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The Singularity is Near: How Kurzweil’s Predictions Are Faring

Mish Boyka

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Back in 2007 I was very excited to start reading The Singularity is Near by Ray Kurzweil which had been published 2 years earlier in 2005. As someone who’d always been fascinated by computers and technology since I started programming my first ZX Spectrum as a child, through to my teenage years programming in QBASIC, to my work as a Web Developer, I was well aware of Moore’s law and very conscious of the accelerating progress in technology.

As I started to read, it became clear that this was an exceptional book. The clarity of Kurzweil’s writing, the level of detail he went in to about each concept he discussed and the content itself were entirely captivating, not least because the predictions were set to happen in the near future and would change the world in to an unrecognisable utopia. In fact, although Kurzweil says early on in the book that his view of the future is neither utopian nor dystopian, the future described is so rosy that the Singularity has also been called “the Geeks’ Rapture”.

Indeed, if Kurzweil’s predictions do come true, they are comparible in their size and implications to the Second Coming of Jesus – the conquering of death and the unification of all consciousness in to one computational substrate that is to become more powerful than anything in the Universe and spreads outward from the Earth at the speed of light … or faster!

The book quickly became an absolute page-turner for me and as incredulous as it sounded, Kurzweil backed up every prediction with thorough research, logic, and his own impressive credentials – Kurzweil was something of a child prodigy who programmed computers and wrote scientific papers at an early age and became the inventor of OCR (Optical Character Recognition) and the Kurzweil digital pianos and keyboards that bear his name. Kurzweil now works at Google where his job description is “to bring natural language understanding to Google” – a goal not too distant from developing an AI capable of passing the Turing test.

During my time as a software developer, discussions often arose about the future of technology and I would occasionally lend the book to other developers. Unfortunately, at some point the book wasn’t returned and I wasn’t too fussed as I’d already read it thoroughly. Recently, I decided to buy another copy and re-read it – after all, I still consider it to be one of the best books I’ve ever read. This time though, 12 years after the initial publication, it would be possible to see how Kurzweil’s predictions had done.

Incidentally, Kurzweil himself has released a document describing how his predictions are faring which can be downloaded here: http://www.kurzweilai.net/images/How-My-Predictions-Are-Faring.pdf

Unfortunately though, he doesn’t always seem to be intellectually honest with himself:

“PREDICTION
Displays will be built into our eyeglasses and contact lenses and images projected directly onto our retinas.

ACCURACY
Essentially correct

In The Singularity is Near, the wording could be interpreted to mean that it is commonly
used, which is not yet the case, but this is likely to become the case over the next couple
of years.”

Well that was 2010, it’s now 2017 – where are these eyeglasses and contact lenses? What about Google Glass? Well it may still be being developed, but it certainly isn’t in common use. Kurzweil also tends to mark many of his other predictions as “correct”, when really they’re not, even now in 2017.

So, let’s get on to my re-reading of The Singularity is Near, which even for the second time I thoroughly enjoyed and took away a load more fascinating information that I may have missed on the first reading. This time I noted any predictions as I went through that we can now verify and what I found is below.

On pages 11 and 12 we have:

“James Watson, the codiscoverer of DNA, said that in fifty years we will have drugs that will allow us to eat as much as we want without gaining weight.
I replied, ‘Fifty years?’ We have accomplished this already in mice by blocking the fat insulin receptor gene that controls the storage of fat in the fat cells. Drugs for human use … are in development now and will be in FDA tests in several years. These will be available in five to ten years, not fifty.”

Well, The Singularity is Near was published in 2005, so Kurzweil’s deadline for this was 2015. According to the NHS website however, 1,316 gastrc band operations were performed in 2012 and today we still don’t have a pill that you can take and then eat what you want. It would be unfair of me not to mention an article on Kurzweil’s site: http://www.kurzweilai.net/imaginary-meal-tricks-the-body-into-losing-weight but this has only been tested in mice which Kurzweil even says on p11 had already been achieved. I’m sure Kurzweil would disagree, but if we’re being honest, there is still no magic pill available that lets us eat what we want and not gain weight.

Prediction: False

Page 105

“By the end of this decade, computers will disappear as distinct physical objects, with displays built in our eyeglasses, and electronics woven in our clothing, providing full-immersion visual virtual reality. Thus, ‘going to a Web site’ will mean entering a virtual-reality environment – at least for the visual and auditory senses – where we can directly interact with products and people, both real and simulated. Although simulated people will not be up to human standards – at least not by 2009 – they will be quite satisfactory as sales agents, reservation clerks, and research assistants. Haptic (tactile) interfaces will enable us to touch products and people. It is difficult to identify any lasting advantage of the old brick-and-mortar world that will not ultimately be overcome by the rich interactive interfaces that are soon to come.”

Did the above sound anything like your experience of 2009? Because it doesn’t seem anything like my experience of 2017. There are a few separate claims here, let’s break them down:

    • “Computers will disappear in to clothes and eyeglasses.”
      Nope. Computers have become our smart phones though and we’re no longer tied to desktops.Prediction: False

 

    • “Going to a website will mean entering virtual reality.”
      In 2009, no. In 2017, it is possible that a tiny percentage (and we’re talking < 0.0001%) of websites use VR and probably a similar percentage of people have an Oculus, Vive, Google Cardboard, Gear VR or similar VR headset. There is a framework to allow developers to make VR websites called A-Frame but it’s definitely not in common use yet.Prediction: False

 

    • “Virtual assistants will be satisfactory sales agents.”
      Nope, not in 2009 and not now in 2017. The closest we get is a live chat that is a bot, but as soon as the user realises they’re not speaking to a real person, and that is pretty much after the very first question, they would usually rather just use a search or browse an FAQ.Prediction: False

 

    • “Touch interfaces will allow us to touch products and people.”
      Sure this has existed in labs for a long time, but do we use this even in 2017? Nope, not even close. Yet another fail for Kurzweil, if we’re honest.Prediction: False

 

Page 312

“Computers arriving at the beginning of the next decade will become essentially invisible: woven into our clothing, embedded in our furniture and environment. They will tap into the worldwide mesh (what the World Wide Web will become once all of its linked devices become communicating Web servers, thereby forming vast supercomputers and memory banks) of high-speed communications and computational resources. We’ll have very high-bandwidth, wireless communication to the Internet at all times. Displays will be built into our eyeglasses and contact lenses and images projected directly onto our retinas.”

    • “Computers in clothing, furniture and the environment.”
      Well I have a Christmas jumper with flashing LEDs but I don’t think that’s what Kurzweil meant, and none of my furniture has a computer in it unless you count the Raspberry Pi on the shelf of my coffee table. As above, this one doesn’t seem correct even in 2017.Prediction: False

 

    • “A worldwide mesh will link all devices”
      Many devices do connect to wifi and you can connect to their IP address to access a config page served by their web server, so this seems to be correct.Prediction: True

 

    • “forming vast supercomputers and memory banks”
      In the PDF linked to above, Kurzweil tries to claim he meant the Cloud, but actually I think it’s clear from the text that he meant all devices that connect to the Internet will share their resources in terms of memory and processing power. While this probably will happen fairly soon in my GFN and I run the “Folding @ Home” software which donates spare processor time to scientists who are trying to solve cancer and Alzheimer’s, and can run on a mobile device, this isn’t in common use yet in 2017.Prediction: False

      [Update 2017-12-22]
      Rather than a single standard for devices to share their computing resources, it might be that blockchain technology allows these resources to be shared safely and anonymously in return for a reward such as cash, cryptocurrency or the use of other resources. Some technologies now exist that share processing such as Golem and storage such as Sia. If these became ubiquitous and ran on the majority of devices, the amount of computing power available would probably be many orders of magnitude greater than even the most powerful supercomputers in existence today.

 

    • “We’ll have very high-bandwidth, wireless communication to the Internet at all times.”
      Correct! Indeed we do, and we use it so much that it’s hard to remember that in 2005, we didn’t have this.Prediction: True

 

    • “Displays will be built into our eyeglasses and contact lenses and images projected directly onto our retinas.”
      Also discussed above, this one seems way off.Prediction: False

 

Still talking about “The 2010 Scenario”, Kurzweil continues on page 313:

“These resources will provide high-resolution, full-immersion visual-auditory virtual reality at any time. We will also have augmented reality with displays overlaying the real world to provide real-time guidance and explanations. For example, your retinal display might remind us, ‘That’s Dr. John Smith, director of the ABC Institute – you last saw him six months ago at the XYZ conference’ or, ‘That’s the Time-Life Building – your meeting is on the tenth floor.’
We’ll have real-time translation of foreign languages, essentially subtitles on the world, and access to many forms of online information integrated into our daily activities. Virtual personalities that overlay the real world will help us with information retrieval and our chores and transactions. These virtual assistants won’t always wait for questions and directives but will step forward if they see us struggling to find a piece of information. (As we wonder about ‘That actress … who played the princess, or was it the queen … in that movie with the robot,’ our virtual assistant may whisper in our ear or display in our visual field of view: ‘Natalie Portman as Queen Amidala in Star Wars, episodes 1, 2, and 3.’)”

    • “high-resolution, full-immersion visual-auditory virtual reality at any time”
      Unfortunately this wasn’t true in 2010 and isn’t true in 2017.Prediction: False

 

    • “We will also have augmented reality with displays overlaying the real world to provide real-time guidance and explanations”
      I’d probably argue that this one is true, although we don’t use displays in contact lenses or eyeglasses, it’s possible to use one’s phone to overlay the world with useful information. An example is an astronomy app that identifies stars and constellations as your point your phone’s camera at them.Prediction: True

 

    • “Virtual personalities that overlay the real world will help us … For example, your retinal display might remind us …”
      Not even close. We had nothing like this in 2010 and nothing like it now in 2017.Prediction: False

 

    • “As we wonder about ‘That actress … who played the princess …”
      Well, a personal assistant is not always watching and understanding with the good judgement to know when to interject, but, if we have our phones so configured (and I do), we can talk to our phone and say “Ok Google, which actress played the princess …” and fairly often a computerised voice will start speaking, not just with the content of the first matching search result, but with a direct answer to the question. Impressive stuff!Prediction: True

 

    • “We’ll have real-time translation of foreign languages”
      Speech to text and text to speech are both essentially solved problems. (If you don’t believe me, try talking to Google Now on an Android phone.) And language translation has existed for a while. It continues to improve in quality, although bi-lingual friends of mine tell me it’s still not great. But it’s probably fair to count that this exists.Prediction: True

 

Page 336

“As with all of our other institutions we will ultimately move toward a decentralized educational system in which every person will have ready access to the highest-quality knowledge and instruction. We are now in the early stages of this transformation, but already the advent of the availability of vast knowledge on the Web, useful search engines, high-quality open Web courseware, and increasingly effective computer-assisted instruction are providing widespread and inexpensive access to eduction.”

This is essentially correct – the trend toward high quality online courses at affordable costs is continuing and there are some really great resources out there such as:

 

 

 

    • and of course, one of my favourites, Wikipedia (whose reputation in academia for being inaccurate I don’t accept as fair or accurate).

 

Prediction: True

Page 337

“In the early part of the second decade of this century visual-auditory virtual-reality environments will be full immersion, very high resolution, and very convincing. Most colleges will follow MIT’s lead, and students will increasingly attend classes virtually. Vitrual environments will provide high-quality virtual laboratories where experiments can be conducted in chemistry, nuclear physics, or any other scientific field. Students will be able to interact with a virtual Thomas Jefferson or Thomas Edison or even to become a virtual Thomas Jefferson. Classes will be available for all grade levels in many languages. The devices needed to enter these high-quality, high-resolution virtual classrooms will be ubiquitous and affordable even in third world countries. Students at any age, from toddlers to adults, will be able to access the best education in the world at any time and from any place”

    • “early part of the second decade of this century”
      So Kurzweil is talking about 2010 to 2015.

 

 

    • “students will increasingly attend classes virtually”
      This one seems correct, indeed some students do attend some or even all classes virtually.Prediction: True

 

    • “Vitrual environments will provide high-quality virtual laboratories ”
      No, unfortunately “virtual” classes tend to just be video calls at this point with IM (Instant Messaging) functionality built-in.Prediction: False

 

    • “Students will be able to interact with a virtual Thomas Jefferson”
      Kurzweil is talking about 2015 but is suggesting there will be virtual avatars capable of some sort of in-character conversation. The Turing test implies that strong AI would be needed for this, and Kurzweil doesn’t predict a computer will pass this until 2029, so it’s hard to infer what sort of interaction Kurzweil expects of these virtual characters. It’s irrelevant anyway seeing as in 2017 we have nothing even close to this in university courses (that I’m aware of, if you know differently please comment below).Prediction: False

 

    • “high-resolution virtual classrooms will be ubiquitous and affordable even in third world countries”
      It doesn’t really take any research to state that this one isn’t true or anywhere near, even in 2017.Prediction: False

 

    • “at any time and from any place”
      Although Google and Facebook are working on getting Internet to remote corners of the globe, I currently lose my connection when I drive through certain parts of West Sussex, so it’s fair to say this one has definitely not yet been achieved.Prediction: False

 

Page 340

“Musicians typically make most of their money with live performances, but that model will also come under attack early in the next decade, when we will have full-immersion virtual reality.”

As The Singularity is Near was written in 2005, “early in the next decade” means from 2010 to 2015. Although in 2016 Google released The Bohemian Rhapsody Experience it’s probably safe to say that no musician anywhere has lost money because someone wanted a VR band at their wedding or event instead of a live performance.

Prediction: False

Page 341

“By the 2020s, full-immersion virtual reality will be a vast playground of compelling environments and experiences. Initially VR will have certain benefits in terms of enabling communications with others in engaging ways over long distances and featuring a great variety of environments from which to choose. Although the environments will not be completely convincing at first, by the late 2020s they will be indistinguishable from real reality and will involve all of the senses, as well as neurological correlations of our emotions.”

    • “By the 2020s”
      It’s not really clear what years Kurzweil is talking about here. When he says “By” does he mean before the 2020s? In which case me means in 2019 at the latest? Or does he mean in the 2020s which could be any time before 2029? Either way, it seems these predictions are for the near future so we cannot definitively say true or false but we can see how close we are.

 

    • “full-immersion virtual reality will be a vast playground of compelling environments and experiences”
      There is already some good VR content in 2017 and the experience is pretty good. There could definitely be more content though.

 

    • “enabling communications with others in engaging ways over long distances ”
      Currently it doesn’t look like VR will be used for video call type communication, it will be more about exploring environments, albeit perhaps collaboratively.

 

    • “by the late 2020s they will be indistinguishable from real reality”
      This isn’t at all unbelievable considering the late 2020s are over 10 years away and some computer games are already looking very close to reality. It’s often hard to know if a video is from a computer game or not. Making games more realistic is essentially just a case of more graphics processing power, so in 10+ years it seems very likely that games will be photoreal. Connecting VR to an existing game is easy, so it doesn’t seem there will be any difficulty with this prediction.

 

    • “will involve all of the senses”
      This will be harder to achieve because it involves very advanced hardware or nanobots that connect directly to neurons. Perhaps we will develop those, but 10 years seems too short for this one, although this is of course my own personal feeling and speculation.

 

    • “neurological correlations of our emotions”
      By this I assume Kurzweil means that either nanobots in our brain or some other technology will directly cause emotional experiences. I think Kurzweil means that it would be like watching a film and being put in to appropriate moods and being given certain emotions by some unknown technology. Personally I find a good musical score is more than capable of achieving this but I’m not sure being forced to feel a certain way is desirable even if it is technologically achievable as in the case of people undergoing brain surgery while awake who react with certain moods when electrodes are placed in specific places.

 

Page 424

“For example, before this decade is over, devices the size of dust particles will be able to carry out reconnaissance missions.”

Before this decade is over here seems to mean by 2009. Kurzweil is an advisor to the US Military and mentions in the book that he isn’t allowed to disclose everything he knows. So it may be the case that dust particles are already carrying out missions for the US Military but I can’t help thinking such a technology would be in use in business as well if it existed and I’ve not seen any news about such a thing. For it to work there would have to be nanobots that could move around an environment on their own power and transmit a signal back wirelessly. I’m just not sure we’re there yet with that one.

Prediction: False (unless the US Military has these and they’re classified which I find implausible)

Page 473

“In the second decade of this century, we will routinely be interactive with virtual humans that, although not yet Turing-test capable, will have sufficient natural language understanding to act as our personal assistants for a wide range of tasks.”

I think it’s probably fair to say that OK Google can perform this role. Once enabled on your Android device, you can open your phone and say things like “OK Google …”

    • “Set an alarm for x”

 

    • “How old is x?”

 

    • “Who invented x?”

 

    • “Navigate to x”

 

    • “Call x”

 

    • “What time is it in x?”

 

    • “Do I need a jacket tomorrow?”

 

    • “What is the current share price for x?”

 

    • “What is x GBP in USD?”

 

    • “Calculate x times y squared?”

 

    • “Define x”

 

    • “Take a picture”

 

    • “Play {song name}”

 

And these are not gimmicks. My experience has been that the voice recognition is incredible, even in incredibly noisy environments. Often while reading, I’ll ask Google to define a word. Almost always, it will get the exact word, even considering there is no context and if I’m looking it up it’s probably a word that I don’t know how to pronounce. I’m certain it can do this better than a person would, especially with very obscure words.

Prediction: True

So, how near is the Singularity?

I am still a Singularitarian (“Ich bin ein Singularitarian” as it says in the book!) which means I still think that, after looking at as much evidence as I can in books and the real world, it’s likely that the exponential progress of technology is a continuation of biological evolution and will continue to accelerate until an intelligence emerges that is able to improve itself and at that point, the pace of progress will accelerate beyond recognition.

So to me, the real question is about the timescales involved. Let’s have a look at how Kurzweil did in the number of predictions he’s got right so far:

    • 25 Predictions

 

    • 9 True

 

    • 16 False

 

This is actually quite impressive! Although 9 out of 25 is only a 36% accuracy rate, I still remember when reading The Singularity is Near for the first time that almost all of the predictions seemed wildly optimistic and sort of crazy. It seemed a bit unlikely that it would be possible to have a high speed internet connection from a touchscreen super-computer everyone has in their pocket that can also act as a personal assistant that you can speak to in natural language and it will usually understand and respond appropriately, albeit unable to have a full conversation at this point.

Throughout the book, Kurzweil includes graphs of processing power and computer memory for a given dollar value. This growth, related to Moore’s law, Kurzweil calls The Law of Accelerating Returns. The graphs have remained spot-on. In fact there is a prediction listed on the Wikipedia page of Kurzweil’s predictions that 10TB of computer memory will cost $1000 or less in 2018 – it’s been removed now but the Wikipedia page previously linked to a 10TB drive on Amazon from 2016 which was around $600.

While Kurzweil’s predictions for computation and memory capacity are extremely accurate, sometimes his predictions for the technologies that will be in use are wide of the mark. It might be that these technologies are indeed easily technologically possible but they just aren’t that desirable. Kurzweil talks at length about computers being woven in to our clothing but doesn’t mention the smartphone. I can’t really see why we’d want a computer in our clothing (or indeed our washing machines if we’re not careful) but it could be said that he was fundamentally right that we would have a powerful, connected computer with us at all times.

Many of Kurzweil’s predictions relate to Virtual Reality, and while Oculus enjoyed a massive following and was bought by Facebook, and many other commercially successful VR headsets are available, their high price, awkward usage characteristics (wires, setup, bulk etc.) and the fact that they mostly only appeal to geeky gamers has meant that adoption is currently very low. It’s even possible that VR is a fad like 3D TV which never really takes off however hard the manufacturers try, or it could be that Facebook manage to find a social, people-centric use for VR that improves the Facebook experience so much that it suddenly takes off.

Interestingly, Kurzweil mentions fairly early on in the book that self-driving cars are a long way off and doesn’t even bother to give a date. He must have considered it a pretty formidable challenge but Google, Tesla, NVidia and others seem to be very close now to having viable self-driving cars on the roads, so while some predictions are way behind schedule, others are way ahead of schedule.

It seems that Kurzweil’s mistakes then are more related to a mismatch between what is technically possible and what is desirable. No one wants a computer in their jumper but everyone wants the latest new smartphone. There isn’t a massive demand for VR outside the gaming community but there is for high capacity hard drives. So it’s more likely to be a combination of what’s possible and what consumers want that shapes the technologies that become ubiquitous over the coming decades.

The biggest sections of the book are about the three coming revolutions in GNR (Genetics, Nanotechnology and Robotics/AI) and I hope to revisit the book in another 10 years to see how these things have progressed.

In terms of a date for the Singularity itself, if Kurzweil’s estimate of the computational capacity of the human brain is accurate, and his logic that increasing brain scan resolutions will allow us to reverse engineer the entire human brain and model it in a computer, there is no reason to doubt his date of 2029 – other than how incredulous it sounds! The Singularity may indeed be Near.

Election

Why 780 retired generals and former national security leaders spoke out against Trump

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Donald Trump
Trump departs the White House for a photo op outside St. John’s Church on June 1, 2020. Walking behind the president are, from left, Attorney General William Barr, Secretary of Defense Mark Esper and Gen. Mark Milley, chairman of the Joint Chiefs of Staff. (Patrick Semansky/AP)

On June 1, retired Army vice chief of staff Gen. Peter Chiarelli sat staring out at the Pacific Ocean in Gearhart, Ore., where his family had vacationed throughout his long military career. The peaceful scene was occasionally interrupted by the news flashing across the notebook computer in his lap. In a Rose Garden speech that afternoon, President Trump addressed the racial justice protests spreading across the nation after the brutal killing of George Floyd in police custody a week earlier.

In the speech, Trump proclaimed himself “your president of law and order,” and claimed the protests had been hijacked by “professional anarchists, violent mobs, arsonists, looters, criminals, rider rioters, antifa and others” intent on “domestic terror.” News cameras showed some of the hundreds of National Guard troops from around the country that had been sent to reinforce the D.C. Guard, and there were reports that 1,600 active-duty troops were on high alert just outside the capital. Privately, Trump was threatening to invoke the Insurrection Act in order to send thousands more active-duty troops onto the nation’s streets in a show of dominant military force, criticizing weak governors and mayors around the country for not doing more to forcefully stamp out the protests.

The television cameras shifted to a mostly peaceful crowd of protesters across Lafayette Park from the White House. Chiarelli sat up when a phalanx of federal police and National Guard troops suddenly marched into the peaceful crowd, backed by a small cavalry of Park Police on horseback. There were flash-bang explosions, clouds of tear gas and the crackle of pepper balls as riot police used shields and batons to pummel some in the crowd. A woman could be heard plaintively shouting above the din, “Why are you shooting at us?!”

After the crowd was dispersed, Chiarelli watched with growing alarm as President Trump strode purposefully across Lafayette Park flanked by Attorney General William Barr, Defense Secretary Mark Esper, and Gen. Mark Milley, chairman of the Joint Chiefs of Staff. Chiarelli had served in combat with Milley in Iraq, and considered him a good friend. That Mark Milley would have known better than to appear at the president’s side in his camouflage uniform after a show of dominant force against protesters on the streets of America.

In front of historic Saint John’s Church, damaged by fire during earlier protests, Trump posed silently holding a bible aloft for a 2-minute photo op. At long last, President Trump had the image of the “American carnage” that he had promised to end in his inauguration speech, insisting that he alone could fix it.

Donald Trump
President Trump holds a Bible as he visits St. John’s Church across Lafayette Park from the White House on June 1, 2020. (Patrick Semansky/AP)

Along with a cadre of other retired generals, a very upset Peter Chiarelli decided to contact his old friend General Milley, the most senior uniformed leader in the country. After serving as commander of the 147.000 U.S. and coalition troops of Multi-National Corps – Iraq, Chiarelli as vice chief of the Army had led Defense Department efforts to treat post-traumatic stress, traumatic brain injury and suicide prevention. On his retirement in 2012, he became the first CEO of One Mind, which supports research into brain illnesses and injuries.

“That whole incident around Lafayette Square was stunning to me, because those were mostly peaceful demonstrators exercising a right guaranteed by the Constitution that I’ve sworn allegiance to throughout my entire career,” said Chiarelli in an interview. That allegiance is not given to a political party, Congress or the president of the United States, he noted, making the image of a uniformed chairman of the Joint Chiefs and the defense secretary at Trump’s side that day so alarming. General Milley later apologized for his presence in Lafayette Square, and Defense Secretary Mark Esper earned the president’s enmity by publicly opposing invocation of the Insurrection Act in order to use U.S. military troops to “dominate” the streets.

Along with more than 780 retired high-ranking officers and former national security leaders — including 22 retired four-star generals and admirals and five former secretaries of defense — Chiarelli signed an “Open Letter to America” endorsing Joe Biden for president. “We love our country,” the signatories wrote. “Unfortunately, we also fear for it.”

“Signing that letter was very hard for me to do, because I have never done that before or even given a dollar to a political campaign. Frankly, even as a retired general I didn’t think it was the right thing to do,” said Chiarelli, stressing that active-duty military officers are indoctrinated from a young age to remain strictly nonpartisan and apolitical. “But this president has assaulted the military justice system on behalf of individuals charged with war crimes. He has ended the career of service members like [impeachment witness Lt. Col. Alexander] Vindman for doing his duty and what was right. He has maligned mail-in voting as a fraud and suggested he might claim victory in a close election before all the ballots are counted, when as a service member I have voted absentee by mail my entire life. So like everyone else I’ve become numb after four years of this, but we have gone places in that time that I never dreamt we would go as a nation. I really do fear that the republic that I swore allegiance to is now under threat.”

Peter Chiarelli
Retired Gen. Peter Chiarelli. (Alastair Grant/AP)

Even among the cascade of scandals and controversies that have characterized the Trump presidency, the use of excessive force against mostly peaceful protesters near Lafayette Square, and the involvement of the top ranks of  the U.S. military, still stands out. The incident conjured a truly dystopian vision of a U.S. president not only willing but eager to use the world’s most powerful military to crush domestic protests and “dominate” the streets of America, one that an increasing number of retired generals and senior national security experts believe could become all too real in a second Trump term.

Lafayette Square was so alarming that it shook Trump’s former Defense Secretary, retired four-star Marine Gen. Jim Mattis, out of his long silence on the president’s leadership, writing afterwards that “Donald Trump is the first president in my lifetime who does not try to unite the American people — does not even pretend to try.”

Trump’s troubling authoritarian instincts, focus on image over substance, constant misuse and politicization of nonpartisan institutions and penchant for chaos were all on clear display in Lafayette Square, and the incident crystalized the concerns expressed in the open letter. Traditionally both active-duty and retired U.S. military and intelligence officials have steered clear of politics, but in mid-September the Trump campaign released a letter signed by 235 retired senior military officers endorsing the president for reelection with the claim that Americans’ “historic way of life is at stake” if the “socialists and Marxists” of the Democratic Party take control of the government.

The willingness of hundreds of career officers to break with tradition and speak out on behalf of one candidate reflects beliefs, on both sides, that the nation faces an uncertain future, facing the worst pandemic in over a century, the worst economic decline since the Great Depression and the worst racial unrest since the 1960s. To the signers of the “Open Letter to America,” a second Trump term would only make things worse.

Protestors
Protestors at Lafayette Park on June 1, 2020. (Ken Cedeno/Reuters)

“Over the last three-plus years, I’ve watched the Trump administration politicize the Department of Justice and eviscerate the State Department, and the situation in Lafayette Square made clear that if reelected, Trump will politicize the Defense Department as well,” said retired Rear Adm. Mike Smith, who was instrumental in organizing the “Open Letter to America.” “A lot of us who spent our careers in the military would rather have stayed out of politics, but we have a deep moral conviction that the country can’t afford to go through another four years of this kind of leadership.”

Already the Lafayette Square incident has sunk beneath a wave of subsequent controversies and scandals, including recent revelations in investigative reporter Bob Woodward’s book “Rage,” based on numerous on-the-record interviews with Trump, that the president knew early on about the deadly and extremely contagious nature of the COVID-19 virus, but chose to continually play down the threat; the revelations in an article in the Atlantic, backed by reporting by the Washington Post, Fox News and other outlets, that Trump has repeatedly shown contempt for U.S. service members killed in combat, including referring to fallen soldiers and marines in cemeteries overseas as “losers” and “suckers”; Trump’s bullying and hectoring performance in the first presidential debate that astounded viewers at home and abroad; the president’s decision to put the health and lives of his Secret Service detail in jeopardy for a photo op after he tested positive for the coronavirus; and Trump’s insistence that the presidential election weeks away will be “the most rigged” in history, and his refusal to commit to accepting its results and peacefully transfer power if he loses.

Civil-Military Dysfunction

Donald Trump and Melania Trump
Donald and Melania Trump celebrate Independence Day on the South Lawn of the White House, July 4, 2020. (Carlos Barria/Reuters)

President Trump’s relationship with military commanders might have been an asset in his reelection campaign. He has increased defense spending each year of his presidency, with the United States on track to spend more on the military in 2020 (adjusted for inflation) than at any point since World War II, with the exception of a few years at the height of the Iraq War. Early in his term, Trump pleased commanders by relaxing battlefield restrictions in the fight against the Islamic State of Iraq and Syria (ISIS), and he ordered successful strikes that killed ISIS leader Abu Bakr al-Baghdadi and Iranian Quds Force leader Qassem Soleimani.

As commander in chief, Trump also clearly revels in the pomp and spectacle of military parades, and in salutes to the troops. Yet from the early days of his presidency there were signs of severe tension between a president who has racked up an unprecedented 20,000 falsehoods since taking the oath, according to the Washington Post’s “Fact Checker,” and an institution built on the ethos that officers “will not lie, cheat, steal, or tolerate those who do.” There were also early indications that Trump was willing to politicize the most stringently apolitical institution in the U.S. government, treating appearances with the troops like political rallies where he excoriated Democrats and signed “Make America Great Again” hats. Before the 2018 midterm elections, Trump alarmed senior military leaders by sending active-duty troops to the southern border to confront a ragtag caravan of asylum seekers and migrants in a nakedly political stunt, and he diverted Pentagon funds to build sections of the wall he promised that Mexico would pay for.

From the beginning of his term, Trump has also exhibited indifference bordering on contempt for the sacrifices and principle of selfless service that underlies the military profession. Many officers were willing to look past the five draft deferments Trump received during the Vietnam War, including one for a “bone spur” diagnosis from a New York podiatrist who reportedly rented an apartment from Trump’s father.

More troubling to many uniformed leaders was Trump’s belittling of the Muslim Gold Star parents of a slain U.S. soldier who criticized him during the 2016 Democratic National Convention, and the president’s casual dismissal of the wartime service of the late Sen. John McCain, a former Navy pilot who spent more than five years being tormented in the notorious “Hanoi Hilton” prison. “He’s not a war hero,” said candidate Trump, when he was feuding with the Arizona senator. “He was a war hero because he was captured. I like people who weren’t captured.”

Donald Trump
Then presidential candidate Donald Trump speaks at the Family Leadership Summit in Ames, Iowa, in July 2015. (Nat Harnik/AP)

In his first briefing inside the Pentagon’s classified “tank” with then Defense Secretary Mattis and the Joint Chiefs, Trump famously bristled at their arguments supporting NATO and ongoing operations in Afghanistan. “You’re all losers,” Trump reportedly said to a room full of four-star flag officers and combat veterans. “You don’t know how to win anymore.” After Mattis later resigned to protest Trump’s rash decision to pull U.S. troops out of Syria and abandon Kurdish allies in the fight against ISIS, Trump publicly dissed him as “the world’s most overrated general.”

“President Trump routinely shows disrespect towards exemplary leaders like Senator McCain, and towards General Jim Mattis, one of our very best,” said retired Marine Lt. General Frank Libutti, a combat veteran and Purple Heart recipient who signed the “Open Letter to America.” “It recalls his public ridicule of many of his top military and intelligence community leaders, and his insistence that he knows more about issues of national security than they do, which is nonsense. But what I found truly shocking were Trump’s comments about the Marines who sacrificed their lives for victory at Belleau Wood. I believe words count. Character counts. Temperament counts. And President Trump has shown himself beneath the dignity of the office.”

A seeming contempt for military service came through most clearly when Trump canceled a planned visit to a World War I military cemetery near Paris because of rain during a 2018 trip. Quoting four anonymous sources with firsthand knowledge of the discussion that day, the Atlantic’s editor in chief Jeffrey Goldberg reported that Trump said, “Why should I go to that cemetery? It’s filled with losers.” In a separate conversation on the same trip, Trump reportedly referred to the more than 1,800 Marines who lost their lives at Belleau Wood as “suckers” for getting killed. Fox News and the Washington Post later confirmed similar episodes of the president denigrating military service.

Retired Air Force Gen. Charles Boyd spent more than six years as a prisoner of war in North Vietnam, and he is the only Vietnam War POW to later reach four-star rank. “When I read the Atlantic article, I found it absolutely disgusting. The idea that the commander in chief holds those who serve under him with such contempt, just because they are not driven by the same desire for money and wealth as him, made me sick to my stomach. In all of my experiences in life, I’ve never known any group that is more honorable than military professionals, who sign an unlimited liability contract to sacrifice their lives if called to for this nation.”

In the past, Boyd has also opposed even retired flag officers endorsing candidates or becoming involved in partisan politics, but he made an exception this year by signing the “Open Letter to America.” “There’s a saying in the military that ‘officers eat last,’ which means that leadership is all about what’s best for your troops, and for the nation. President Trump has no concept of that kind of leadership. Everything he does is driven by what’s best for him personally, including casting doubt on any election results that don’t declare him the winner. That’s destructive to the very fiber of our democracy.”

_____

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Twin Cities area youth sports coaches add COVID-19 protocols to daily routines

Emily walpole

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Mary Guzek is used to playing the role of “Team Mom” for her two sons’ Fridley youth football, basketball and baseball squads. Time was, that meant supplying snacks or filling water bottles.

But this fall, in the midst of a global pandemic, it means taking players’ temperatures before every practice and game, counseling parents of sick kids to keep them home and running down a checklist of whether any of the 22 players on the fifth-grade football team have a cough or feel short of breath.

“Unfortunately, it’s what we have had to do to make sure our kids can play,” said Guzek, whose boys are 12 and 10. “But it was worse in the spring, when seasons were canceled, and the kids were sad and depressed. Now, they can play.”

It’s hard enough for some parents to volunteer their time and energy at the end of a workday to coach youth sports. But with COVID-19 rapidly spreading, they’re now forced to do more than manage lineups and the Xs and Os to keep players on the field and the virus at bay.

Many parents and volunteer coaches across the metro have added COVID-19 protocols to their duties. Taking player temperatures, scrubbing down equipment and alternating practice times have, for most, become routine. Meanwhile, some park and recreation departments, not wanting to saddle volunteers with such responsibility, have moved away from traditional soccer and football games, offering instead skills camps run by paid staff members at a handful of hub sites.

Jayme Murphy, who focuses on COVID-19 issues for the Minnesota Amateur Sports Commission, said youth sports groups across the state spent much of the summer exploring ways they could safely play in the fall. Some, he said, were committed to playing out the season. Others created scaled-down versions of their usual offerings. Still others canceled seasons altogether.

Key to those decisions was determining whether coaches and parent volunteers would feel overwhelmed by the responsibility for keeping COVID-19 in check. The Minnesota Department of Health has issued 13 pages of guidelines for safely conducting youth and adult sports.

“The question for volunteers and parents to ask themselves is how comfortable are they with risk?” Murphy said. “If you’re uncomfortable with this, if you’re uncomfortable with your child’s participation in this, that’s ok.”

With COVID-19 cases continuing to rise across the state this fall, those comfort levels may be challenged even more as the winter sports season approaches.

Another way

In St. Paul, officials at the city’s Parks and Recreation department canceled sports at 26 recreation centers over the spring and summer. This fall, they replaced tackle football and competitive soccer with flag football and soccer skills programs hosted at six recreation centers.

They did so, because “we didn’t want to throw the responsibility for following those protocols onto volunteer coaches,” said Andy Rodriguez, recreation services manager.

By limiting offerings to six sites, supervised by city employees with help from coaches at Cretin-Derham Hall and the Sanneh Foundation, Rodriguez said the city can better control social distancing, sanitizing equipment and health screening. Nearly 600 kids, ages 3-14, registered for soccer in St. Paul, Rodriguez said. Almost 400 kids, ages 8-12, signed up for flag football.

“For the most part, the families we have been working with are just thankful for something for their kids to do in the fall,” he said.

Davis Vue who helped his 7-year-old son Memphis tie his shoes on a recent night, said he is one of the happy parents. The St. Paul native watched the coronavirus wipe out his own flag football league season, so he appreciates the city finding a way for Memphis to participate. It’s his son’s first year playing and he hasn’t missed a night, his father said.

“With this pandemic going on, I’m surprised Parks and Rec had this going on for kids,” Vue said. “I’m really glad they did.”

There’s also no tackle football in Minneapolis, where the city’s Park Board has offered flag football for young athletes 6-18. The soccer season has continued with a citywide schedule and volunteer coaches, said Mimi Kalb, director of Athletic Programs and Aquatics for the Minneapolis Park Board. Younger children — on 6U and 8U teams — are playing games in “smaller service areas” with city staff members conducting many of the COVID-19 protocols, she said.

Some coaches and players and families opted out of playing, “but for those who wanted to play, we tried to take a lot of the responsibility off the coaches,” she said. “Our park staff and league directors are doing a lot of that.”

Tim Grate, athletics program director for Minneapolis Parks and Recreation, said many coaches have successfully incorporated their new responsibilities.

“I’ve seen coaches who laid out cones to make sure [players are] social distancing,” he said. “I haven’t heard a lot of complaints.”

John Swanson, a Fridley varsity football coach who oversees more than 200 youth teams across the north metro, said about 30 % of them opted out of play due to COVID-19 concerns. Those that remained were committed to following all the necessary rules to keep playing.

“It’s one of the few things that still connects community,” he said. “Youth sports help us maintain that connectivity.”

Coaches and team moms and dads are keeping spreadsheets, taking temperatures, cleaning equipment, staggering practice nights and holding kids out if they show symptoms or test positive, he said. Teams have built time into their schedules to play makeup games when any had to quarantine for 14 days. So far, he said, there have been no COVID-19 cases transmitted on the football field.

“I don’t think we are asking the coaches to do too much,” Swanson said. “Volunteer coaches have proved they can do it.”

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tsla-ex991_57.pptx.htm

Mish Boyka

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Slide 1

Q3 2020 Update Exhibit 99.1

Slide 2

Highlights 03 Financial Summary04 Operational Summary06 Vehicle Capacity 07 Core Technology 08 Other Highlights09 Outlook10 Battery Day Highlights11 Photos & Charts13 Financial Statements23 Additional Information28

Slide 3

The third quarter of 2020 was a record quarter on many levels. Over the past four quarters, we generated over $1.9B of free cash flow while spending $2.4B on new production capacity, service centers, Supercharging locations and other capital investments.  While we took additional SBC expense in Q3, our GAAP operating margin reached 9.2%. We are increasingly focused on our next phase of growth. Our most recent capacity expansion investments are now stabilizing with Model 3 in Shanghai achieving its designed production rate and Model Y in Fremont expected to reach capacity-level production soon. During this next phase, we are implementing more ambitious architectural changes to our products and factories to improve manufacturing cost and efficiency. We are also expanding our scope of manufacturing to include additional areas of insourcing. At Tesla Battery Day, we announced our plans to manufacture battery cells in-house to aid in our rapid expansion plan. We believe our new 4680 cells are an important step forward to reduce cost and improve capital efficiency, while improving performance. We continue to see growing interest in our cars, storage and solar products and remain focused on cost-efficiency while growing capacity as quickly as possible. $5.9B increase in our cash and cash equivalents in Q3 to $14.5B Operating cash flow less capex (free cash flow) of $1.4B in Q3 Cash Record vehicle deliveries, profitability and free cash flow Buildout of three new factories on three continents continues as planned First step of FSD beta rollout started in Oct. 2020 Profitability $809M GAAP operating income; 9.2% operating margin in Q3 $331M GAAP net income; $874M non-GAAP net income (ex-SBC) in Q3 SBC expense increased to $543M (driven by 2018 CEO award milestones) Operations S U M M A R Y H I G H L I G H T S 3 SBC = stock-based compensation

Slide 4

F I N A N C I A L   S U M M A R Y (Unaudited) 4 ($ in millions, except percentages and per share data) Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 QoQ YoY Automotive revenues 5,353 6,368 5,132 5,179 7,611 47% 42%    of which regulatory credits 134 133 354 428 397 -7% 196% Automotive gross profit 1,222 1,434 1,311 1,317 2,105 60% 72% Automotive gross margin 22.8% 22.5% 25.5% 25.4% 27.7% 223 bp 483 bp               Total revenues 6,303 7,384 5,985 6,036 8,771 45% 39% Total gross profit 1,191 1,391 1,234 1,267 2,063 63% 73% Total GAAP gross margin 18.9% 18.8% 20.6% 21.0% 23.5% 253 bp 462 bp               Operating expenses 930 1,032 951 940 1,254 33% 35% Income from operations 261 359 283 327 809 147% 210% Operating margin 4.1% 4.9% 4.7% 5.4% 9.2% 381 bp 508 bp               Adjusted EBITDA 1,083 1,175 951 1,209 1,807 49% 67% Adjusted EBITDA margin 17.2% 15.9% 15.9% 20.0% 20.6% 57 bp 342 bp               Net income attributable to common stockholders (GAAP) 143 105 16 104 331 218% 131% Net income attributable to common stockholders (non-GAAP) 342 386 227 451 874 94% 156%               EPS attributable to common stockholders, diluted (GAAP) (1) 0.16 0.11 0.02 0.10 0.27 170% 69% EPS attributable to common stockholders, diluted (non-GAAP) (1) 0.37 0.41 0.23 0.44 0.76 73% 105%               Net cash provided by (used in) operating activities 756 1,425 (440) 964 2,400 149% 217% Capital expenditures (385) (412) (455) (546) (1,005) 84% 161% Free cash flow 371 1,013 (895) 418 1,395 234% 276% Cash and cash equivalents 5,338 6,268 8,080 8,615 14,531 69% 172% (1) Prior period results have been retroactively adjusted to reflect the five-for-one stock split effected in the form of a stock dividend in August 2020. EPS = Earnings per share

Slide 5

F I N A N C I A L   S U M M A R Y Revenue Profitability Cash Total revenue grew 39% YoY in Q3. This was achieved mainly through substantial growth in vehicle deliveries as well as growth in other parts of the business. At the same time, vehicle average selling price (ASP) declined slightly compared to the same period last year as our product mix continues to shift from Model S and Model X to the more affordable Model 3 and Model Y. Our operating income improved in Q3 to a record level of $809M, resulting in a 9.2% operating margin. This profit level was reached while we took increased SBC expense in Q3 attributable to the 2018 CEO award, of which $290M was triggered by a significant increase in share price and market capitalization and a new operational milestone becoming probable. Positive profit impacts included strong volume, better fixed cost absorption and continuous cost reduction.  Quarter-end cash and cash equivalents increased by $5.9B QoQ to $14.5B, driven mainly by our recent capital raise of $5.0B (average price of this offering was ~$449/share) combined with free cash flow of $1.4B and partially offset by reduced use of working capital credit lines. Since our days payable outstanding (DPO) are higher than days sales outstanding (DSO), revenue growth results in additional cash generation from working capital. DPO and DSO both declined sequentially in Q3 2020.  5

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Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 QoQ YoY Model S/X production 16,318 17,933 15,390 6,326 16,992 169% 4% Model 3/Y production 79,837 86,958 87,282 75,946 128,044 69% 60% Total production 96,155 104,891 102,672 82,272 145,036 76% 51% Model S/X deliveries 17,483 19,475 12,230 10,614 15,275 44% -13% Model 3/Y deliveries 79,703 92,620 76,266 80,277 124,318 55% 56% Total deliveries 97,186 112,095 88,496 90,891 139,593 54% 44%    of which subject to operating lease accounting 9,086 8,848 6,104 4,716 10,014 112% 10% Total end of quarter operating lease vehicle count 44,241 49,901 53,159 54,519 61,638 13% 39% Global vehicle inventory (days of supply)(1) 18 10 25 17 14 -18% -22% Solar deployed (MW) 43 54 35 27 57 111% 33% Storage deployed (MWh) 477 530 260 419 759 81% 59% Store and service locations 417 433 438 446 466 4% 12% Mobile service fleet 719 743 756 769 780 1% 8% Supercharger stations 1,653 1,821 1,917 2,035 2,181 7% 32% Supercharger connectors 14,658 16,104 17,007 18,100 19,437 7% 33% (1) Days of supply is calculated by dividing new car ending inventory by the quarter’s deliveries and using 75 trading days (aligned with Automotive News definition). 6 O P E R A T I O N A L   S U M M A R Y (Unaudited)

Slide 7

Delivery percentage of locally-made vehicles* V E H I C L E C A P A C I T Y Fremont We have recently increased capacity of Model 3 / Model Y to 500,000 units a year. In order to do this, we restarted our second paint shop, installed the largest die-casting machine in the world and upgraded our Model Y general assembly line. Production should reach full capacity toward the end of this year or beginning of next year. Shanghai Model 3 production capacity has increased to 250,000 units a year. We reduced the price of Model 3 to 249,900 RMB after incentives, making it the lowest-price premium mid-sized sedan1 in China. This was enabled both by lower-cost batteries and an increased level of local procurement. As a result of this shift in cost and starting price, we recently added a third production shift to our Model 3 factory. Berlin-Brandenburg Construction of the Gigafactory in Berlin continues to progress rapidly. Buildings are under construction and equipment move-in will start over the coming weeks. At the same time, the Giga Berlin team continues to grow. Production is expected to start in 2021.  Installed Annual Capacity Current Status Fremont Model S / Model X         90,000 Production Model 3 / Model Y    500,000 Production Shanghai Model 3       250,000 Production Model Y – Construction Berlin Model 3 – In development Model Y – Construction Texas Model Y – Construction Cybertruck – In development United States Tesla Semi – In development Roadster – In development 7 Installed capacity ≠ Current production rate. Production rate depends on pace of factory ramp, supply chain ramp, downtime related to factory upgrades, national holidays and other factors. * Locally-made is defined as (i) cars made in Fremont and delivered in North America and (ii) cars made in China and delivered in China. 1 Premium mid-sized sedan segment in China defined as Audi A4, BMW 3-Series, Mercedes C-Class and Tesla Model 3.

Slide 8

C O R E   T E C H N O L O G Y Autopilot & Full Self Driving (FSD) Our Autopilot team has been focused on a fundamental architectural rewrite of our neural networks and control algorithms. This rewrite will allow the remaining driving features to be released. In October, we sent the first FSD software update enabled by the rewrite to a limited number of Early Access Program users — City Streets. As we continue to collect data over time, the system will become more robust. Vehicle Software New software functionality was introduced since the start of Q3. In order to make our products safer from unauthorized access, we introduced the ability to enable 2-step verification via a smartphone. Additionally, among many other updates, we improved active suspension comfort, updated Powerwall-to-vehicle charging coordination and added an automated window close function and glovebox PIN access. Our Model Y AWD customers can now purchase a $2,000 software update that improves 0-60 mph time to just 4.3s.     Battery & Powertrain On September 22, we hosted Tesla Battery Day where we described a path to reducing battery pack cost per kWh by 56%, enabling production of a profitable $25,000 vehicle. This, in our view, is a critical component to exceed cost parity with internal combustion engine vehicles. Additionally, due to a simpler cell manufacturing process, we believe capex per GWh of battery capacity should decline by 69% compared to today’s production process.  How our vehicles see an intersection 8 How our Neural Net understands the same intersection (generalized approach for any unmapped intersection)

Slide 9

O T H E R H I G H L I G H T S Energy Business Our energy storage business reached record deployments of 759 MWh in Q3. Megapack production continued to ramp at Gigafactory Nevada as production volumes more than doubled in Q3. Powerwall demand remains strong and is growing, particularly as our solar business grows as many customers include a Powerwall with their solar installation. Additionally, we are seeing accelerating interest in Powerwall as concerns with grid stability grow, particularly in California. We continue to believe that the energy business will ultimately be as large as our vehicle business. Our recently introduced strategy of low cost solar (at $1.49/watt in the US after tax credit) is starting to have an impact. Total solar deployments more than doubled in Q3 to 57 MW compared to the prior quarter, with Solar Roof deployments almost tripling sequentially. While not yet at scale, we recently demonstrated a ~1.5-day Solar Roof install, as shown below in the photos. For Solar Roof, installation time is a key area of focus to accelerate the growth of this program. We continue to onboard hundreds of electricians and roofers to grow this business. 9 7:30 am Noon 2:00 pm (the next day)

Slide 10

O U T L O O K Volume Cash Flow Profit Product We have the capacity installed to produce and deliver 500,000 vehicles this year.  While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target. Achieving this target depends primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.  We should have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.  For the trailing 12 months, we achieved an operating margin of 6.3%. We expect our operating margin will continue to grow over time, ultimately reaching industry-leading levels with capacity expansion and localization plans underway.  We are currently building Model Y capacity at Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas, and remain on track to start deliveries from each location in 2021. Tesla Semi deliveries will also begin in 2021.  We continue to significantly invest in our product roadmap. 10

Slide 11

B A T T E R Y D A Y H I G H L I G H T S

Slide 12

Area of improvement Description Range Increase* $/kWh Cost Reduction* $/GWh Capex Reduction* Cell Design After considering every form factor and cell size across quantifiable factors, we deemed 80 mm height by 46 mm diameter cylindrical to be best These dimensions maximize vehicle range (pack level energy density) while minimizing manufacturing and product cost The challenge is that large diameter cylindrical cells easily overheat during supercharging We identified a tab-less design solution to resolve the overheating challenge and simplify manufacturing 16% 14% 7% Cell Factory Electrode Current electrode production process involves mixing liquids with cathode or anode powders and using massive machinery to coat and dry electrode New process allows going directly from cathode or anode powder to an electrode film 0% 18% 34% Winding Larger cells improve winder productivity Incorporates our tab-less design Assembly Large cells moving at high speed with simplification in process steps enables a single production line to have 20 GWh of capacity Formation Leveraging our power electronics to densify and reduce costs of the final charging and testing step of millions of cells Anode Material Silicon is a better anode material than graphite – stores 9x more lithium, but silicon expansion brings challenges Silicon used in anodes today is highly engineered and expensive Raw silicon with our coating design will cost just $1.20/kWh Expansion of silicon is managed by stabilizing surface and by creating an elastic binder network 20% 5% 4% Cathode Material We are taking a diversified cathode approach to maximize available supply options: all usable in our 4680 cells We are planning to manufacture cathode in-house, using far less water and reagents in a simplified production process Focus on local sourcing for each cell factory to avoid unnecessary transportation cost Actively pursuing pathways to vertically integrate lithium production for a portion of supply 4% 12% 16% Cell-Vehicle Integration Current EV design: cells to modules, modules to battery pack, battery pack to vehicle Future EV design: cells directly integrated into vehicle body with giga castings Battery is no longer carried as “luggage”, will provide new utility as a load-bearing frame element This unlocks high-efficiency factories and mechanical structures— best manufacturability, weight, range and cost 14% 7% 8% Projected Total Improvement 54% 56% 69% F I V E A R E A S O F F O C U S 12 * Our current projections.

Slide 13

P H O T O S & C H A R T S

Slide 14

G I G A F A C T O R Y   S H A N G H A I   –   M O D E L   Y   F A C T O R Y   ( F O R E G R O U N D ) ;   M O D E L   3   F A C T O R Y   ( B A C K G R O U N D ) 14

Slide 15

G I G A F A C T O R Y S H A N G H A I – M O D E L Y D I E C A S T 15

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G I G A F A C T O R Y S H A N G H A I – M O D E L Y B O D Y S H O P 16

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G I G A F A C T O R Y S H A N G H A I – M O D E L Y P A I N T S H O P 17

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18 G I G A F A C T O R Y B E R L I N – M O D E L Y F A C T O R Y C O N S T R U C T I O N

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19 G I G A F A C T O R Y T E X A S

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20 M E G A P A C K P R O J E C T AT M O S S L A N D I N G

Slide 21

Vehicle Deliveries (units) Net Income ($B) K E Y   M E T R I C S   Q U A R T E R L Y  (Unaudited) 21 Operating Cash Flow ($B) Free Cash Flow ($B)

Slide 22

K E Y   M E T R I C S   T R A I L I N G   1 2   M O N T H S   ( T T M ) (Unaudited) Vehicle Deliveries (units) Operating Cash Flow ($B) Free Cash Flow ($B) Net Income ($B) 22

Slide 23

F I N A N C I A L S T A T E M E N T S

Slide 24

In millions of USD or shares as applicable, except per share data Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 REVENUES Automotive sales 5,132 6,143 4,893 4,911 7,346 Automotive leasing 221 225 239 268 265 Total automotive revenue 5,353 6,368 5,132 5,179 7,611 Energy generation and storage 402 436 293 370 579 Services and other 548 580 560 487 581 Total revenues 6,303 7,384 5,985 6,036 8,771 COST OF REVENUES           Automotive sales 4,014 4,815 3,699 3,714 5,361 Automotive leasing 117 119 122 148 145 Total automotive cost of revenues 4,131 4,934 3,821 3,862 5,506 Energy generation and storage 314 385 282 349 558 Services and other 667 674 648 558 644 Total cost of revenues 5,112 5,993 4,751 4,769 6,708 Gross profit 1,191 1,391 1,234 1,267 2,063 OPERATING EXPENSES           Research and development 334 345 324 279 366 Selling, general and administrative 596 699 627 661 888 Restructuring and other – (12) – – – Total operating expenses 930 1,032 951 940 1,254 INCOME FROM OPERATIONS 261 359 283 327 809 Interest income 15 10 10 8 6 Interest expense (185) (170) (169) (170) (163) Other income (expense), net 85 (25) (54) (15) (97) INCOME BEFORE INCOME TAXES 176 174 70 150 555 Provision for income taxes 26 42 2 21 186 NET INCOME 150 132 68 129 369 Net income attributable to noncontrolling interests and redeemable noncontrolling interests 7 27 52 25 38 NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS 143 105 16 104 331 Less: Buy-out of noncontrolling interest – – – – 31 NET INCOME USED IN COMPUTING NET INCOME PER SHARE OF COMMON STOCK 143 105 16 104 300 Net income per share of common stock attributable to common stockholders(1)           Basic $ 0.16 $ 0.12 $ 0.02 $ 0.11 $ 0.32 Diluted $ 0.16 $ 0.11 $ 0.02 $ 0.10 $ 0.27 Weighted average shares used in computing net income per share of common stock(1)           Basic 897 902 915 928 937 Diluted 922 935 994 1,036 1,105 S T A T E M E N T O F O P E R A T I O N S (Unaudited) 24 (1) Prior period results have been retroactively adjusted to reflect the five-for-one stock split effected in the form of a stock dividend in August 2020

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B A L A N C E   S H E E T (Unaudited) In millions of USD 30-Sep-19 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 ASSETS Current assets    Cash and cash equivalents 5,338 6,268 8,080 8,615 14,531    Accounts receivable, net 1,128 1,324 1,274 1,485 1,757    Inventory 3,581 3,552 4,494 4,018 4,218    Prepaid expenses and other current assets 893 959 1,045 1,218 1,238       Total current assets 10,940 12,103 14,893 15,336 21,744 Operating lease vehicles, net 2,253 2,447 2,527 2,524 2,742 Solar energy systems, net 6,168 6,138 6,106 6,069 6,025 Property, plant and equipment, net 10,190 10,396 10,638 11,009 11,848 Operating lease right-of-use assets 1,234 1,218 1,197 1,274 1,375 Goodwill and intangible assets, net 537 537 516 508 521 Other non-current assets 1,473 1,470 1,373 1,415 1,436      Total assets 32,795 34,309 37,250 38,135 45,691 LIABILITIES AND EQUITY Current liabilities    Accounts payable       3,468        3,771       3,970        3,638       4,958    Accrued liabilities and other        2,938        3,222        2,825        3,110        3,252    Deferred revenue 1,045 1,163 1,186 1,130 1,258    Customer deposits 665 726 788 713 708    Current portion of debt and finance leases (1) 2,030 1,785 3,217 3,679 3,126      Total current liabilities 10,146 10,667 11,986 12,270 13,302 Debt and finance leases, net of current portion (1) 11,313 11,634 10,666 10,416 10,559 Deferred revenue, net of current portion 1,140 1,207 1,199 1,198 1,233 Other long-term liabilities 2,714 2,691 2,667 2,870 3,049       Total liabilities 25,313 26,199 26,518 26,754 28,143 Redeemable noncontrolling interests in subsidiaries 600 643 632 613 608  Convertible senior notes              —              —  60  44 48 Total stockholders’ equity 6,040 6,618 9,173 9,855 16,031 Noncontrolling interests in subsidiaries 842 849 867 869 861       Total liabilities and equity 32,795 34,309 37,250 38,135 45,691 (1) Breakdown of our debt is as follows:    Vehicle and energy product financing (non-recourse) 3,702 4,183 4,022 4,043 4,141    Other non-recourse debt 155 355 708 1,415 605    Recourse debt 7,882 7,263 7,600 7,106 7,448       Total debt excluding vehicle and energy product financing 8,037 7,618 8,308 8,521 8,053 25

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In millions of USD Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 CASH FLOWS FROM OPERATING ACTIVITIES Net income 150  132  68  129  369  Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization and impairment 530  577  553  567  584  Stock-based compensation 199  281  211  347  543  Other 69  204  175  167  269  Changes in operating assets and liabilities, net of effect of business combinations (192) 231  (1,447) (246) 635  Net cash provided by (used in) operating activities 756  1,425  (440) 964  2,400  CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (385) (412) (455) (546) (1,005) Purchases of solar energy systems, net of sales (25) (37) (26) (20) (16) Purchase of intangible assets               —                —                —                —  (5) Receipt of government grants               —  46  1  —  —  Business combinations, net of cash acquired (76)               —                —                —  (13) Net cash used in investing activities (486) (403) (480) (566) (1,039) CASH FLOWS FROM FINANCING ACTIVITIES Net cash flows from debt activities (55) (591) 544  164  (630) Collateralized lease repayments (83) (87) (97) (71) (56) Net borrowings (repayments) under vehicle and solar financing 183  478  (160) 18  99  Net cash flows from noncontrolling interests – Auto 30  19  (8) (3) (31) Net cash flows from noncontrolling interests – Solar (28) 6  (40) (42) (49) Proceeds from issuances of common stock in public offerings, net of issuance costs               —                —  2,309                —  4,973  Other 71  96  160  57  144  Net cash provided by (used in) financing activities 118  (79) 2,708  123  4,450  Effect of exchange rate changes on cash and cash equivalents and restricted cash (11) 14  (24) 38  86  Net increase in cash and cash equivalents and restricted cash 377  957  1,764  559  5,897  Cash and cash equivalents and restricted cash at beginning of period 5,449  5,826  6,783  8,547  9,106  Cash and cash equivalents and restricted cash at end of period 5,826  6,783  8,547  9,106  15,003  S T A T E M E N T   O F   C A S H   F L O W S  (Unaudited) 26

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In millions of USD or shares as applicable, except per share data Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020           Net income attributable to common stockholders (GAAP) 143 105 16 104 331 Stock-based compensation expense 199 281 211 347 543 Net income attributable to common stockholders (non-GAAP) 342 386 227 451 874 Less: Buy-out of noncontrolling interest – – – – 31 Net income used in computing EPS attributable to common stockholders (non-GAAP) 342 386 227 451 843         EPS attributable to common stockholders, diluted (GAAP)(1) 0.16 0.11 0.02 0.10 0.27 Stock-based compensation expense per share(1) 0.21 0.30 0.21 0.34 0.49 EPS attributable to common stockholders, diluted (non-GAAP)(1) 0.37 0.41 0.23 0.44 0.76 Shares used in EPS calculation, diluted (GAAP and non-GAAP)(1) 922 935 994 1,036 1,105 Net income attributable to common stockholders (GAAP) 143 105 16 104 331 Interest expense 185 170 169 170 163 Provision for income taxes 26 42 2 21 186 Depreciation, amortization and impairment 530 577 553 567 584 Stock-based compensation expense 199 281 211 347 543 Adjusted EBITDA (non-GAAP) 1,083 1,175 951 1,209 1,807 Total revenues 6,303 7,384 5,985 6,036 8,771 Adjusted EBITDA margin (non-GAAP)(2) 17.2% 15.9% 15.9% 20.0% 20.6%         Automotive gross margin (GAAP) 22.8% 22.5% 25.5% 25.4% 27.7% Less: Total regulatory credit revenue recognized 2.0% 1.6% 5.5% 6.7% 4.0% Automotive gross margin excluding regulatory credits (non-GAAP) 20.8% 20.9% 20.0% 18.7% 23.7% R e c o n c I l I a t I o n   o f   G A A P   t o   N o n – G A A P   F I n a n c I a l   I n f o r m a t I o n (Unaudited) 27 In millions of USD 4Q-2017 1Q-2018 2Q-2018 3Q-2018 4Q-2018 1Q-2019 2Q-2019 3Q-2019 4Q-2019 1Q-2020 2Q-2020 3Q-2020 Net cash provided by (used in) operating activities (GAAP) 510 (398) (130) 1,391 1,235 (640) 864 756 1,425 (440) 964 2,400 Capital expenditures (787) (656) (610) (510) (325) (280) (250) (385) (412) (455) (546) (1,005) Free cash flow (non-GAAP) (277) (1,054) (740) 881 910 (920) 614 371 1,013 (895) 418 1,395                           In millions of USD 4Q-2017 1Q-2018 2Q-2018 3Q-2018 4Q-2018 1Q-2019 2Q-2019 3Q-2019 4Q-2019 1Q-2020 2Q-2020 3Q-2020 Net cash (used in) provided by operating activities – TTM (GAAP) (61) (389) (319) 1,373 2,098 1,856 2,850 2,215 2,405 2,605 2,705 4,349 Capital expenditures – TTM (3,415) (3,518) (3,169) (2,563) (2,101) (1,725) (1,365) (1,240) (1,327) (1,502) (1,798) (2,418) Free cash flow – TTM (non-GAAP) (3,476) (3,907) (3,488) (1,190) (3) 131 1,485 975 1,078 1,103 907 1,931 (1) Prior period results have been retroactively adjusted to reflect the five-for-one stock split effected in the form of a stock dividend in August 2020 (2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues

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A D D I T I O N A L   I N F O R M A T I O N WEBCAST INFORMATION Tesla will provide a live webcast of its third quarter 2020 financial results conference call beginning at 2:30 p.m. PT on October 21, 2020 at ir.tesla.com. This webcast will also be available for replay for approximately one year thereafter.   CERTAIN TERMS When used in this update, certain terms have the following meanings. Our vehicle deliveries include only vehicles that have been transferred to end customers with all paperwork correctly completed. Our energy product deployment volume includes both customer units installed and equipment sales; we report installations at time of commissioning for storage projects or inspection for solar projects, and equipment sales at time of delivery. “Adjusted EBITDA” is equal to (i) net income (loss) attributable to common stockholders before (ii)(a) interest expense, (b) provision for income taxes, (c) depreciation, amortization and impairment and (d) stock-based compensation expense, which is the same measurement for this term pursuant to the performance-based stock option award granted to our CEO in 2018. “Free cash flow” is operating cash flow less capital expenditures. NON-GAAP FINANCIAL INFORMATION Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis to supplement our consolidated financial results. Our non-GAAP financial measures include non-GAAP automotive gross margin, non-GAAP net income (loss) attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders on a diluted per share basis (calculated using weighted average shares for GAAP diluted net income (loss) attributable to common stockholders), Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well as comparisons to the operating results of other companies. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla uses to run the business, and allowing investors to better understand Tesla’s performance. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided above.   FORWARD-LOOKING STATEMENTS Certain statements in this update, including statements in the “Outlook” section; statements relating to the future development, production capacity and output rates, demand and market growth, deliveries, deployment, safety, range and other features and improvements, and timing of existing and future Tesla products and technologies such as Model 3, Model Y, Cybertruck, Tesla Semi, Roadster, Autopilot and Full Self Driving, our energy products and services such as Megapack, Solar Roof and Powerwall, and the battery cells we are developing and related technologies; statements regarding operating margin, spending and liquidity targets; statements regarding manufacturing and procurement improvements, cost reductions and efficiencies; statements regarding construction, expansion, improvements and/or ramp at the Tesla Factory, Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas; and statements regarding our hiring targets are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: uncertainties in future macroeconomic and regulatory conditions arising from the current global pandemic; the risk of delays in launching and manufacturing our products and features cost-effectively; our ability to grow our sales, delivery, installation, servicing and charging capabilities and effectively manage this growth; consumers’ willingness to adopt electric vehicles generally and our vehicles specifically; the ability of suppliers to deliver components according to schedules, prices, quality and volumes acceptable to us, and our ability to manage such components effectively; any issues with lithium-ion cells or other components manufactured at Gigafactory Nevada; our ability to build and ramp Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas in accordance with our plans; our ability to procure supply of battery cells, including through our own manufacturing; risks relating to international expansion; any failures by Tesla products to perform as expected or if product recalls occur; the risk of product liability claims; competition in the automotive and energy product markets; our ability to maintain public credibility and confidence in our long-term business prospects; our ability to manage risks relating to our various product financing programs; the unavailability, reduction or elimination of government and economic incentives for electric vehicles and energy products; our ability to attract and retain key employees and qualified personnel and ramp our installation teams; our ability to maintain the security of our information and production and product systems; our compliance with various regulations and laws applicable to our operations and products, which may evolve from time to time; risks relating to our indebtedness and financing strategies; and adverse foreign exchange movements. More information on potential factors that could affect our financial results is included from time to time in our Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the SEC on July 28, 2020. Tesla disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise. 28

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