Fireside Chat: Elon Musk at Ron Baron’s 32nd Baron Investment Conference (Transcript)

Here is the full transcript of Elon Musk’s insightful conversation at Ron Baron’s Baron Capital Conference held on November 14, 2025. In this video, Musk shares his perspectives on innovation, business, and the future, making it a must-watch for anyone interested in visionary leadership and cutting-edge ideas from one of today’s most influential minds.

Opening Remarks and Introduction

RON BARON: Thank you everyone. As I said before, this is a lot different than convention hall and Asbury Park. Today we’re privileged to have Elon Musk join us virtually. And there couldn’t be anyone more appropriate to speak to today. When a theme of our conference is changing lives, there’s no one who’s changed our lives more than Elon. Especially changed our lives financially, but changed everyone else’s lives. And that really feels like it’s just beginning.

Without him, there’d be no electric vehicles, there’d be no FSD. Has anyone ever heard of full self-driving 5 or 10 years ago? Has anyone ever thought about that? So reusable rockets. No one has been able to do that before. Congratulations to Jeff Bezos for accomplishing it yesterday. First time. We’ve already done what, 5,000 flights and we have 9,000 satellites. I think it is on the way to 15,000.

And the people who did that for him, did it for Jeff, are people who used to work for SpaceX but couldn’t go fast enough for Elon. So now they went over to Bezos. So there would be no Starlink, no Refi, no Optimus.

In fact, one of the first questions I wanted to ask is I was telling my assistant about Optimus before and how the plan is to go from a million production next year to 10 million the following year, to 100 million to a billion. And what she asked me was, well, so where’s the room for them on the sidewalks? Are you going to build something? Is that the idea that we have behind Boring company to go underground for the robots to walk around or fly above? Where’s the room for them?

Population Density and Space for Robots

ELON MUSK: Well, actually you can fit all of humanity on one floor in the city. That’s how small the humans are. And Optimus doesn’t mind being packed densely. So it’s always helpful to think how much room do people take? And this is why I think just having it in the back of your mind that all 8 billion people on Earth can fit on one floor in the city of New York. So another way to figure it is if you’re flying across the country and your goal is to drop a water balloon on someone, you will fail because it’s empty.

RON BARON: We used to do that when we were in eighth grade. We got them though. So Caitlin, don’t worry, there’s enough room.

The Future of Human Purpose with Optimus

RON BARON: So one of the things I think about when you talk about Optimus is that there are so many functions that it can perform. What’s going to be left for humans? Is there a job that humans going to have other than just living in this great abundance that you’re going to create? What’s going to happen?

ELON MUSK: Well, I think there is this question of how do you find meaning if the robots can do everything. But we see lots of examples where even though machines can do much better, humans still find meaning. Athletics, for example. Or let’s take a mental sport like chess. Computers are so good that your phone not even connected to the Internet can beat max task easily. But yet chess is at all-time highs in popularity.

RON BARON: So really machines being better at us.

ELON MUSK: Than us at something doesn’t mean we derive satisfaction and meaning from it.

The Scale of Humanoid Robots

RON BARON: The functions that you see these robots doing, what are they going to do and why is that? How are we going to have a billion of them when we have 8 billion people?

ELON MUSK: Look, it’s going to take us a minute to make a billion robots. So, you know, longer than various people. But I think there will ultimately be billions, billions of humanoid robots. A way to think of it is who on earth would not want their own personal R2-D2, C-3PO? Pretty much everyone would. You know, it’s like Star Wars. But even better, like your personal helpful and funny robot. It would be great.

You could teach your kids, take your dog for a walk, get the groceries, chat, you know, protect you when needed. Great. And then how many robots would there be in industry providing products? Probably three or four to one relative to humans. Which suggests that total number of robots will be somewhere around maybe as high as 40 billion, maybe 30 billion robots.

Pricing and Production of Optimus

RON BARON: So the Japanese company, those robots that are used in manufacturing are $50,000 to $100,000. And you’re describing a robot that’s $20,000. We have to have a million a year to do that or 10 million a year to get to $20,000. And is that something that’s going to be affordable for people? Are they going to be rented? They’re going to be purchased by corporations. Are we going to get some kind of carried interest once they buy them from us? How is this going to work? Or don’t we have the model yet?

ELON MUSK: Well, my rough guess is that the cost of goods sold, the labor and materials for Optimus after we reach a million units of steady state production. So call it a year after reaching a million units a year because it takes a lot of effort to improve the cost. But at that point I would expect the labor and materials to be $20,000 to $30,000 in current year dollars.

I think that’s a pretty safe estimate.

RON BARON: When you’re improving costs with cars, your idea is that everything we buy from other people to use in our cars, we know exactly how much it costs and therefore we can tell someone how much we’re going to pay for what we’re buying from them. And if they’re making too much, then we make that stuff ourselves. Is that the same kind of idea we have in this robot where we’re going to, should be much simpler to make than a car, or am I wrong? Is it a hand?

The Complexity of the Optimus Hand

ELON MUSK: The hand is extremely complex. There are 50 actuators in the hand, in hand and forearm actuators and motor. Yeah, actuator is the motor, gearbox and power electronics. So that’s 100 per robot. Really a lot of actuators and sensors. So there’s a lot of complexity.

RON BARON: Why is that important? Why is it important that we have such a complex hand?

ELON MUSK: So in order to do dexterous tasks, you have to have a hand with the sensitivity, precision and degrees of freedom of a human hand. Because something that we find easy to do, like pick up a screwdriver or turn a wrench or even say thread a needle or play the guitar, actually require a lot of dexterity.

And one of the reasons we think we can achieve sustainable abundance, which is sort of the new, sort of the revised version of the company’s goal, because it was accelerate sustainable energy, which as you mentioned, we’ve done that. Our new goal is sustainable abundance. So that’s abundance for all. But in a way that is sustainable, that does not destroy any of the natural world around us.

Distribution of Abundance

RON BARON: How do we decide who gets what? Somebody wants to buy my house. They can just come in and start living there?

ELON MUSK: Well, I’m not sure why. I mean, I do have a nice house. I can certainly see the appeal. But the robots will make anyone a house. And you know, as long as you don’t insist on it being in a particular location, you can have, robots will be able to build you a castle if you want.

But the reason for having dexterity is you want to be able to do surgery and precision medical actions. And so imagine a world where everyone has access to the best surgeons, literally everyone. And Optimus will have the level of precision that is frankly superhuman, and will be able to do medical procedures, very sophisticated medical procedures, any medical procedure, perhaps things that really humans can’t even do because they’re too difficult, and that will be available to anyone.

People often talk about eliminating poverty and providing great medical care, but they never actually have a solution. And money doesn’t solve it because there are only so many, there’s a very limited number of great doctors and surgeons. They don’t grow on trees, but now they’ll get built in factories.

Neuralink and Optimus Integration

RON BARON: So I sent you, a year or two ago, an article about a young man who was in an interview in Barron’s, and he was 33 at the time, and he’d become a portfolio manager. And he lost his legs to, I knew it was a Paralympic performer. And he lost his legs to man-eating bacteria. And he said, is there anything we can do to get him out of the wheelchair? And you said, yes, there is. In three or four years, we can give him an Optimus body and then we can use transistors in his head, in his brain, to let him function as a normal person. Dance and sing and walk and run. Have we been able to make progress in that area?

ELON MUSK: Yes. So that’s a combination of two of my companies. One is being Neuralink and the other being Tesla. So Neuralink is also making good progress. Now has, I think, over 10 patients with Neuralink implants. And these people who didn’t have the ability to move their arms or legs, in some cases were completely locked in, like Stephen Hawking. And they can now communicate as quickly or almost as quickly as we’re communicating right now, which is very cool. And that’s going to continue to accelerate.

So what we can do is a Neuralink implant that is taking signals from the motor cortex of the brain and also receiving signals from the somatosensory cortex and then give someone who’s lost their legs Optimus legs. And so, I mean, we’re really getting like the Six Million Dollar Man here, I mean, from back in the day. I don’t know if you watched that show, but…

RON BARON: I watched it. I watched it.

ELON MUSK: Yeah.

RON BARON: I thought it was pretty fun.

ELON MUSK: And we can actually give someone superhuman cyborg capabilities, like the Six Million Dollar Man for less than six million dollars in this day and age. I mean, six million dollars back then was a fortune. These days, this is like nothing. But for much less than that. I mean, like, for something that would be reasonable and affordable, you know, it might be more like $60,000 type of thing.

And you can take the signals from Neuralink, the mind that would be transmitting to legs and transmit those to the attached Optimus robot legs, and he would actually be able to run faster than any human. Just like Six Million Dollar Man with Neuralink.

The X (Twitter) Investment Story

RON BARON: Sounds really exciting. Sounds unbelievably exciting. Let’s switch to xAI. So three years ago, you were here and you had either just purchased or were about to purchase, you know, Twitter, which you’ve renamed X, and you were widely criticized for that.

ELON MUSK: And yes, I was right.

RON BARON: In fact, you even mentioned here on stage that you didn’t want to have anyone else be angry at you because you had enough people trying to kill you already.

ELON MUSK: Yeah, yeah, totally.

RON BARON: So you were buying X, and it was $42 billion, I think, and you were in the process of raising money. And I called you up. You hadn’t called me to solicit me, and I called you up and I said, I would like to invest with you $100 million in this. And it was $60 million for one of our funds and $40 million for me. And he said, “Really?” I said, “Yeah.” You said, “Really?” And I said, “Yeah.”

And you told me that you thought I would make a double. And I said, well, I hope so. But to me, it felt like you made us $8 billion in Tesla, and it’d be not very appropriate if I didn’t support this new venture that you were doing. So we invested, and then the day that we paid the money, we marked it down 70%.

ELON MUSK: Oh, man. This is how I know you’re a true friend, Ron, because this is, you know, I do regard you as a true and trusted friend. And, you know, the test of friendship…

RON BARON: I got more to the story.

ELON MUSK: A test of friendship is who supports you when the chips are down and the times are tough and everyone’s against you. That’s a real friend. And that’s you, Ron.

RON BARON: Thank you. So we did invest that $100 million, marked down to $30 million. And then about a year later, we started getting phone calls from hedge funds who always seem to know things they’re not supposed to know.

ELON MUSK: Yeah. How do they do that? Right?

The Vision Behind X and Grok

RON BARON: And they started saying, “I’d like to buy your stock for what you paid for it.” And I said, “I think I’d rather wait and stay in,” which I did. And then you changed the name to X and changed the configuration of business. And then from that, you bought Twitter and it came together in a social network along with this. And all of a sudden we have a business that has incredible data.

Did you buy this for the data that no one knew about? The data with 600 million people talking with each other, physical data that no one else has. And then you started Grok, which is based on our data and everyone else doesn’t have that. They got digital stuff. And then when they have Grok, then we need more data centers. And you’re building those.

And in a space of a very short time, less than months, you built a data center which is four times as large as anyone else on the planet. 25,000 what other people had in CPUs. And we built it in GPUs, 100,000 more powerful. And then now we’re going to go to hundreds of thousands.

But the bottom line is the investment that we made, we put up more money and we have a total of $350 million invested over the past two or three years. And now it’s worth $700 million. So everything you touch is like that. It’s the most unbelievable thing I’ve ever seen.

So everyone invested in technology and we are investing in the technology person, best engineer on the planet. So thank you very much. So the vision is, the question is, did you buy X, did you buy Twitter because of the data? Is that, did you have all this in your head before you did it?

Freedom of Speech and Democracy

ELON MUSK: Not really, no. I just bought Twitter because I thought it was having a negative effect on civilization and just sort of pushing ideas that were anti-civilizational. You know, it was somewhat captured by the far left. That’s, you know, it’s fair to say the radical left. I mean, they wouldn’t regard themselves as such, but it was captured by people whose political beliefs are those of deeply San Francisco and Berkeley, which is about as deep as you get in America.

So that meant it wasn’t a good forum for debate because they suspended many people on the right, including the President, as you may recall, a sitting president, which is really unprecedented. So I think we need to have a public square where there’s true freedom of speech.

And freedom of speech is the bedrock of democracy. If there’s not freedom of speech, people cannot make an informed vote. And if you cannot make an informed vote, you don’t have a real democracy. So the purpose of acquiring Twitter was to try to bring it more to the center.

There have been no left-wing voices that have been banned or anything like that, or suppressed. But what we’re trying to do is give equal weight to all parts of the country so that they can be a public town square where people can exchange ideas and hopefully not resort to violence. And I think that’s fundamental.

Like I said, free speech is a bedrock of democracy. It’s why it’s the First Amendment, because people came from countries where they could be killed or imprisoned for what they said. And in fact, this is happening all around the world as we speak, even in places like Britain.

So that’s why I did it, because I felt like the civilizational risk had to be addressed. I mean, if America is not strong, then what do businesses matter? America is the central pillar that holds up Western civilization, and if that pillar falls, everything falls.

The OpenAI Story

RON BARON: So you were one of the two founders of ChatGPT and OpenAI, and you had a disagreement. And it was founded as a charity, and it was your idea that you wanted to make sure that freedom of speech and all the things that you deem important for good lives on our planet were followed. Safety.

And the other founder, what he tried to do and did accomplish is that he got control, even though it was your money, and he got control. And you, and he said, “Elon, I’d like you to stay.” And you said, “I want to go. I don’t want to be a part of this.” And he offered you some ownership, and you said, “I don’t want it.”

I said, here you walk away from an ownership of ChatGPT. So you’re obviously not doing all this stuff for money. I mean, you are, but I mean, it’s, that’s not. But I mean, if you were only about money, you would have never left something that’s worth $500 billion by itself.

And so here you’re forming this new entity, Grok, to accomplish what you wanted ChatGPT to accomplish. But you think that we have an advantage in this because of the data, because of the compute, because of what. And what are you going to do with this? Ultimately, you talk about connecting physical world to digital. What does that mean?

ELON MUSK: Yeah, well, just going back to OpenAI for a second. The reason I founded OpenAI was because I was concerned, based on my conversations with Larry Page, who used to be a close friend of mine, that he was not sufficiently concerned about the dangers of AI.

This really came to a head when at my birthday party, he, in front of a large group of people, called me a “speciesist” for favoring humanity over computers. I found that troubling. I was like, “Larry, what side are you on? It sounds like you’re on the side of the computers, but you really need to be on team humanity here.”

So after that I was like, okay, this is it. We got to have some counterbalance to Google because Larry doesn’t seem to care if humans make it or not. So I thought, what’s the opposite of Google? It would be an open source, non-profit. And that’s where the word “open” in OpenAI comes from. It means open source.

And I provided all the money beginning, like one of the Series A, B, C rounds, and recruited the key people like Ilya and Greg and taught them everything I know. And you know, I actually even got them the deal with Microsoft. I got them to donate some time from Azure.

And for all that I did not seek any financial reward whatsoever. And the reason I actually turned down the offer for shares is because I felt like, what are shares? Nonprofits are supposed to have shares? At least last time I checked, nonprofits are not supposed to be a vehicle for self-enrichment.

So that’s why I turned down the offer of shares, because it didn’t seem morally or legally defensible. So then with xAI, we are starting late with xAI and we’re only two and a half years old basically, and we’re starting from behind. We are somewhat of an underdog, but pretty good with technology.

So I don’t want to pat myself on the back here, but I’m pretty good with technology. And we are advancing faster than any other way. So I think for technology ventures, the winner ultimately is the one that is able to move the fastest.

The Three Pillars of AI Success

RON BARON: So we think we’re optimizing for the best technology and we’re doing something different than others. Others are in a digital world and we’re physical to digital with movements and visual, and other people can’t match that. And also we have the real-time data. What does that mean? Why should we do better than everyone else? Why are we going to win? Or why are we going to at least be different than everyone else? So we have a really strong business.

ELON MUSK: Well, first of all, I think in terms of being a strong business, I’m actually not too worried about that because even a small player that is successful in AI will be worth a lot because they will contribute so much in productivity to the economy.

So it’s actually pretty easy to achieve, not pretty easy, but I mean there will be many companies that are worth sustainably several hundred billion dollars. Sustainably. So then the question of, well, how do we achieve the lead? That comes down to three things.

Are you able to attract the best talent? Are you able to bring the most amount of AI hardware online? Can you bring GPUs online faster than anyone else? And we’ve already demonstrated that we can do that. Jensen Huang himself said that he was blown away by how fast xAI built a data center.

RON BARON: Jensen said there’s only one human on the planet who could have done that. That’s you.

ELON MUSK: Yes, he did say that. That’s very kind of him.

RON BARON: It’s made us think about, are you really human?

ELON MUSK: I keep telling people I’m an alien, but nobody believes me. I mean, when I got my green card it said “alien registration card.” So I mean I have proof from the government. I just have to get registered.

So let’s say I’ve got some relatively rare skills these days in America in terms of getting hardware built. If you look at the biggest successes in manufacturing in America since World War II, by far they are Tesla and SpaceX.

Physical Meets Digital

RON BARON: Yeah, so to stay on Grok for another minute. So the idea of connecting physical and digital is that that’s different than digital to digital, figuring out who wants to buy what. We’re doing something entirely different. Is that fair?

ELON MUSK: I wouldn’t say we’re doing something hyper. We’re doing some things that are same, some things that are different. But it’s just saying the elements that define success for an AI company are going to be one, the talent. Two, the hardware. How much AI hardware can you bring to bear? That’s actually a very big deal and we’ve shown that we’re the best at doing that at xAI.

And then third, unique access to data. And for that we’ve got the X system, formerly the Twitter system, which is by far the best source of real-time data in the world. So those are some pretty significant assets and I think we’re going to come up with some very innovative ideas.

When I have more ideas in my head than I know what to do with, frankly. So I think we’ll make some moves that are not on the chessboard that people don’t anticipate, some creative moves.

And like I said, and I should point out, Grok right now actually is still the smartest AI, best of my knowledge. I recommend trying it out. Grok 4 Heavy is where we spawn several agents, they work in parallel, they compare their output like a study group and give you the final conclusion. And it keeps getting better.

And now we’ve begun training on Grok 5. Grok 5 I think will be the smartest AI in the world by a significant margin on every metric, without exception. I might be wrong, but I think that will be the case and that will be in Q1 sometime.

RON BARON: Grok 5, yes.

The Path to AGI

ELON MUSK: Grok 5 is the first time where I thought, well, we have a non-zero chance of achieving artificial general intelligence. Not that it’s a high chance. I calculate like 10%. That’s what my biological neural network comes up with, which still means 90% chance that we don’t. But I’ve never thought that before.

And so for the first time I think, well, this really could be general intelligence. At least a small chance. Grok 5 will really be something special and it’ll be both extremely intelligent and extremely fast.

So one of the things that we’re doing that I think is interesting is Grokopedia, which we’re going to rename down the road to Insight, to be Encyclopedia Galactica, in honor of Isaac Asimov and Douglas Adams, who both mentioned that.

And the idea behind Galactica is to create an open source repository of all knowledge, like a distillation of all knowledge and open source, meaning anyone can access it, anyone can use it, and if other people want to train on it, they can do so.

And then we want to create copies of this and distribute these copies throughout Earth and even put them on the Moon and Mars and out in deep space, as in a way, sort of a modern day Library of Alexandria. It was the great tragedy that the Library of Alexandria burned down or was burned down.

And so in order to preserve this knowledge, I think we want to literally etch it in stone, in sort of stone-like microform and distribute it widely. So the worst case scenario, future civilization can see what we learned and maybe pick things up from there.

RON BARON: So is there a major breakthrough that you can describe that allows us to do this with Grok 5? Is it just speed? Is it more compute and therefore we have more analysis, more information we can train on? What is the breakthrough that allows us to have this 10% chance for AGI? Is there a breakthrough or is it just speed and access to data? Not just, but.

The Future of AI: Grok 5 and Beyond

ELON MUSK: So there’s a couple things. It will be the largest model to test my knowledge. So this is a 6 trillion parameter model, whereas Grok 3 and 4 are based on a 3 trillion parameter model. Moreover, the 6 trillion parameters will have a much higher intelligence density per gigabyte than Grok 4. I think this is an important metric to think about: intelligence per gigabyte and intelligence per trillion operations.

We’ve learned a lot, so the quality of the data that we’re training on with Grok 5 is much nearer. It’s also inherently multimodal, so it’s text, pictures, video, audio. It’s going to be much better at tool use and in fact creating tools to be more effective at answering questions and understanding its vision will be extremely good.

It’ll have real time video, which is I think a really fundamentally important thing that none of the other AIs can understand. I think if you can’t do that, which humans can obviously do, you really can’t achieve AGI.

RON BARON: By the way, every one of these…

ELON MUSK: There’s some special source items that I can’t talk about in a public forum. Obviously you can’t give away all the secrets here, just between us, but we have a few other special things that are in the works for Grok 5. So it’s really going to feel sentient.

RON BARON: So but there is no… When we’re Grok 5 and you’re talking about the advances, there is no limit. So when Grok 5 is better than Grok 4, which is better than Grok 3, so it keeps going. So once we get to sentient levels, we go to sentient five, sentient ten, sentient a million.

ELON MUSK: Correct. The sentience will grow. I mean, what’s really mind blowing is how far can the sentience grow? To your point, how far does it go? I think it goes immensely far. Almost incomprehensibly far. Almost does go incomprehensibly far.

Solar-Powered AI Satellites

ELON MUSK: We see a path to putting 100 gigawatts per year of solar powered AI satellite into orbit and having this be actually the lowest cost way to power and operate AI at a very large scale. For reference, the United States consumes roughly 460 gigawatts on average per year because the average power load in the U.S. is 460 gigawatts.

RON BARON: The whole country?

ELON MUSK: The whole country. All electricity of all sources in the U.S., yes.

RON BARON: And you’re talking about 100 being added?

ELON MUSK: Well, at roughly a quarter of the U.S. electricity output. We have a plan mapped out to do that. It gets crazy.

The Search for Alien Civilizations

RON BARON: So there’s what, a trillion planets like Earth in the world, in the solar system, whatever you call it, a trillion. And in that trillion, so Big Bang was 14 billion years ago, 13 and a half billion years ago. And our planet’s only 4 billion years old. So there must be other planets that are like ours with all the minerals: oxygen, hydrogen, silicon, carbon.

So life here has been extinguished four times. And presumably you feel that other places, other civilizations, other planets, then we’ll get off of this exist. And are they planets where the beings there are part human or part carbon and part metal?

ELON MUSK: Well, I think we’d like to find out. I’d like to find out. I mean, my philosophy is one of curiosity. I just want to know what’s going on in this universe. Is the standard physics correct about the beginning of the universe? Is heat death the end of the universe? Are there other alien civilizations? Can we talk to them? And what questions should we be asking about reality that we don’t know to ask? So that’s my motivation, is to expand consciousness to better understand the universe.

Tesla’s Manufacturing Revolution

RON BARON: So let’s go away from the universe, back to Tesla again. As you said, got to be back.

ELON MUSK: On the ground here.

RON BARON: Back on ground. And so you said that our expertise is in making things better, faster, cheaper than other people. And when I started investing in Tesla, we started investing in Tesla, you were telling us that it’s the machine that makes the machine that’s most important, the machine that makes.

So you went to machine learning, machine technology then, which is 15 years ago. And now the average car I think is 50 minutes or 50 seconds, 40 seconds, 60 seconds, and we’re now 35 seconds. Every 35 seconds the car rolls off and then you say that we’re going to get down to 10 seconds. And you said it’s a possibility, we can go to 5 seconds. Every car is rolling off the line. How does that happen?

ELON MUSK: I certainly see a path to achieving a roughly 5 second time, or 5 seconds, which is only really walking speed. That’s like sort of a fast walk. 1 meter per second is a fast walk. The car is less than 5 meters long. So 5 second cycle time. The cars will be exiting the line at walking speed. So you can run away from them. It’s not going to be like they’re coming out like bullets or something.

So but as a rough rule of thumb, that’s, you know, 10,000 minutes in a week. If you run 24/7 operation and you get, you know, let’s say 10 cars per minute, you’ve got 100,000 per week.

RON BARON: So, but the question is, how come we’re able to do this? Do other people just not care? Or they think that, gee, if I do something, if I have this idea and we try to implement it and it doesn’t work, then I’m not going to get promoted or I can get fired or I’ll get blamed. And if it works, then I’m going to have to do a lot of extra work that I wouldn’t know how to do if it didn’t work.

So why don’t other people have a mindset of making things better? The Chinese, they’ve been great at copying us and in some instances probably even done better than us after they’ve copied for the first time. But how come do you think that other people haven’t been able to make the advances we have?

And even the guy from Ford just recently said, gee, those people in China wouldn’t give us compliments. But he said the people and the Chinese have copied us. Those people in China are doing great, which is really a compliment to us because the reason they’re doing great is because of us. So why don’t other people do this? Why doesn’t he do that?

ELON MUSK: Most companies are incrementalist. The management team wants to do, I don’t know, 5%, maybe 10% better than last year as opposed to take big risks that could fail. Obviously I don’t have a problem with taking big risks.

RON BARON: Yeah, I see.

Factory Efficiency and Physics

ELON MUSK: I like to use the tools of physics to analyze things. And when I was in the factory one night I was looking at the factory and I was like, you know…

RON BARON: This could be…

ELON MUSK: Much more efficient, could be much faster. I was trying to just rough math, trying to calculate the volumetric efficiency of the factory. So if you divide the factory into cubic meters and say how many cubic meters are doing something useful? And it’s a surprisingly small percentage. The volumetric density is not very good.

And then the speed of the cars and the parts moving is quite slow, generally limited by the speed at which people can say attach brake lights or a seat or something like that. So if you densify the fact that you improve the volumetric efficiency, which is helpful for production efficiency because things have less distance to move. Just like a chip. You densify circuits in a chip to make it more efficient. Think of a factory as a lot like chip. How do you make a chip faster? Well, you bring circuits closer together, make them smaller and you increase the clock speed.

RON BARON: So Robin told me that you told her once that I think of myself as a bit. And if I’m a bit, how would I want to travel? That makes sense.

ELON MUSK: Bit or an atom? If it’s the software or if I’m on a ship, I say what’s the journey of the bit? What am I doing? And if this journey doesn’t make sense, I need to fix it. And if the journey of the atom in the factory doesn’t make sense, I need to fix it.

The AI5 Chip Development

RON BARON: So when you say you’re working on weekends, I spend all my Sundays working on a chip. What does that mean? What do you do?

ELON MUSK: It’s Saturdays, but sometimes Sundays. Actually recent weekends and Sundays too. Yeah, just the AI5 chip which is going to be a great chip. You know all of Tesla hinges on that chip. That’s the chip that goes into our next generation of self driving cars. And it’s also essential for the Optimus robot.

So that chip program was in bad shape. It wasn’t closing because it’s quite an ambitious chip design and it really wasn’t on a path to success. And they also had the Dojo program which was doing, it was also doing okay, but not on a path to be competitive with Nvidia.

So I collapsed the two programs into just one program to get everyone focused on AI5 chip, which is essential. Continue to use Nvidia for training. But we need the AI5 inference chip which is a very powerful chip, but it’s also a very low power chip. It doesn’t use a lot of power. So its performance per watt is extremely good.

We think it’s probably going to be at least two to three times better than Nvidia performance per watt at the inference level in the car and the robot. And I don’t know, 10% of the cost of an Nvidia chip, something like that. So these are very important numbers to achieve. And I had to get the chip program back on track. So put immense amount of time into it. And at this point I have the entire design of the chip laid out in memory. I can visualize the whole thing.

Building Chip Manufacturing Capacity

RON BARON: But when you’re talking about chip manufacturing you say we might have to build some kind of a giant fab. Presumably we would have a partner with TSMC or with Samsung. We wouldn’t do this by ourselves. And those guys have been doing this for… We would do it by ourselves. And these are things that cost 20 billion, 30, $40 billion. And where the people come from to do this? How could we not have partners? Is your thought to have a partner to do it by ourselves ultimately? 10 years, you don’t, there’s not going to be enough chips in the world to accomplish what we’re trying to do.

ELON MUSK: Yeah. First of all I have immense respect for TSMC and Samsung and we’ve worked with both TSMC and Samsung at Tesla and at SpaceX. So TSMC and Samsung are great companies and we want them to make our chips as quickly as they can and scale up to as high as possible volume that they’re comfortable doing. But it doesn’t appear to be fast enough.

And you know when I ask how long will it take from start to finish to get a new chip fab built they tell me five years to get to buying production. I’m like five years? To me that’s an eternity. My timelines, to me, one year, two year and at year three it reels to infinity so I can’t even see past three years. So then I’m like damn, okay, this is not going to be fast enough.

So now if they change their minds and say yeah they’re going to go faster. They want to provide us with you know, 100, 200 billion AI chips a year in the time frame that we need them. That’s great.

RON BARON: But how could they not when they know that we’re demand and we are going to use the product in our own product? How could they not want to be our supplier or how could they not want to be partners with us? I don’t understand.

ELON MUSK: They are partners. We’re using both TSMC, I mean…

RON BARON: To really expand capacity tremendously. Why don’t they do that from their standpoint?

ELON MUSK: They are because we’ll be using TSMC Taiwan, TSMC Arizona, Samsung Korea, and the Texas backed Samsung. So we got four fabs going and you know from their standpoint they’re moving like lightning. I’m just saying that nonetheless it would be a limiting factor for us. They’re going as fast as they can from their standpoint. There’s pedal to the metal. They just never had someone with this sense of urgency.

So it might just be that the only way to get to scale at the rate that we want to get to scale is to build a really big fab and or be limited in output of Optimus and self driving cars by the AI chips.

Full Self-Driving Progress

RON BARON: Obviously you’re not going to… Those are two choices to go to FSD. We don’t have too much more time but FSD, full self driving, you know we’re making these tremendous breakthroughs, it seems. And you said recently that you didn’t want to expand capacity for making cars until you were convinced that that was the case. You are now convinced that’s the case. And again, here we’re making these exponential leaps in these cars and you said that a very large percentage of people who actually paid for full self driving don’t use it, have never tried it before.

ELON MUSK: Yes, it’s pretty wild, yeah.

The Future of Full Self-Driving

RON BARON: How are we doing?

ELON MUSK: How buy something when you want to try it type of thing.

RON BARON: It’s amazing.

ELON MUSK: Yeah. So we’re now kind of insisting with customers for safety reason that we demonstrate full self-driving because the numbers are unequivocal at scale that with now over 10 billion miles driven, that it’s four times safer on full self-driving than not. So it’s actually a big improvement in safety.

And so at this point we’re just insisting that we at least demonstrate self-driving to customers so they know how to use it and turn it on for safety reasons.

RON BARON: So it drives full self-driving drives just like a person. As opposed to having to code to look for every circumstance that would happen. And you had a, you know, this is a fire truck in front of us with a bicycle attached to it or someone walking his dog while he’s driving along. You have to identify everything with a code.

What AI does, what we do is we, as I understand it, is to make sure that it’s just like us. Is that fair?

ELON MUSK: Yes. The key to achieving full self-driving unsupervised, full self-driving, much safer than a human, is improving the AI software in the car. We’re confident that the AI 4 hardware that’s a chip that we designed, currently made by Samsung, is capable of achieving a safety level unsupervised, meaning if you’re asleep in the car, at least two to three times that of the average driver, maybe more.

And then with AI5, we think probably at 10x improvement in safety. So these are really big deals. I mean, I think one of very profound things that I’m saying here and I really encourage people to go out there and try Tesla self-driving and see it for yourself. And you can just go to any Tesla store, they’ll show it to you. It’s not secret.

RON BARON: See everyone here, you’re benefiting if you try this and then buy it. But once you try it, you’re going to buy it. You should try it.

So I want to close on what I mentioned this morning on CNBC was that you’re not doing this so you can get enough money to buy a beach house. You’re doing this even mine?

ELON MUSK: Yeah, that’s right.

Purpose Beyond Wealth

RON BARON: But you’re doing this because, you know, Larry Page was right. You’re a species that you think humans should survive.

ELON MUSK: Yes, I’m unabashedly pro-human.

RON BARON: I mean, so you’re spending actually whether you’re worth another trillion dollars or 400 billion, it doesn’t really matter. What are you going to do with all this money at the end? What’s your plan? How do you want people to think about you?

ELON MUSK: Well, you know, mostly I need to have enough sort of ownership of the companies to be able to continue to direct their activities. But it’s from a personal consumption standpoint. I don’t actually own any vacation homes and I just own one sort of, you know, medium-sized house in Austin, so. And actually a tiny house at Starbase.

RON BARON: I’ve seen that house. It’s tiny.

ELON MUSK: Yeah, yeah, yeah. Actually friends of mine have come to visit. They thought I was kidding. I’m like, no, it’s real. I bought him $8,000. But I’ve done a lot with the place.

RON BARON: Artificial turf in front, little white picket fence.

The Future of AI and Human Consciousness

ELON MUSK: Yeah. So, but I said, with AI and robotics there will be abundance brawl. So people actually, in fact, in a benign scenario there’s going to be interesting threshold that AI passes and AI robotics pass where it’s run out of things to do for humans. Literally it’s completely satiated, all human wants.

And then I guess it’ll have to start thinking about what to do for itself or I don’t know. But overall, I want to take the set of actions that expand consciousness into the future so that the scope and scale of consciousness grows tremendously and that we explore other star systems like in Star Trek, go places nobody’s ever gone before and find out if there are existing alien civilizations or maybe this long dead alien civilization.

And we can look through their ruins and try to understand what they were like and just generally understand the universe.

RON BARON: Where are you now? Right now.

ELON MUSK: I’m in Sokotami.

RON BARON: Thank you very much for today. Thank you for everything you’ve done for me, for our shareholders and for humanity.

ELON MUSK: Thank you.