Transcribing the Q/A:
Q: Can you talk a little bit more about what's gonna happen when they change the battery? You said they can either come back and pick up their old battery or the battery - you'll know how much is left on it. How is this going to impact warranty? Are you going to keep track of the battery warranty?
Elon: At the SuperCharger locations, or the 'Pack Swap Stations', you'll have the opportunity of returning the pack that you borrowed, just sort'a like a rental car, or rental skis or something. If you don't return the pack, then what we'll do is: We know the pack that you gave us, and we know the pack that we gave you. We'll simply give you the option of billing you for the difference, or, if you don't want to do that, we'll just transport your pack to wherever your car is, and we'll switch out the pack at whatever location your car is. And you'll just pay for the transport cost of that.
But the overarching goal is - what we're trying to achieve, and what we're essentially commiting to achieve is that the cost of pack swap will be equivalent to the cost of gasoline. That's what we're going to make sure happens at the end of the day. Except that it will obviously be more convenient, because it will take 90 seconds and not 4 or 5 minutes.
The warranty will obviously... if you get your original pack back the warranty will stay the same. If you get a new pack, it will be dependend upon the length of time than that pack. A pack warranty is 8 years long, so if the pack you got is a 1 year old pack, then you'll have 7 years left on that pack. Whatever the age of that pack is.
Q: Will the switch out packs be new?
Elon: The switch out packs / replacement packs will at first be new, and over time they will be used. Of course when we first start off with the pack swap stations, they're all going to be fairly new.
Q: [Something like: the new pack you get may not be much newer than the one you have]
Elon: That's right, yes exactly. If you got a pack which is essentially the same as the one you dropped off, you don't need to drop it off again.
Q: The price of the Model S is based on the Mercedes Benz S class. How are you basing the cost of a tank of fuel? What constitutes the price of fuel?
Elon: Actually I should clarify - we do not base the Model S on the Mercedes S class as a price. So we didn't really reference it. We reference it generally against premier cars but not specifically against the Mercedes S class. The reference point for the cost of fuel is whatever is locally true. So the price will actually vary depending on where you are in the country.
Q: Based on how many gallons?
Elon: Based on about 15 gallons. So figure it's going to be somewhere between 60 to 80 dollars.
Q: How much does it affect the cost per station to build them? How many battery packs are you going to have at each station? How are you going to build these stations? Are there going to be batteries stored in kits or are they going to be parts of ...?
Elon: The pack swap hardware - the cost of establishing a pack swap location is about half a million dollars. As I mentioned in the presentation, we'll start off with the really fast high-traffic coridors. Because the assumption here is that if you want to pack swap, time is of the essence. We'll start off on the I5 corridor in California, and the Boston - DC route on the east coast. And they'll be co-located with the SuperChargers. You'll have the choice of either faster, at the same price you'll pay for gasoline, or free, and wait a bit longer.
As to the size of the storage for packs, it's going to vary depending on the specific location. And we'll certainly grow the storage facility as the use of that location increases. The same way we do the SuperChargers - according to the usage of the SuperChargers, we size the location - and they grow over time.
Q: [... cut off...]
It's very thin, I don't know if you - it's very thin.
Q: Yes, but you're going to have to store it somewhere.
Elon: The actual change-out area is a pit. The machine and so forth is stored in a pit. So we dig down for that. And some of the pack storage is underground, and some of it is above ground. Initial storage, actually I don't know the exact number, but I think it's somewhere in the order of around 50 packs.
Q: Are you going to be recharging packs while inside?
Elon: Yes, which we already have with the SuperCharger locations.
Q: [... cut off...]
We expect to have the first pack swap stations active later this year - probably in the 4th quarter.
Q: Tesla is fundamentally an auto maker. But these last couple of things you've done with SuperChargers and now with the packs. Isn't this possibly a distraction for you? Doesn't this take away from your prime mission of getting an automaker launched?
Elon: No, I think it's important for us to address the concerns that people have. We need to address the reasons that people are not buying electric cars. In order to have mainstream adoption, people need to feel that they have the same level of freedom that they have with gasoline cars.
And I think that's really at the heart of it. If you buy a gasoline car you have this feeling: you can drive anywhere you want, any time you want, and we want to give people that same sense of freedom with an electric car. So that they can feel that if they need to get somewhere in a hurry that they can do that. In fact they can get their faster with an electric car than they can with a gasoline car. It's just really important for us to address those objections, since they fundamentally affects people's willingness to buy electric cars.
Q: In the video, how many gallons was that tank? Seems like that was larger than the 15 gallon reference that you're using.
Elon: Yeah, in that case it was a 20 gallon tank. So we could have done (I think it was around 20 gallons, not sure the exact number but somewhere in that order). But for the pricing, we were going to do the pricing at 20 gallons, but I thought let's knock it down a bit and be conservative in that regard, and we knocked it down 25% and we'll set the pricing at 15.
Q: ARB is looking into maybe removing the battery swap to qualify for the additional credits you get for fast fueling. How do you feel about that? There's no final decision yet, but that might mean that the Model S generates fewer ZEV credits.
Elon: Yes, there are some incremental number of credits generated for pack swap. Essentially you get more credits for the longer the range is and if you're able to match the convenience level of gasoline. As to what the Air Resources Board will do - I don't really know. I would hope this demonstration would illustrate that we're able to do it, and we'll be rolling it out for customers to actually use later this year. I hope thus far people have noticed that there is a track record of if we say that we're going to do something, we actually do do it.
But I should mention that, perhaps there is an implicit in there that, are we simply doing this for ARB credits? That is not the case. In fact, as we start producing more and more cars, and we sell for example so many cars to Europe, so many cars to Asia, the cars sold to the U.S. will only constitude about a third of our production. And of that third only about half actually get credits. So it's really only about one sixth of our production that gets the credits. And in order for us to actually get money for the credits, we actually have to sell them to other car companies.
Q: When you return the battery pack, do you have to pay again for the swap? And next question - how is this technology better than Better Place's?
Elon: Yes, by the time you get pack you get your own pack back fully charged, and you pay again for the pack swap.
We talked about battery pack swap for a long time. It's not some new revelation. Nor do I regard battery pack swap as a particularly novel concept - since your average toy is capable of doing this. The notion of battery pack swap is not the problem. What is difficult is the actual technology of having a replacable battery pack. Something that can be done in automated fashion, quickly and safely, reliably, and economically. That's sort'a quite a difficult engineering challenge. And it's not clear to me that Better Place was really that... hmm... they were better at marketing than they were at engineering.
Q: Do you have to reserve the battery pack in advance - will they have to notify the SuperCharging stations that they're going to come in for a swap, or is it pull-up and go?
Elon: It's going to be pull-up and go. So we're going to overstock on the battery front.
Q: Will this work on both the Model S and Model X and Gen III?
Elon: The battery pack will indeed by common between the Model S and Model X.
... [ very muted part]...
it's also possible by that time that maybe charging technology gets better and better. And we'll have to see several years down the road whether battery pack swap is still even relevant.
Q: And as a follow up - just as an enthusiast - what is the benchmark of the forthcoming entry level model?
Elon: From a cost standby. So we're aiming for half the cost of the Model S. So a starting price of $35'000 and that doesn't include any tax credits or anything. So the Model S right now before tax credits is $70'000, so it would be $35'000... by that point there won't be any tax credits available to us, so it's gotta be 35 on the button. And it's gotta have true range, including under difficult circumstances - bad weather and all that - of at least 200 miles.
Q: [not included]
Elon: For battery pack swap it's quite a difficult technical challenge. Unless somebody really understands the car, it's not that easy to do. Designing the machine to do the automated pack-swap was a non-trivial exercise. And I have a hard time thinking about who would solve that except Tesla, honestly.
But, that said, once we have this working, I'd be very open to selling the battery pack swap system to people who want to operate it independently. The only constraint would be that they gotta make it as convenient as we do. It's gotta automatically bill credit card, and just be a real easy smooth operation, they'll have some commitments to quality and all that. But the first order of business is that we gotta make it work. And it's gotta really work and it's gotta be something that, if you're a customer you don't even need to think about it - you just go there and it's smooth, you're happy and you do your trip and you come back, and everything is just great. So we just gotta make sure that that's happening. That's going to take a bit of care and effort and then after we're done with that I'm very open to selling the system to people who want to operate such things around the country.
