Tesla Inc. CEO Elon Musk said he has no immediate plans to leave the top post since he wants to oversee the development of artificial intelligence software that will enable lucrative future products, such as autonomous vehicles and humanoid robots.
At the automaker’s annual shareholders meeting Tuesday, an investor asked Musk about recent rumors that he may step down as CEO. “Please say it ain’t so,” the investor added.
Musk said, “It ain’t so,” to loud applause from Tesla shareholders in a question-and-answer session that capped the event. The Wall Street Journal reported last week that Tesla board members had discussed company CFO Zach Kirkhorn as a possible successor to Musk.
At the shareholders meeting and in an interview after on CNBC, Musk touched on a variety of topics.
He said he expects the Cybertruck pickup launching this year to sell between 250,000 and 500,000 trucks per year, and he hinted at two future mass-market vehicles. He said Tesla would reverse its opposition to traditional advertising in response to requests from the investor community.
On the CEO question, Musk said he wanted to oversee the automaker’s development of artificial intelligence and artificial general intelligence that would enable Tesla vehicles to operate as robotaxis. Humanoid robots that could sell in the billions are another application for the software, he said.
Tesla calls its robot under development Optimus. It showed video footage of the robot moving its limbs.
“I think Tesla’s going to play an important role in AI and AGI and I think I need to oversee that to make sure it’s good,” Musk said. Tesla’s lead in AI technology is not widely appreciated, he added.
Tesla sells advanced driver-assistance software for $15,000 that it calls Full Self-Driving, even though it requires human supervision and is only available as an incomplete beta version. Musk said he expects robotaxi software to eventually generate more revenue for Tesla than vehicle sales.
Future sales of the Optimus robot, Musk said, could be 10 billion or 20 billion since every person on the planet would want at least one.
“It’s some really big number, vastly in excess of cars,” he said, adding that a majority of the company’s long-term value would come from Optimus.
On automotive products, Musk said the Cybertruck that will launch this year after a long delay has the potential to generate between 250,000 and 500,000 sales per year.
“We’ll start production later this year and we’ll start handing over cars later this year,” he said. “I’d say a quarter million a year is a reasonable guess and it might be 500,000, I don’t know. We’ll make as many as people want and can afford. It’s going to be hard to make the cost affordable.”
Tesla originally said in 2019 the Cybertruck would start around $40,000. Musk has since said the price would be higher, but has not indicated by how much. The base Model 3 sedan, now Tesla’s most inexpensive vehicle, starts at $41,880 with shipping.
The pickup truck sales leader, Ford, sold just over 653,000 F-Series trucks in 2022, including 15,617 F-150 Lightning electric pickups that went on sale last year, beating Tesla to the EV pickup market.
Musk also mentioned two future vehicles to be built on a new platform Tesla is developing for more affordable models. The automaker is targeting production costs about 50 percent lower than the platform used for the Model 3 and Model Y crossover, which are classified as luxury cars.
He said he would save details on future vehicles for another time, but offered a sales prediction.
Two new products
“There are two new products that I think you will be very excited about, and both the design of the products and the manufacturing techniques are head and shoulders above anything else that is present in the industry,” Musk said. Combined, the two products could generate sales of 5 million per year, he said.
Tesla is building a new factory in Mexico for the vehicles, which could also be built in other plants. Wall Street analysts suggest the starting price for at least one could be $30,000 or lower.
In response to a plea from a shareholder, Musk said Tesla would try some traditional advertising to stimulate sales. Previously, Musk was adamant about relying on word-of-mouth and nontraditional marketing efforts, such as programs where Tesla owners refer friends in exchange for prizes.
“I share your larger point that there are amazing features and functionality about Teslas that people don’t know about,” he told the shareholder. “I think what you’re saying does have some merit and, you know what, I believe in taking suggestions, so we’ll try a little advertising and see how it goes.”
Musk’s comments drew loud applause. He later said on CNBC that he made the decision in real time while on stage and was surprised by the intensity of the applause. “I only just agreed to it, so it’s not a fully formed strategy,” Musk said.
Some analysts have been saying for months that Tesla should advertise to stimulate sales. More recently, advertising proponents said Tesla’s deep price cuts since January had bolstered their argument that the automaker needs more tools to drive deliveries in this climate of economic uncertainty.
Musk defended Tesla’s multiple price cuts this year and its new policy of adjusting pricing up and down every few weeks to balance supply and demand.
He said Tesla was being unfairly singled out for the frequent price adjustments. Legacy automakers do the same thing, he said, although it doesn’t show up in the sticker price.
“What happens with other automakers is that they are actually constantly adjusting pricing on cars, it’s just not that obvious,” Musk said. “Last year, there were significant premiums above MSRP,” he said, referring to dealer markups. “This year, I think things are below MSRP or close to it.”
Rapid price changes
Musk also defended the industry’s practice of adjusting prices to match market conditions.
“This is a necessity because demand fluctuates a lot, so something’s got to be done to achieve a supply-demand clearing point,” he said. “Every car company does this all the time. Tesla is no different.”
Recent data shows the price cuts have been successful, although they reduced Tesla’s profit margins in the first quarter.
According to Experian, Tesla’s U.S. registrations rose 37 percent compared with the same period last year to 155,360 vehicles. Tesla increased its annual production capacity by about 260,000 cars per year in the first quarter by adding a second U.S. factory in Texas, according to Tesla numbers.
The meeting, held at Tesla’s new factory in Austin on Tuesday, saw shareholders vote to appoint the company’s co-founder and former chief technology officer, JB Straubel, to the board of directors. They also voted to re-elect Musk and Chair Robyn Denholm as board members.
Investors voted against publishing a report on “Key-Person Risk.” The proposal sought to identify key persons and establish succession plans.
Musk said that now that he is stepping down as CEO of Twitter, which he purchased last year, he will have more time to focus on Tesla.