The biggest surprise was that Elon Musk showed up in a tie. That was something we hadn’t expected from a California-based entrepreneur of his caliber. Before the Handelsblatt interview, the Tesla CEO visionary of electromobility had just met with 30 government representatives at a parliamentary breakfast in Berlin to talk about the future of mobility and would meet with German Economics Minister Sigmar Gabriel. He gave Handelsblatt his frank take on the old-school thinking within the German auto industry, what VW should do next and how the German autobahn forced Tesla to adapt their cars.
Handelsblatt: Mr. Musk, how many Teslas have you seen on the road during your visit to Germany this time?
Elon Musk: I admit, it wasn’t that many. But in Germany, we are also still a comparatively small player on the market.
At the end of 2014, you wanted to sell up to 300 cars here – per week. In the entire first half year it was only around 700. Isn’t that way too few?
We’ve been able to meet our global sales targets with no problem. But proportionately speaking, our sales in Germany are lower than in a lot of other parts of the world, in particular compared to the United States. A few hundred cars per week is a tiny drop in the bucket for the German auto market. But it is our aspiration to sell more than 1,000 cars a month in Germany. Do I think we’ll get there? Yes.
Would you like to have more political support?
Government incentives would be helpful, no question. For a very large auto market, Germany has the worst incentives for electric vehicles. I think the government is listening too closely to what the big German automakers say. And if the big German automakers are wrong, then the wrong thing happens.
What should politics change?
I don’t want to pretend to be the government advisor, but I think, for a large economy like Germany, it would be important to have a meaningful set of financial incentives for electric vehicles. Some of the smaller economies have much greater incentives. In Germany it would be a good start to make bus lanes available for electric cars. In Norway that has worked well. In Oslo, the use of bus lanes has been one of the top reasons for people to buy an electric car.
What can Tesla do better to reach German customers?
Our car has always had excellent acceleration, but its operation at high speed wasn’t that great. And in Germany, which is really the only place where people experience truly high speeds, that wasn’t so well-received. We have worked hard to tailor our car to high speeds. Now the car not only delivers consistently good performance but we have also greatly reduced noise and vibration. And we now have enough Superchargers (fast charging stations) in Germany and the rest of Europe. So I see things really coming together. And if that’s combined with more action on the government front, we’ll have all of the prerequisites for being successful in Germany.
Do you like the German autobahn? It would be better for Tesla if Germans didn’t drive so fast…
Of course! I wish the autobahn was in other countries too. I think that’s one of the great things about Germany.
Do German politicians understand what’s happening in the mobility market?
I think the public understands better than the politicians and the automakers. If you judge the public reaction in the room, they know what should be done.
The German automakers just presented their reponses to Tesla in Frankfurt at the international automobile show. What do you think of the Audi e-tron quattro and the Porsche Mission E?
Any action in the direction of electric mobility is good. Our goal at Tesla is for cars to transition to e-vehicles. That’s why we opened up all our patents for use by anybody.
And who has used them?
Maybe the companies you already mentioned. When I saw a diagram of Porsche’s Mission E, I thought: It looks exactly like our car. Which is fine. It’s more important to accelerate the advent of sustainable transport.
What are German carmakers doing wrong?
The senior management is too old-school. They’re not accepting the future yet. Germany needs to move to the next level of technology. The country was a pioneer in internal combustion technology. But if you cling to the past, you won’t get to the future. It’s time to start building a fundamentally new generation of cars.
What role will German manufacturers play in the future?
The longer the delay of getting into electric cars, the worse off the German car industry will be. We have reached the limit of physics for what gasoline and diesel can do. You see what’s happened with the current diesel scandal at Volkswagen. In order to make progress, they apparently had to cheat. I think if you intentionally mislead governments around the world with software that is designed to only be effective at the test stand, this is a very conscious action.
Does Tesla profit from the situation?
I don’t think so. I don’t think anyone really profits from this kind of situation. But the best thing that could come out of this is a decision to abandon oil-based transportation – and for Volkswagen to make a very serious move towards electromobility.
You used to also maintain partnerships with German automakers. Is that a model for the future?
The problem that we found with programs we did with Toyota and with Daimler was that they ended up being too small. They basically just calculated the amount they needed to keep the regulators happy and made the program as small as possible. We don’t want to do programs like that. We want to do programs that are going to change the world.
How big would they have to be?
It would be interesting starting at around 100,000 cars in Europe, for example.
For those kinds of sales figures, Tesla needs new models. The Model S is still a car for a chosen few; the Model X will even be a bit more expensive…
I’ve only been saying it for nine years: step one: expensive car, low volume. Step two: medium price, medium volume. Step three: low price, high volume.
Daimler CEO Dieter Zetsche said: “No one will make money on electric cars.” When will Tesla?
I hope to be profitable next year. I agree, we cannot be making losses forever. This year we’ll be investing a lot into the manufacturing ramp-up of the Model X, and in the long term, the Model 3 as well. So our goal from next year onwards is to be cash-flow positive. But we wouldn’t slow down our growth for the sake of profitability.
When people discuss e-cars in Germany, you often hear one question: Where do we get the energy to drive it? Do you have an answer?
We need reliable renewable energy like solar and wind. The batteries we want to build are key to making this energy permanently available. In terms of markets outside of the United States, Germany is one of the most interesting markets in the world because here you already have an awareness of renewable energy. But e-cars can also theoretically store and release energy.
Apple just hired some of Tesla’s most important engineers. Do you have to worry about a new competitor?
Important engineers? They have hired people we’ve fired. We always jokingly call Apple the “Tesla Graveyard.” If you don’t make it at Tesla, you go work at Apple. I’m not kidding.
Do you take Apple’s ambitions seriously?
Did you ever take a look at the Apple Watch? (laughs) No, seriously: It’s good that Apple is moving and investing in this direction. But cars are very complex compared to phones or smartwatches. You can’t just go to a supplier like Foxconn and say: Build me a car. But for Apple, the car is the next logical thing to finally offer a significant innovation. A new pencil or a bigger iPad alone were not relevant enough.
You still work with a number of German suppliers to build the Model S. How important is German technology for you?
Our biggest supply base outside North America is Germany. Bosch, for example, is a huge supplier of a variety of components for us. We’ll be working with Dräxlmaier for the interior components, because they offer higher quality than some of our U.S. suppliers. I think those are two good examples.
How do you see the role of Asia in the future of the e-car? We just saw the Taiwanese Thunder Power e-car at the IAA…
Thunder Power? Never heard of it. But you do have to take them seriously. There are four China-funded electric vehicle start-ups in the United States alone at the billion-dollar level. We are facing some challenges in China because we don’t get produced domestically. We have to pay 25 percent import taxes; when China exports a car to the United States, it’s 3 percent. If China expects other countries to have a level playing field then they should too.