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Speaking at a standing-room-only meeting at the Computer History Museum in Mountain View, Calif., Musk outlined how he expects auto-pilot cars will become road ready.
He said the Palo Alto automaker's efforts to develop a battery-swapping network for its electric cars have faltered and announced that the Model X, Tesla's long-delayed sport utility vehicle, will reach the market in three to four months.
At the behest of shareholders addressing the company at the meeting, Musk agreed to look into using vegan materials for seating and other surfaces in Tesla cars. He also announced that Deepak Ahuja, the automaker's veteran chief financial officer, is retiring but will stay on until a replacement is appointed.
Musk spent much of the meeting talking about the potential for robotic cars.
In the first phase of autopilot development, Musk said, drivers will need to remain fully alert and ready to take over the driving.
The feature is designed to alleviate part of the burden of driving from the driver but not replace the person at the controls. He said such a feature will be legal because the driver would remain responsible for control of the car and in the driver's seat.
"This is not an abdication of responsibility for steering," Musk said.
But Tesla is aiming for a fully autonomous system in about three years.
"There will be a fully operational autopilot with everything that is needed for someone to go to sleep and wake up at their destination," Musk said. "But this is an extremely difficult engineering project."
Tesla would want a fully robotic car to be at least 10 times safer than a human driver before rolling it out, he said. Regulators would likely be even harder to convince, he said.
Speaking of the Model X, Musk said it will be the safest sport utility on the road. The electric architecture locates the heavy battery pack on the floor pan of the car, lowering its center of gravity and making the vehicle almost impossible to roll over, he said.
Musk said Tesla engineers are working out the final details of the car before approving it for production.
"Getting those final nuances right for the Model X is what we are focusing on right now," Musk said.
The auto executive told shareholders that Tesla should do more to emphasize the safety of its cars, which he claimed had lower injury rates than other vehicles.
"As we can show statistics on accidents and so forth, it should translate to lower insurance rates," Musk said. "We will have to work with insurance companies to make sure they are factoring in the actual accident rates for the Model S and Model X."
Musk also disclosed that a much publicized effort to allow people to pull into roadside stations and swap a spent battery for a fully charged one has not worked out.
Tesla built such a station on Interstate 5 at the Harris Ranch, a midpoint on the drive from Los Angeles to San Francisco, but Tesla owners aren't using it.
The automaker issued sample invitations to a group of about 200 California Model S owners to test out the swap system but only a handful used it, and then only once. A wider roll out also failed.
"We are seeing a very low take rate," Musk said. "People don't care about pack swap."
Instead, they use Tesla's network of free "superchargers" to recharge the cars. It takes longer, but they time it for a coffee break or a meal, he said.
Tesla doesn't plan to expand its battery swap system, Musk said.
The swap system was important to Tesla because based on California Air Resources Board rules, it provided an opportunity to generate more valuable zero-emission vehicle credits. Tesla has made more than $500 million selling California and federal environmental credits to other automakers.