know, I did my best.

Interviewer: All right, well everybody if you would please join me in thanking Elon for being here today.

Elon Musk: Thank you, I thank you.

 

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