so i build the world-changing machines. i get it. you can't talk because it's super high-level. no, i actually do build the machines. blink if what you're doing involves encrypted data transfer. wait, what? wowwww... wow? what wow? there is no wow. good morning. it is a.m. at goproheadquarters in san mateo, california, 11:00 a.m. on wall street. "squawk alley" is live.

♪ welcome to "squawk alley." happy friday. i'm sara eisen. with me this morning my partner in crime, wilfred frost, staying up past 6:00 a.m. and en lee. four days to go until the election. new reports this morning that russia or another state agency may try to undermine tuesday's voting. this as donald trump and hillary clinton make their final push into key battleground states. our john harwood is in washington, d.c.. >> we have a three-point race. 47% clinton, 44% trump. donald trump had moved ahead in

that poll earlier this week. that indicates things slipping back a little bit toward hillary clinton but not desis live at this point. look at the battleground map. electoral votes, hillary clinton is leading or solid in more than enough states to get to 270 electoral votes if you look at both how she's doing in traditional democratic battlegrounds and some new democratic strongholds. now, how are the candidates deploying themselves over the weekend? this is the time they race around the country. if you look at hillary clinton's final push, you can see that she has got a set of surrogates -- president obama, you've got michelle obama, vice president biden, bernie sanders, all dotting the map to try to shore up hillary clinton's support. donald trump doesn't have those surrogates. but what you can see is he's got his own energy, and he is chris chri -- crisscrossing the country today, new hampshire and ohio, trying to figure out ways to break through not just in the

midwest, his rust belt strategy is what he's been leaning on most of the campaign but also in places like colorado that democrats have won the last couple elections and also trying to hold on to arizona, which is a republican stronghold. democrats have only carried it once since world war ii, but hillary clinton is xet live the so donald trump has to play defense as well. >> all sorts of mix-ups on the swing states this year. john, thank you very much. let's get to the cyber concerns for next tuesday. nbc reporting that the white house and many government departments are on guard. what are they most worried about? >> it's silly confusion. you don't know what's going on, the internet is down, you think your vote won't get counted. the thing that's working sort of in our favor in terms of our election process is each state has their own process anyway. machines are not hooked up to the internet. a lot are counted by hand. you can disrupt the internet or parts of the internet across the u.s. on election day. it shouldn't affect you at the

polls. >> what's the incentive, whether it's russia or anyone else, to hack on election day specifically? totally derail the process? >> again, it's just to sort of sew confusion, create a sense of fear more than anything else. in terms of practically speaking, i think, yeah, people want to check where their polling place is online, they can't do that, that could disrupt the process. i think, you know, if it's russia that's behind it, i think they're sort of acting like they're sort of showing their might. that's what this comes town to. >> how serious could it be? could they go far enough that the day after we're going to have increased calls from either candidate that this result isn't fair or is it, again, just small amounts of confusion? i think it's more small amounts of confusion. both sides are lorrying up properly. if there's going to be a recount sor some kind of a ballot xef exercise, they'll be fully stocked. yes, it gives some meat to certain supportering saying if my candidate lost because we were hacked or the process

wasn't fair, it does sort of disrupt i wat that way. it misunderstands the nature of the internet to think a hack could disrupt the election itself. it's more the everyday use of the internet. >> when was that attack? denial of services shut down so many website, paypal, amazon. a lot of security experts were out after that saying this is a drill. this looks like a drill, which is scary, because, a, it shows how vulnerable we are, and, b, what is it a drill for? could it be something leading up to election day? >> the authorities still don't know who was behind that particular attack, and there's one sort of theory that it wasn't a coordinated thing so much as a bunch of gamers trying to hack into a certain system and they created malware that spread much faster than they thought. that's one theory. the other is gearing up for big show on election day. >> after the dust settles if it's proven, for example, russia

has hacked certain aspects of the election process, what's in the retaliation? you don't want to elevate it to military action. >> that's a great point. u.s. military has done a lot of counter cyber espionage so, to speak. stuxnet is an example of that with israel. there has been retaliation. we just haven't seen it. i also think what we're seeing is the escalation of a different kind of a cold war, a cyber cold war so, to speak. i think what we're seeing is potential emergence i suspect of like a fifth branch of the u.s. military, where you have a cyber branch to deal specifically with these things. if russia is hacking u.s. servers, you need to fight back. >> feels like it's time for that already. ed, more with you throughout the hour. we want to get to the markets now. the dow is up 26 points. the u.s. economy added 161,000 new jobs in october.

economists were calling for more like 175,000. the employment rate falling to 4.9% partly because of people dropping out of the labor force. the s&p 500 trying to avoid its longest losing streak in more than 30 years, nine down days. we've already seen eight. looks like the s&p is positive by about 0.3. health care is in the lead. bob is on the floor with more. >> good morning, sara. the market has three problems. very simple -- the election, the fed, and crude. let's take a look. you heard about these eight down days, worst period since 2008. nine down days, haven't done that since 1980. ten down days haven't had that since noah. we don't quite now. we're checking it out. it was a long time ago. the decline in the s&p has been gradual, only 5% off the historic high. that was back in august that we hit. the russell 2000, much bigger decline. that's the fed, small cap worse on higher interest rate or

periods of rising interest rates. if you look at the sectors, you can see this already. we've been talking about the telecom and reiets getting hit badly. health care has been hit because of the regulatory concerns we've been seeing and all the big health care dmams are down for this quarter. i want to talk about energy. look at crude oil. we don't talk about it as much because we're obsessed with the election, but it's down 9% this week. oil services down 5%. so, folks, add it all up, you have pressure on pharmaceutical stocks from regulatory issues, pressure on oil from oversupply. you have pressure on industrials from slow global growth. guy, it's no wonder the stock market has been having some problems. of course some of this may be resolved next week, at least one of those three will be resolved. >> dash for cash is what you keep hearing. bob, thank you. meantime, it's a camera made for adrenaline junkies and the stock may be too. shares of gopro taking a noetz dive, posting a wilder than expected third-quarter loss, missing on both the top and blm

lines, sales down 40% from a year ago. ceo nick woodman is placing all his bets on two new cameras and a drone ahead of the hol lay shopping season, but it's not just gopro. earlier this week, fit bit lowered its guidance for the holiday quarter nearly 25% sending that stock sinking. and last month ibc had a report saying, quote, significantly designs in the smart watch market for the third quarter. what's going on in the wearables market, ed? >> we all have these phones. they work well for video and camera. do i need to spend $100, $200 for -- >> that's not new. >> not new but the expectations game is something a lot of tech companies, a lot of silicon valley companies have not done a good job of signalling to the market, right, to investors. i think that's a big factor weighing on this. yeah, i think, you know -- consumer confidence when it comes to tech is sort of a bizarre thing. iphone comes out, i'm going to spend my money there. i'm not spending it elsewhere.

that's another factor. >> obviously we all have smartphones. that's a threat to the likes of gopro. what about drones? are they a threat or opportunity for gopro? >> definitely an opportunity. it's also still a nascent thing. it started out as a toy. is it a serious product? how do i use it as an adult? it's not there yet. people don't know how they work. it's expensive, a lot of them, frankly, and the ability to use them, it's still limited, right. you can do it in your front yard or backyard, take it out to the field somewhere and play with it, but that's sort of it. it's not something you're going to pull out of your back pocket to capture a moment of friends and family. >> could it save gopro? >> i still don't think that market is big enough yet. it's a growth market, certainly, but if gopro were to pivot that part of it towards we're seeing use of drones in more b2b applications, using them to sort of monitor construction sites or dangerous areas where it's

harder for people to get inside and out, that is a growing market and a real one in terms of there's a real need or efficiency. >> can it save nick woodman's billionaire status? i can't keep up. every day, he's a billionaire, he's not. >> he has a lot more work to do with that company. >> ed, stick around. we'll talk to you more. carl is live at the baron investment summit. hi. >> always good to get here. the investment conferences in new york city, this is truly one of the main events. always good to check in with ron and get his take on not just the shift from akive to passive management but what's going on with fundamental analysis, what's going on with the cost of trading and the markets themselves. so we'll talk to ron baron about that. today is especially exciting because we'll include elon musk, the ceo of tesla. you saw probably a few moments ago that iss recommending that merger with solar city, but we'll talk about tesla production, talk about raising cash, auto pilot, spacex,

artificial intelligence, colonization on mars, and probably the election too. that's all coming up in just a few minutes. >> we look forward to that on the other side of the break. before we go to break, let's take a look at some of this morning's early movers. shares of starbucks trading near fresh 52-week lows, just beating estimates from earnings and revenue. ambassador announcing a 25% quarterly dividend boost. the company's ceo, kevin johnson, on -- "squawk on the street" earlier this morning. >> all retailers are facing challenging conditions. the election is creating noise in the market, requiring retailers, us included, to work harder to break through. >> and first it was smartphones, now samsung and the u.s. consumer product safety commission are recalling 2.8 million top-loading washing machines after reports hundreds of units exploded operating at high speed. nine people have been injured. more to come on "squawk alley"

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welcome back to "squawk alley." we got that jobs number this morning. of course the election is in four days. an awful lot for the market to digest. joining us here to talk more about the markets ahead of our

interview with elon mus income a few moments is ron baron, the chairman and ceo of baron capital, at his investment conference at lincoln center in new york city. great to have you. thank you for having us. >> thanks for coming back, carl. >> we got this election in a few days and this jobs number. i know so much of your thesis is that information gets sloshed around and markets don't know how to discount long term. what are you thinking about what's right in front of us right now? >> what i've been thinking about a couple weeks, probably wake up twice a night, go look at the odds who will win because it's affecting me. i don't think it will affect us long term. at least i'm hoping it doesn't. i think we've been through a lot in this country for the past 240 years, and we survived and, you know, profited and done better and better. exceptional country. i think that anything -- we've gone through depressions and wars and terror attacks, bank runs, everything you could think

of. and yet we keep going. and we have this great system that's degraded a lot by alexander hamilton. >> theme of the conference. >> theme of the conference. exceptional takes time. it's taken us time to become an exceptional nation. we are an exceptional nation, an exceptional place to live. we have a better place to live than anywhere else in the world. the opportunities here are better than anywhere else in the world. people can create businesses and jobs and lifestyles and better here in the u.s. and our grandchildren and their grandchildren will have much better lives than we have, and we have much better lives than john rockefeller had 100 years ago and henry xiv had 300 years ago. >> you haven't been thrown by fears that all those things you just mentioned are in peril? >> no, i don't think they're in peril. >> and those fears from others hasn't changed your investing thesis either. >> the reason stocks are so cheap is there are very few people doing research any longer. when i started business in 1970 they had what were called fixed

brokerage commissions, and those on average were about 1% of the amount of money that you were using to purchase stock. so, for example, if you were buying a thousand shares of google in 1970 and it was $800 a share, you paid $8,000 as a commission. you can now do that for $7.95. so when you have $7.95 as opposed to $8,000, you don't have as much money to spend on research or stockbrokers. a lot fewer stockbrokers, fewer people doing rnl. therefore the markets are incredibly inefficient. everything gets priced all same because they're all part of indexes or etfs. when one goes, the other goes, and everybody is trying to keep up. the computers are doing the trading. no if you look at my screen every day, if all my stocks are up 1%, down a half a percent, like every single one. >> you call it low dispersion. >> it's unbelievable. all correlated. that's because everyone is making decisions about who's going to win the election, what's the price of oil going to

be, when is the government going to raise prices? so i don't really buy into all that. and i think that nobody through trying to trade is going to do better in the market except if you can -- so when i was talking before about commissions, ver2 is a market maker. they trade 9% of the volume on 7% of the volume of general electric every day or 9% and 7 million shares. that's what they trade. every day. it turns out that what would you guess that they make on those trades? >> i sort of have read your thoughts on this, but -- >> it's $350. >> not a lot. >> $350. so if i think about $350, i mean, gee, they make $350 every single day on that stock for 50 weeks a year, but that's not the research that people are doing. they're just buying and selling, constantly buying and selling.

what it does for people like us is that if you're trying to do what they're doing, you're going to lose, but if you're trying to just make long-term investments in businesses that are yet to be much larger and you're buy at a good price relative to what you think they become and what people don't understand they want to buy at some point in the future, then you'll make a lot of money. >> that's why you think the markets sort of trade in this narrow band for days, for weeks, something happens, they reprice and trade in a narrow band -- >> look at netflix. they announce earnings. we have a small position in n netfl netflix. $50 billion company. they announce earnings and the next day it's up 20%. $50 billion company. the other companies that are sort of similar up 5% that day. but everything trades together. it's all because there's no advance notice or understanding of what's happening in businesses because people aren't doing research. that's the opportunity. >> you have not been afraid to add to things under pressure like an under armour or azilla.

>> correct. that was at 21 or 22, we were buying stock, now in the 30s as an example. >> is that a torturous process or no. >> no. that's opportunities. the big picture is we think that the economy and the stock market are intertwined and they both approximately double every 10 to 12 years. so stock market doubles every 10 or 12 years and the economy doubles every 10 or 12 years. and you g back to 1960 and it's the same thing. the economy is now 18 trillion, 19 trillion, and the stock market is 18,000. 2007 it was 14,000 and 14 trillion. 1960 it was 600 on the dow and 520 billion for the economy. and that's 6.7% a year compound for economy and 6.3% for stock market plus dividend. that's what the stocks and the economy do. what you're facing, the race against is trying to make your money stay whole and your money falls in value roughly 50% every

17 years. buffett says that 50 years ago when he started his business, what cost him 12 cents now cost him a dollar. that's eight times. eight times is three doubles. two, four, eight, three doubles, that means you lose half the value every 17 years. that's 3.5% a year. just go back one step further, the louisiana purchase was by thomas jefferson in 1803. and it was enabled because the credit that alexander hamilton had established was so great that he was able to borrow $15 million to double the size of the united states. that $15 million today, what would you guess it's worth? >> i have no idea. >> $250 billion. $250 billion. so that $15 million in 1803 to 2016, $250 billion, you get a sense for what percentage annual rate of return that would be? it's 3.5%. so 3.5%, that's just the value of your money.

at $250 billion is not worth what the louisiana purchase was, especially since they're all red states, but that $250 billion, if you value what they bought, it's a lot more than that. but the value of your money has fallen at 3.5% a year. >> we're going to get to elon. one of your biggest holdings. we've got questions. i know you've got some too. we expect to hear you and him go back and forth a little bit. >> great. >> in a few minutes. for now, sara, back to you. >> we're looking forward to that conversation, carl. thank you. when we come back, as carl mentioned, his continuing conversation with billionaire investor ron baron and then tesla ceo elon musk will be joining "squawk on the street" talking everything from the company's future to spacex. you don't want to miss this interview. the dow is up a little more than 30 points. your path to retirement may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals. call us or your advisor t. rowe price.

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motors. it's up about 2.8%. we're just moments away from carl quintanilla's conversation with tesla ceo elon musk. guys with us, we don't get to hear from elon musk very often. he's talking about a critical time for this company trying to combine solar city and tesla at a time when the stock has lost almost 17% in the last 12 months. what are the key questions? >> key question for me, first of all, solar city, tesla, they were separate companies to begin with. there is a market for solar panels, a growing market for electric vehicles certainly and those are good companies to have, good things to invest in. i don't know why you need to combine it. we know why. there's a balance sheet issue with both companies and combining them would sort of help keep that you remembered control. but from a synergy perspective, what one brings to the other, solar kanls on top of cars, i don't think that's a big edition, an efficient thing, necessarily. >> what do you think drives the

stock price more meanfully? is it still whether they can deliver enough cars or have we moved on to other issues in terms of innovation? >> i think they can deliver cars. we've seen that. like their last sort of asset they had, they actually exceeded what they thought in terms of cars they will deliver or can deliver. the bigger issue for tesla and solar city is management, leadership, right which way is that headed? elon musk is a visionary, he's got great ideas. how does he manage and bring it forward? >> more on that in a minute. >> absolutely. when we get to that interview. for now, dominic chu has a quick market flash for us. >> we're watching shares of medical diagnostics company alere, down 11%. the company reported earnings that didn't meet some analyst expectati expectations. however, many people are pointing to something that was in their regulatory filings in which they say that one of their units is no longer going to be able to do business with medicare.

in their statement they basically said that the cms, the center for medicare and medicaid services is no longer going to let one of its business units do business because they allegedly submitted false claims. the company does plan to appeal this particular ruling but that's why those shares are moving the way they are. >> big move. thank you very much. when we come back, our exclusive interview with elon musk just two weeks ahead of that shareholder vote on combining his two companies. if we don't solve our debt problem 19 trillion and growing money for programs like education will shrink. in just 8 years, interest on the debt will be our third largest federal program. bad news for small businesses. the good news? there's still time for a solution. ask the candidates for a plan to secure our future.

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welcome back to "squawk alley." our next guest is the ceo of tesla, space ex, and the co-founder of solar city. joining us on the phone, elon musk, and from the baron investment conference with me, tesla investor ron baron is still with us. elon, great to talk with you. thanks for calling in. >> thanks for having me. >> i saw you tweeted a few moments ago the news about iss recommending the merger, stocks up today. give us your thoughts around that. >> yeah. well, infrastructure and services has -- i mean, they're the leading independence evaluator in the world and actually have a tendency to be if anything conservative in their recommendations. i hate to say that, but i thought they wouldn't recommend

but they did. i'm very glad they did. they can be a bit negative. but i'd say i was really ims pred with the team that i met and the depth of questions they asked. and they spent a lot of time with tesla and with solar city and with our independent board of directors. so they came to the conclusion, which is fantastic. >> so, elon, this is ron. >> hey, ron. >> so i looked at the -- hi. so i looked at this also and initially, you know, the way i perceived this transaction is that so solar city, you know, might be paying $5 billion for it, $2.5 billion for debt, $2.5 billion for equity, but you could sell the receivables then

pay $2.5 billion for a business that could in a few years make $400 million a year. >> right. >> so the financial transaction is fine. that's not the reason you're doing it. >> that's correct. when we began to invest several years ago, people would say to me, if you're right, if elon is right, if you could produce as many cars as you think nuk the future, there won't be enough electricity. so the more i thought about that and -- >> true. >> -- the more i talk about this, 40% of electricity is used by houses and every time you put some car inside of a garage, then it takes 30% of the electricity of the house, two cars means 60% electricity of the house. all of a sudden you get 200 million cars and 100 million houses and you're up 24%. and there's no electricity expansion that's going on in the industry because they can't build these $500 million plants that are only used some of the time. your idea i presume or understand is that when people buy these solar panels or buy solar roofs, then all of a sudden they're going to need

batteries so they can use the solar power they generate at nighttime. but the really big deal is you'll have a intelligence la network that the intelligence la network is going to be able to store up these batteries -- this energy and all of a sudden when you have peak hours at the end of the -- you know, at the peak hours, the utility doesn't have to build those plants, the $500 million plants. they could buy $30 million or $40 million worth of batteries and make the same money and split wit the consumer and reduce the consumer expenses and, you know, make a tremendous return, 50% on a $50 million investment, for example, and the consumers save 25 million. isn't that the concept about the reason we're doing this is that -- >> yeah. >> -- we're going to be able to eliminate these huge -- right. >> yeah. actually, ron, i couldn't have said it better myself. i think that's exactly right. in order to -- if you sort of stand back and looked at this from a macro standpoint and say, look, we really want a future

where all cars are electric, all power is sustainable and clean and, you know, which is really going to be primarily from the sun, seasoned since the sun only shines during the day and it's right in the middle and it's at dusk you need batteries in the house and businesses to store the electricity. so if you have solar panels factories and electric cars, you have a complete solution to sustainable energy future. but if any one of those pieces are missing, then you don't. so it's just critical that all three pieces are there because i think that's the future we as humanity want. and we just didn't see it getting solved in the right way. wouldn't see anyone doing anything on electric cars, and then very little was happening

on stationary stores with hub factories and we did that. and then also in terms of electricity generation, the solar side, it just wasn't being done well. you know, i actually am convinced -- and i hope they're happy about this, but i convinced my two cousins, who are exceptional entrepreneurs, and they actually bought a technology company and sold it to dell for about $110 million, $120 million. they don't need to work. they could have gone and lived on an island and sipped mai tais, you know, and -- for the rest of their lives. but instead they went and -- >> like you with paypal. like you with paypal. you didn't have to work anymore either. >> yeah. but guys tortured me to go into

the solar business, when is one of the hardest businesses, three years of torture instead. >> can i go one more second? so on the plant in buffalo that they have that is an $800 million plant and a couple hundred millions more invested, make a couple hundred million dollars a year, that's presumely going to make the roof. you complained. you said these solar panels are ugly. i'm not going to attach the tesla brand to an ugly product. we want something gorgeous. now you have these roofs that looked amazing and then those roofs, when people start using those roofs, they're going to buy the batteries that we can produce a zillion of and make them at ever lower costs for engines for cars keep going up and battery costs keep going down. we put hem in people's houses, utilities invest in them, then you have the network. how does that network work? is the plant in buffalo going to make roofs, solar panels? what are they going to do? >> yeah.

the plant in buffalo is going to make solar roofs large scale. and i'm actually really excited about the possibilities. what i demonstrated -- when i unveiled the solar roofs sort of kind of four initial versions of the solar roof, that was really just for start. just to get going. i think we can actually have more varieties at a time. we can make subtle improvements. i think it's going to get even better than what we're shown, you know, subtly over time as we have new versions and expand the range of options. i really think it's going get to the point where if you get a normal roof, it's sort of odd. it's going to be like of course you get a solar roof because it looks better, it lasts longer, it's got better insulating

value, and it costs less when you factor in the electricity that it generates. like why would you get anything else? >> four years instead of 20 years for an asphalt roof? >> frankly, it's going the last -- i mean, it's going to last longer than the house. so 40 years is a low estimate, i would say. you look at cathedrals like those that are several hundred years old and the roofs have had to be reroofed many, many times. you know what's still there? the stained glass windows. the glass is still there. >> glass l.a.asts. >> your point is well made. what do you say to people who argue it's hard enough to become a mass market oem, you just had a profit, $3 billion in cash, why would you want to complicate things with a deal that's -- that has more questions, right, more questions about up-front

costs, more questions about cash flow terms on the solar city side? is the timing not inconvenient at least? >> i think the timing is just right if not -- i mean, frankly, we may be a little late. i wouldn't say that we're early. it's really an accident of history that the companies are even separate. in my original plan, business plan for tesla, i planned for tesla to do solar panels. but at the time there wasn't the overlap because we didn't have the stationary storage for houses, the battery power for houses. once you start producing the battery packs, we had the power wall for houses and small businesses and we have the power pack for bigger companies and utilities, and in the process of installing the biggest utility battery set up in the world with southern california edison and another big one that's a solar

battery combination in kauai, you really need product integration. so you want the solar -- you have the solar panels and the battery to work seamlessly with one set of electronics, one set of software, one insulation crew, one service crew. it's way better that way. and that's increasingly obvious and it was just getting clunkier and clunkier to do these like the kauai deal with the kauai utility. it took months to vet that through our independent board members of both companies and concerned it was an arm's-length transaction. and it was just very unwieldy. now we're going to do hundreds if not thousands of deals of that size and bigger.

are we going to run them all through the independent committee? there's no way to do that effectively. product integration, people really want -- the end user, whether you're a big company or a utility or a consumer, you want things to just work. you don't want to be figuring out who's responsible and finger-pointing. it just needs to work. >> so talk about the machine that makes the machine. so originally, you told people we could do 500,000 cars a year. recently you told them you could do three times that amount and maybe ten times that amount. i was reading an interview with the head of manufacturing and he was talking about, you know, ten times. are we going to do that with a plant in buffalo? is the plant in buffalo going to make roofs? are we going to be able to produce those with machines that make machines much more rapidly, faster, cheaper, more reliable than we ever could before?

is that the idea? >> yeah. yeah. a better way to approach things, i was originally trained as a physicist. i was planning to just be a scientist or something. so i really think the framework is the best way to think about things, the physics framework. so when you do that and you actually analyze the -- watch the acceleration, the density of the factory, really i find it comes down to two key variables. what is the volume etric -- what percentage of the -- what percentage of the volume of the factory is useful equipment versus air or storage or

something that isn't useful? and then the other parameter is what's the exit velocity of product from the factory? when i did that sort of basic math on cars, i came to the conclusion that even the biggest car interactions in the world are actually really slow. the cars are exiting at about 0.2 meters per second. a moderate walking speed the 1 meter per second. so cars are are moving through the factory five times slower than the person can walk. so applying that same mental framework to the solar factory in buffalo, i suspect we will probably ultimately be able to produce as much as ten gig watts from that factory, designed for

gigawatt nominally but we could probably exceed that by an order of magnitude. >> ten times. >> yeah. yeah. >> what this means is we are going from having this fixed investment and producing one times the revenues and fixed investment to being ten times. so we're becoming a capital-live business. >> yeah. exactly. exactly. it translates into natural terms, it means that the cap exneeded is much, much less to achieve the same outcome. >> so when you talk about having no need to raise cash anytime soon but leaving the door open for that, where is your head in terms of how much needs to be done potentially in the future, how much could be done for risk mitigation? >> as i said on the earnings call, our current financial

projectio projections say that we don't need to -- equity or general corporate debt in order to reach cash flow positive with the model. so actually, there is no explicit need for us to raise money. it may be prudent for us to raise some capital as a buffer and just to derisk the business, but we've not yet decided when that might be. >> now we've got panasonic as a partner in beautiful as well as wi -- buffalo as well as with us in reno so, presumably they would have the capital if we needed it. >> yeah. for sure. yeah. >> in technology and in customer -- in production in our facility, the same idea.

>> yeah. >> technology as well? >> yeah, yeah. actually, panasonic has the most efficient solar style in the world. and we think with solar city's panel technology, it's actually slightly worse than panasonic but at a significantly lower cost per cell. we think there are ways to combine solar city's low-cost cell technology techniques with panasonic's high-efficiency cell technology and the net result being the highest efficiencies at the lowest cost, which is really -- obviously that's a winner. >> that sounds fantastic. okay. so next topic. autonomous driving and safety. so we talked before about how safe cars are, but we're getting tarred when a car that we have

gets in an accident and cars get in accidents all over the place and you never read about them, but you read about anytime one of our cars gets in an accident. how do we turn this around? how do we get favorable publicity to show how safe our cars are instead of every now and then a car gets in an accident and all you read about is, oh my god, this is the worst thing in the world? >> well, i think these things tend to rise up and die down. we had this with car fires at one point where every year just in north america there are about 200,000 automobile fires. 200,000. and we had -- we had three. so our three fires, which caused no injuries, by the way, nobody so much as burned a finger, whereas in the gasoline car fires, thousands of deaths and

horrible injuries. our three noninjurious fires got more press than the other 200,000 combined. >> amazing. >> the public figures this out over time >> then it gets -- then the reader is like, oh, yeah, this is so easy, and then, of course -- >> we have a new -- we have a new model coming out. a new design coming out. that presumably is going to be multiple safer, multiple more functionali functionality. >> i did want to ask you, elan, would you have gone back if you could and changed the name autopilot. did that give people the wrong impression about the software's capability? >> i don't think so.

so far there's only one case of -- a case of concern where autopilot was on and somebody died. that was the case in florida. all that really means is autopilot didn't really steer away or break away from the truck that crossed the highway. it stayed in the lane, but the nature of the truck that was crossing the highway was sort of very unexpected and, unfortunately, the driver didn't take action.

>> the autopilot does not -- it is meant as an aid to the pilot. it enhances safety, autopilot. >> tlr plenty of planes that crash all the time with autopilot on. i would say probably a week doesn't go by that that doesn't happen somewhere. >> we got eight minutes left. i do want to ask you, elan, yesterday the white house designated 48 u.s. interstates as easy corridors where eventually you can expect to see a charging station every 50 miles. that's a big deal. does that dynamic change if there's a president trump?

you can go anywhere in the united states on the super charger network right now. >> but how would you measure political risk to your model right now? >> i don't think it's very high. yeah. i would say it's not going to make much of a difference one way or the other. you know, i -- yeah. obviously i think hillary's economic policies and environmental policies particularly are the right ones, you know, but. >> i don't think this is the finest moment in our democracy

at all. >> a year ago you blogged that you didn't have strong feelings about the political environment. you said you hoped he didn't get the nod for the nomination, and do you feel the same way about him getting into the white house. >> he is not the right guy. he doesn't seem to have the sort of character that reflects well on the united states. it's just -- i don't know. no. i just don't think that -- yeah. i don't think it's the -- >> let's get back to -- >> i tried. >> it's a model three. do people say, gee, he says he can make 200,000 or 300,000 cars next year and 500,000 cars the year afterwards. people were saying how can he ever possibly do that? that's not possible.

then i was talking to jeff recently, and i was asking him a question about how if i got an old car, old tesla i can get it upgraded a new car, and he said that the model three is going to be the easiest car we've ever manufactured, and the reason for it is there's going to be a lot of commonality in it and modularity. if we have a new product, we can take out a box and put in the new box and take out the old one. is that what's going to -- why is it such an easy car to make? >>. >> it was designed to be easy. >> the three. the three? >> yeah. the three was designed to be really easy to make and easy to automate. the model s is a hard car build and the model x is an insanely hard car to build. in fact -- >> because of the doors? >> there's so much -- it's like

a faberge egg. there are so many great things in that car. we designed the seats to be like a sculpture. we hid all the mechanisms in the door. it moves like it's invisible. it fields like you're in a helicopter. there's so much about the model x that's amazing, and i say that i'm a fool. we should not have done that. >> i got two x's and the s. i love the s. i got that first. great to drive it. i got an x. i just -- i don't drinow i have. it's an amazing car. >> i have to ask elon.

bill ford gave an interview saying the silicon valley is learning how hard it is to build automobiles at scaled. do you feel like you've been schooled somehow? >> yeah, for sure. major issue. that hurt. >> maybe one of the hardest businesses to do. >> when you see what they've done there, when you see what tesla has done, you think how could they succeed. >> it's so unlikely and probable that it would be successful. the hard stuff has been done, i think. >> yeah. >> i know you don't want to spend too much time on spacex. you said the fall kong nine week was one of the worst weeks ever. we're curious as to launch plans going forward.

>> yeah, that's -- i think we've gotten to the bottom of the problem. it basically involves a combin i guess so of liquid helium, advanced carbon fiber kparmts and solid oxygen. it's never happened before in history, so that's why it took us a while to sort it out. we've been working closely with our commercial customers to sort of understand it. this was the toughest puzzle that we've ever had to solve. it looks like we're going to be back to launching around mid-december. >> trucks. >> how long before we can have a truck on the road that's

autonomous driving truck? how threatening is that to these big trucking companies? >> you mean like a semitruck? >> yes, exactly. >> pickup trucks and semi-trucks really. and buses. >> yeah. well, i think it's going to start off initially being -- just being really advanced autopilot or self-driving but still a person is behind the wheel. i think it will actually be a big safety improvement because you get a lot of accidentse1 happening when truckers have been on the road for a long time, and they get tired. this could really help with action of that type. it will be a few years before regulators have seen enough d a data. it will be before regulators feel comfortable in not having a

driver in the car, and then i think probably the role of driver will transition to kind of a fleet manager or the fleet operator where each driver will be responsible for a certain number of trucks or in a case buses, a certain number of buses, and they'll sort of manage their fleet and keep track of the status of each one. you know, occasionally they may need to take remote control of one, like if the computer is stuck or basically taking care of their sort of flock of trucks and buses. it's a different job than just driving one. >> and elon, we're in this period where a lot of workers are being displaced by deck nolg, nol technology, by ai. people wonder if we're in a negative tax