Elon Musk: Yes, which is what I’m trying to say. The thing that matters is the monthly — it’s how much money do they have to put down and do they literally have that in their bank account or their check balance and then what is the monthly payment. And it doesn’t matter how — if that monthly payment is principal interest or whatever, it’s just a number, and that number has to not cause their bank account to go negative. That’s it. So going from near zero interest rates to kind of the current very high interest rates, the actual monthly payment is basically the same. It’s just a bunch more of it is going to interest. And there are some incremental challenges beyond that, which is the difficulty of getting credit at all has increased.
And so, the number of people who simply cannot get credit, period, even if they’ve got a job and everything is solid, the banks are a little gun-shy on handing out credit given that a bunch of them kicked the bucket earlier this year.
Unidentified Company Representative: There’s also just fewer options, even if they planned out credit, there’s fewer banks to go there.
Elon Musk: Digital banks still exist. Well, if your bank does not exist, you have to establish a relationship with a new bank. And so a lot of regional banks are died, and I mean even Credit Suisse, I mean, geez, that was a shocker. A 160-year-old-ish Swiss institution, it doesn’t exist anymore. That’s mind blowing. And I think there’s still quite a few shoes to drop on the bad credit situation. I mean, commercial real estate obviously is in terrible shape. Credit card debt has been rising significantly. The credit card interest rates are usurious. It’s over 20% interest rates, meaning like — which over time is just it becomes obviously extremely punishing because if somebody’s paying 20% interest on their credit cards, means they cannot pay them off. If you can’t pay them off and you’re still accruing interest of 20%, you’re at best headed to a bad place.
Martin Viecha: Thank you. Let’s go to next question from George from Canaccord.
George Gianarikas: Just to focus on the cost per vehicle coming down in future quarters as you discussed in your written remarks. I’m curious as to what the levers of that could be. Is it more scale, more factory utilization? Is it material cost reductions? Are there things like gigacasting? I mean, can you just kind of give us some data points to give us confidence if that’s going to come down over time. And if I can sneak one in, please, there are press reports — and I know how perilous it is to believe some of these. But, they say that you’ve included radar as an option in some Model Ys in China. And I’m just here to ask if that’s true. And if so, why?
Elon Musk: We’ve not included radar. We have radar as — a Tesla designed radar is an experiment in Model S and X. That’s it. We’ll see whether that experiment is worth it, but there are no plans to integrate radar into 3 and Y. Just as humans drive well, and in fact, an excellent human driver can drive with amazing safety simply with their eyes, the car will far exceed the average human safety just with vision, far, far, far because, I mean, the car is looking at all directions all at once. We don’t have eyes at the back of our head. And the computer never gets tired and never gets distracted, get drunk, hopefully. And so, radar is — what really matters is how much does it affect the probability of an accident. And in order for the radar to be effective, you have to be able to do radar-only braking — you have to do actions that are radar-only.
Otherwise, you get this disambiguation problem between vision and radar. That’s why we actually turned off the radar in cars historically that we had shipped, all 3 and Y used to have radar, but we turned it off because the radar actually generated more noise than signal. Now the Tesla designed radar is a high-resolution radar that has some potential to be useful, but the jury is still very much out on whether that is in fact the case.
