10 Top Takeaways From Tom Randall’s Superb Interview With Tesla CEO Elon Musk

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I was thrilled to be on Tesla’s quarterly conference call this past week, honored & humbled at the opportunity to bounce a series of questions and short comments off of Tesla CEO Elon Musk. However, Bloomberg’s Tom Randall recently scored an even more amazing opportunity, a full interview with Sir Elon. Below are 10 big highlights from that candid interview.

1. This Was The Last Big Bet (Maybe): “There have been three situations where it was necessary to bet the company. Like it was unavoidable to bet the company. The creation of the Roadster. Obviously, we’re a brand-new company, it’s our only product. From the Model S, we went from like 600 cars a year to 20,000 cars a year and a much more sophisticated car. Obviously, that was a bet-the-company situation.

“Model X was painful but not a bet-the-company situation. Model 3, we’re going from, you know—like the S or the X program is 1,000 cars a week. Model 3, even to basically be healthy for the Model 3 system, it’s 5,000 cars a week. So it’s a half order of magnitude increase relative to the S or the X. That is necessarily a bet-the-company decision. You cannot have that much of a step change for a manufacturing company without this being a bet-the-company decision.

“But I do not see us doing another thing where we go five times bigger. Once we break through to mass market cars, where mass market is on the order of a quarter million vehicles per year, I cannot see us doing a 1.2 million-vehicle program of one particular model.

“Basically, I believe Model 3 is the last bet-the-company situation. It’s not like [I have] a desire to bet the company. There is not a choice. If somebody knows how to do it without betting the company, I would love to talk to that person. But I do not foresee future bet-the-company situations.

“To the best of my judgment, I do not think we have any future bet-the-company situations. We will still need to work hard and be vigilant and not be complacent because it is very difficult just to survive as a car company. But it will not be the same level of strain as getting to volume production of Model 3.”

2. Over-Automation Screwed Shit Up: “A lot of the hoped-for automation was counterproductive. It’s not like we knew it would be bad, because why would we buy a ticket to hell? We don’t actually want to go for hell. We just didn’t realize it was a ticket to hell. We thought it would be good, but it was not good. That applies to a great deal of the automation. A whole bunch of the robots are turned off, and it was reverted to a manual station because the robots kept faulting out. When the robot faults out—like the vision system can’t figure out how to put the object in—then you’ve got to reset the system. You’ve got to manually seat the components. It stops the whole production line while you sort out why the robot faults out.

“It was like rush hour traffic at a bunch of stop streets and like no highways or anything. It’s like you just took all the highways away from L.A. or something. It sounds good on PowerPoint and it was terrible in reality. Everything sounds good on PowerPoint. You could have a great PowerPoint presentation about a teleportation system to the Andromeda galaxy. But guess what? You cannot teleport to the Andromeda galaxy. That is nonsense.

3. Auto Experts Could Have Helped … But Had Been “Crying Wolf” For Years, So Weren’t Very Trustworthy: Tom Randall, Bloomberg: “Then why not reach out? Detroit was shouting, ‘That’s not going to work.'”

Elon Musk: “Well, when have they not said that? When was the last time they said it would work? Can you recall at any point in the history of Tesla where they said it would work? Is there like some point I didn’t notice? Because from my perspective, for the last 15 years that is all they have said.”

4. The First 5,000 Model 3 Week Was A Serious Sprint: “I think there was quite a good esprit de corps. People were pretty fired up. You can see it in the pictures that people posted. You can tell from looking at people’s faces. But everybody was super gung ho to make the number and to make sure that they could do it. We had a lot of challenges.

“You don’t really know that you can actually handle a given rate unless you try to do it. So we successively hit limitations in general assembly, in paint, in body, in module production, pack production, logistics. Even the flow of parts from the warehouse. We’ve never had that kind of flow before. At one point we would make like 100 cars without the right headlamps, and then subsequently put the right headlamps on because the right headlamps didn’t arrive from the warehouse in time. They were put on after general assembly.”

5. Yet Again, Tesla Implemented Things Experts Said Were “Impossible” In The Targeted Timeframe: “There were a lot of issues that we had to address in order to do it. You know, we had to create the new general assembly line in basically less than a month—to create it and get to an excess of a 1,000-cars-a-week rate in like four weeks. We had to get the Module Zone 4 [a line of robots] transferred from Germany and installed in two weeks. Both of those things I was told were impossible.”

6. But, Yes, Tesla Was Naive About Manufacturing As Well: “Part of the problem is that the designing heads were naive about manufacturing. Just because we have something that works great in a simulation does not mean that it works great in reality.”

7. With 40,000 Employees, Some Are Bound To Have Issues, But Elon Dares Bloomberg To Explore The Factory Without A Guide, Going Anywhere: “In order for us to succeed, in order for us to live, we must work very hard. But the notion that people are not treated well at Tesla is false. The UAW has a strong interest in promoting the idea that people aren’t treated well. But, you know, come in and walk around. And I don’t mean like a North Korea guided tour. Go anywhere you want, any time. Go left, go right, go anywhere you want. Talk to people. See if they seem unhappy. See if they seem like they’re not well treated. Bring others. We won’t even escort you. Just walk around. Go any direction you want—no escort.

“We’re 40,000 people at the company. If you have 40,000 people, you can always find some cases where there has been harassment, discrimination. Like at Bloomberg right now, I guarantee you there is every kind of case against Bloomberg. Does that mean you, Tom Randall, are a bad person? It does not.

“I care very deeply about the people at Tesla. I feel like I have a great debt to the people of Tesla who are making the company successful. OK? The reason I sleep on the floor was not because I couldn’t go across the road and be at the hotel. It was because I wanted my circumstance to be worse than anyone else at the company on purpose. Like whatever pain they felt, I wanted mine to be worse. That’s why I did it. And it makes a huge difference to people.

“At GM they’ve got a special elevator for executives. Like the top floor of GM tower is reserved for the chairperson and CEO. They’ve got special cutlery. They’ve got a waitstaff for an executive restaurant. They have special elevators so they don’t have to mingle with anyone else. My desk is the smallest desk in the factory—literally. And I am barely there. The reason people in the paint shop were working their ass off is because I was in the paint oven with them. I’m not in some ivory tower. I invite you to come by and ask them.”

8. A Tesla = A Computer On Wheels, & Keeps Improving: “I think it’s a great car. And I think it is going to get better as we keep upgrading the software. You know, what I think about as Tesla is kind of like a computer on wheels. It’s extremely upgradable. So we’re going to just keep adding more and more functionality to the Model 3. So the longer you own the Model 3, the better the car is going to get.”

9. Model Y = The Next Amazing Computer On Wheels: Tom Randall, Bloomberg: “What’s the next project that you’re most excited about?”

Elon Musk: “The Model Y. We’ve almost finished the design in the studio of Model Y, and we will probably debut the prototype, you know, roughly in March of next year. Maybe I shouldn’t tempt fate, but I did say March 15 as kind of a joke.”

Tom Randall, Bloomberg: “Did you finish up the design already?”

Elon Musk: “We’re a few months away from finishing the design. You finish the broad brush strokes, but there are still a lot of fine brush strokes. The broad brush strokes, we’re maybe a few months away from finishing.”

10. One Foot Out Of Production Hell (Or Not): Tom Randall, Bloomberg: “Do you feel like you’re out of hell yet?” Elon Musk: “I feel like we have got like one foot in hell.”

Tom Randall, Bloomberg: “When do you think you get to pull that out? Is that reaching 5,000 sustainably? Is it 6,000?” Elon Musk: “It’s basically 5,000 without requiring a lot of effort. It’s still quite painful to produce 5,000 a week. But I think in a month, it will not be. It used to be hell to make 2,000 S’s and X’s in a week, and now it’s normal. In three months, I think 5,000 will feel normal.”

It’s been nearly one month since this interview was conducted. Perhaps the second foot is now out of production hell?