Chris Anderson: Elon, what kind of crazy dream

would persuade you to think of trying

to take on the auto industry and build an all-electric car?

Elon Musk: Well, it goes back to when I was in university.

I thought about, what are the problems that are most likely

to affect the future of the world or the future of humanity?

I think it's extremely important that we have sustainable transport

and sustainable energy production.

That sort of overall sustainable energy problem

is the biggest problem that we have to solve this century,

independent of environmental concerns.

In fact, even if producing CO2 was good for the environment,

given that we're going to run out of hydrocarbons,

we need to find some sustainable means of operating.

CA: Most of American electricity comes from

burning fossil fuels.

How can an electric car that plugs into that electricity help?

EM: Right. There's two elements to that answer.

One is that, even if you take the same source fuel

and produce power at the power plant

and use it to charge electric cars, you're still better off.

So if you take, say, natural gas,

which is the most prevalent hydrocarbon source fuel,

if you burn that in a modern

General Electric natural gas turbine,

you'll get about 60 percent efficiency.

If you put that same fuel in an internal combustion engine car,

you get about 20 percent efficiency.

And the reason is, in the stationary power plant,

you can afford to have something that weighs a lot more,

is voluminous,

and you can take the waste heat

and run a steam turbine and generate

a secondary power source.

So in effect, even after you've taken transmission loss into account and everything,

even using the same source fuel, you're at least twice as better off

charging an electric car, then burning it at the power plant.

CA: That scale delivers efficiency.

EM: Yes, it does.

And then the other point is, we have to have sustainable means

of power generation anyway, electricity generation.

So given that we have to solve sustainable electricity generation,

then it makes sense for us to have electric cars

as the mode of transport.

CA: So we've got some video here

of the Tesla being assembled,

which, if we could play that first video --

So what is innovative about this process in this vehicle?

EM: Sure. So, in order to accelerate the advent of electric transport,

and I should say that I think, actually,

all modes of transport will become fully electric

with the ironic exception of rockets.

There's just no way around Newton's third law.

The question is how do you accelerate

the advent of electric transport?

And in order to do that for cars, you have to come up with

a really energy efficient car,

so that means making it incredibly light,

and so what you're seeing here

is the only all-aluminum body and chassis car

made in North America.

In fact, we applied a lot of rocket design techniques

to make the car light despite having a very large battery pack.

And then it also has the lowest drag coefficient

of any car of its size.

So as a result, the energy usage is very low,

and it has the most advanced battery pack,

and that's what gives it the range that's competitive,

so you can actually have on the order of a 250-mile range.

CA: I mean, those battery packs are incredibly heavy,

but you think the math can still work out intelligently --

by combining light body, heavy battery,

you can still gain spectacular efficiency.

EM: Exactly. The rest of the car has to be very light

to offset the mass of the pack,

and then you have to have a low drag coefficient so that you have good highway range.

And in fact, customers of the Model S

are sort of competing with each other

to try to get the highest possible range.

I think somebody recently got 420 miles out of a single charge.

CA: Bruno Bowden, who's here, did that,

broke the world record.EM: Congratulations.

CA: That was the good news. The bad news was that

to do it, he had to drive at 18 miles an hour constant speed

and got pulled over by the cops. (Laughter)

EM: I mean, you can certainly drive --

if you drive it 65 miles an hour,

under normal conditions,

250 miles is a reasonable number.

CA: Let's show that second video

showing the Tesla in action on ice.

Not at all a dig at The New York Times, this, by the way.

What is the most surprising thing about the experience

of driving the car?

EM: In creating an electric car,

the responsiveness of the car is really incredible.

So we wanted really to have people feel as though

they've almost got to mind meld with the car,

so you just feel like you and the car are kind of one,

and as you corner and accelerate, it just happens,

like the car has ESP.

You can do that with an electric car because of its responsiveness.

You can't do that with a gasoline car.

I think that's really a profound difference,

and people only experience that when they have a test drive.

CA: I mean, this is a beautiful but expensive car.

Is there a road map where this becomes

a mass-market vehicle?

EM: Yeah. The goal of Tesla has always been

to have a sort of three-step process,

where version one was an expensive car at low volume,

version two is medium priced and medium volume,

and then version three would be low price, high volume.

So we're at step two at this point.

So we had a $100,000 sports car, which was the Roadster.

Then we've got the Model S, which starts at around 50,000 dollars.

And our third generation car, which should hopefully

be out in about three or four years

will be a $30,000 car.

But whenever you've got really new technology,

it generally takes about three major versions

in order to make it a compelling mass-market product.

And so I think we're making progress in that direction,

and I feel confident that we'll get there.

CA: I mean, right now, if you've got a short commute,

you can drive, you can get back, you can charge it at home.

There isn't a huge nationwide network of charging stations now that are fast.

Do you see that coming, really, truly,

or just on a few key routes?

EM: There actually are far more charging stations

than people realize,

and at Tesla we developed something

called a Supercharging technology,

and we're offering that if you buy a Model S

for free, forever.

And so this is something that maybe a lot of people don't realize.

We actually have California and Nevada covered,

and we've got the Eastern seaboard

from Boston to D.C. covered.

By the end of this year, you'll be able to drive

from L.A. to New York

just using the Supercharger network,

which charges at five times the rate of anything else.

And the key thing is to have a ratio of drive to stop,

to stop time, of about six or seven.

So if you drive for three hours,

you want to stop for 20 or 30 minutes,

because that's normally what people will stop for.

So if you start a trip at 9 a.m.,

by noon you want to stop to have a bite to eat,

hit the restroom, coffee, and keep going.

CA: So your proposition to consumers is, for the full charge, it could take an hour.

So it's common -- don't expect to be out of here in 10 minutes.

Wait for an hour, but the good news is,

you're helping save the planet,

and by the way, the electricity is free. You don't pay anything.

EM: Actually, what we're expecting is for people

to stop for about 20 to 30 minutes, not for an hour.

It's actually better to drive for about maybe 160, 170 miles

and then stop for half an hour

and then keep going.

That's the natural cadence of a trip.

CA: All right. So this is only one string to your energy bow.

You've been working on this solar company SolarCity.

What's unusual about that?

EM: Well, as I mentioned earlier,

we have to have sustainable electricity production

as well as consumption,

so I'm quite confident that the primary means

of power generation will be solar.

I mean, it's really indirect fusion, is what it is.

We've got this giant fusion generator in the sky called the sun,

and we just need to tap a little bit of that energy

for purposes of human civilization.

What most people know but don't realize they know

is that the world is almost entirely solar-powered already.

If the sun wasn't there, we'd be a frozen ice ball

at three degrees Kelvin,

and the sun powers the entire system of precipitation.

The whole ecosystem is solar-powered.

CA: But in a gallon of gasoline, you have,

effectively, thousands of years of sun power

compressed into a small space,

so it's hard to make the numbers work right now on solar,

and to remotely compete with, for example, natural gas,

fracked natural gas. How are you going to build a business here?

EM: Well actually, I'm confident that solar

will beat everything, hands down, including natural gas.

(Applause)CA: How?

EM: It must, actually. If it doesn't, we're in deep trouble.

CA: But you're not selling solar panels to consumers.

What are you doing?

EM: No, we actually are. You can buy a solar system

or you can lease a solar system.

Most people choose to lease.

And the thing about solar power is that

it doesn't have any feed stock or operational costs,

so once it's installed, it's just there.

It works for decades. It'll work for probably a century.

So therefore, the key thing to do is to get the cost

of that initial installation low,

and then get the cost of the financing low,

because that interest -- those are the two factors that drive the cost of solar.

And we've made huge progress in that direction,

and that's why I'm confident we'll actually beat natural gas.

CA: So your current proposition to consumers is,

don't pay so much up front.

EM: Zero.CA: Pay zero up front.

We will install panels on your roof.

You will then pay, how long is a typical lease?

EM: Typical leases are 20 years,

but the value proposition is, as you're sort of alluding to, quite straightforward.

It's no money down, and your utility bill decreases.

Pretty good deal.

CA: So that seems like a win for the consumer.

No risk, you'll pay less than you're paying now.

For you, the dream here then is that --

I mean, who owns the electricity from those panels for the longer term?

I mean, how do you, the company, benefit?

EM: Well, essentially,

SolarCity raises a chunk of capital

from say, a company or a bank.

Google is one of our big partners here.

And they have an expected return on that capital.

With that capital, SolarCity purchases and installs the panel on the roof

and then charges the homeowner or business owner

a monthly lease payment, which is less than the utility bill.

CA: But you yourself get a long-term commercial benefit from that power.

You're kind of building a new type of distributed utility.

EM: Exactly. What it amounts to

is a giant distributed utility.

I think it's a good thing, because utilities

have been this monopoly, and people haven't had any choice.

So effectively it's the first time

there's been competition for this monopoly,

because the utilities have been the only ones

that owned those power distribution lines, but now it's on your roof.

So I think it's actually very empowering

for homeowners and businesses.

CA: And you really picture a future

where a majority of power in America,

within a decade or two, or within your lifetime, it goes solar?

EM: I'm extremely confident that solar will be at least a plurality of power,

and most likely a majority,

and I predict it will be a plurality in less than 20 years.

I made that bet with someone —CA: Definition of plurality is?

EM: More from solar than any other source.

CA: Ah. Who did you make the bet with?

EM: With a friend who will remain nameless.

CA: Just between us. (Laughter)