News
DeepSpace: China tests SpaceX-reminiscent grid fins after iSpace snags orbital milestone
Eric Ralph · August 1st, 2019
Welcome to the latest edition of DeepSpace! Each week, Teslarati space reporter Eric Ralph hand-crafts this newsletter to give you a breakdown of what’s happening in the space industry and what you need to know.
Although the accomplishments aren’t quite as flashy as a launch to the Moon, the last week has featured a number of interesting developments and significant milestones from both the state-run and quasi-commercial wings of Chinese spaceflight.
In the commercial realm, Chinese startup iSpace became the country’s first commercial entity to successfully reach orbit, achieving the feat with a three-stage solid rocket called Hyperbola 1.
One day later, state-owned Chinese company China Aerospace Science and Technology Corporation (CASC) completed its 50th successful Long March 2 rocket launch on a relatively routine government spy satellite mission. Unique was the fact that the rocket marked the first flight test of grid fins – extremely similar to those used on SpaceX’s Falcon 9 – on a Long March rocket.
The march to orbit
- In 2019 alone, three Chinese spaceflight startups have made their first orbital launch attempts and more tries are planned in the second half of the year. OneSpace and LandSpace both got close but ended up suffering partial failures that cut their attempts short before safely reaching orbit.
- Enter iSpace: one of dozens of startups in a burgeoning Chinese commercial spaceflight industry, the company’s three-stage solid rocket – named Hyperbola 1 – became the first Chinese startup-launched rocket to successfully reach orbit on July 25th.
- Although a large amount of the hardware may well have been procured (or licensed) wholesale from CASC, the success still signifies the start of a new alternative to government launches for companies (and perhaps government agencies) seeking to launch smaller satellites.
- Hyperbola 1 stands about 21m (68 ft) tall, is 1.4m (4.6 ft) in diameter at its widest point, and weighs about 31 tons (68,000 lb) when fully fueled. Three solid rocket stages are followed by an extremely small fourth stage meant to circularize the payload(s) in low Earth orbit (LEO).
- The rocket is capable of launching as much as 260 kg (570 lb) to a 500 km (310 mi) sun-synchronous orbit (SSO).
- For iSpace, Hyperbola 1 is more of a stopgap measure as the company works to develop Hyperbola 2, a significantly larger launch vehicle meant to feature a reusable booster and internally-developed liquid rocket engines.
- Ultimately, Hyperbola 1 reaching orbit is an exciting milestone, but it will be far more significant when a Chinese startup reaches orbit with a launch vehicle it has truly designed and built itself. A number of companies aim to do just that next year (2020).
The sincerest form of flattery…
- A day later (July 26th) and approximately 1000 miles (1600 km) to the southeast, state-run corporation CASC was preparing for a routine launch of its Long March 2C rocket, carrying a trio of relatively small spacecraft for a government spy satellite constellation.
- Technically known as YW-30 Group-5, the launch was a routine success that just so happened to be the Long March 2 family’s 50th successful launch in more than 35 years. The family has only suffered one in-flight failure.
- Long March 2C is a two-stage rocket that stands 42m (138 ft) tall (shorter than Falcon 9’s first stage), 3.35m (11 ft) wide, and weighs ~233 tons (514,000 lb) fully fueled. The 2C variant is capable of launching ~3850 kg (8500 lb) into LEO and more than 1250 kg (2750 lb) into geostationary transfer orbit (GTO).
- Although the rocket’s 50th launch success milestone is worth recognizing, this particular launch wound up drawing a significantly greater amount of attention for an entirely different reason: attached to the outside of the Long March 2C’s booster interstage was a quartet of immediately familiar grid fins.
- SpaceX has grown famous in the last five or so years for its spectacularly successful Falcon 9 recovery and reusability, aided in no small part by grid fins used by the booster to retain aerodynamic control authority during its hypersonic jaunts through the atmosphere.
- The appearance of grid fins on a Chinese rocket – looking undeniably similar to SpaceX’s first-generation aluminum fins – raised some (moderately xenophobic) ire in the space community, with people falling back on the stereotype of the perceived willingness of Chinese people to flagrantly ‘copy’ ideas.
- Both the stereotype and the grid fin-stoked ire are arguably undeserved. SpaceX did not invent grid fins, nor did it invent the concept of using grid fins to guide suborbital projectiles.
- In fact, CEO Elon Musk would almost certainly be happy to see someone – anyone! – blatantly copy SpaceX’s approach to reusability. A blatant copy, while not exactly worthy of pride, is still a major improvement over companies sticking their heads in the sand and tacitly choosing insolvency and commercial irrelevance rather than admit that they were wrong and SpaceX was right.
-
- (Pauline Acalin – Teslarati)
- According to CASC, this mission’s grid fins were included to flight-test their ability to more carefully guide the booster’s return to Earth. China infamously takes a… lax… approach to range safety, allowing spent boosters and fairings to haphazardly crash into inhabited areas, often containing remnants of their sometimes toxic propellant.
- Indeed, this particular booster did appear to crash in an uninhabited valley, be it thanks to those experimental grid fins or pure chance
- However, aside from not crashing large objects in populated areas, CASC and China have plans to develop a Long March 6 rocket with a reusable booster that will use the same recovery methods as Falcon 9. That rocket could fly as early as 2021 and July 26th’s grid fin test is an obvious sign that work is ongoing.
- If China manages to develop and launch a partially reusable rocket by 2021, they will be miles (and years) ahead of its space agency peers (NASA, ESA, CNES) and companies like ULA and Arianespace.
Thanks for being a Teslarati Reader! Stay tuned for next week’s issue of DeepSpace.
– Eric
-
Elon Musk
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Elon Musk told SpaceX staff AI revenue will soon dwarf rockets and Starlink combined entirely.
Elon Musk told SpaceX employees this week that artificial intelligence, not rockets, will soon carry the company’s revenue. In a roughly 29 minute internal address posted on SpaceX’s X account on Tuesday, Musk said AI revenue will pass every other line of business at SpaceX “probably in September” and pull further ahead by the fourth quarter.
The numbers he gave are specific. SpaceX currently runs 1.4 gigawatts of AI compute capacity. Musk wants that at 10 gigawatts by the end of 2027, a jump he tied directly to revenue: “if we bring 10GW of AI online by the end of next year, it will be $300 billion to $500 billion a year in revenue.” He called those “big numbers,” which undersells a projection larger than what most countries produce in a year.
We made rockets reusable and are rebuilding the internet in space. The next challenge: making life multiplanetary and understanding the true nature of the universe
Watch @ElonMusk deliver a company update to @SpaceX employees pic.twitter.com/5c8rxoCQfu
— SpaceX (@SpaceX) August 11, 2026
Musk went further on where AI fits into SpaceX’s future. “Probably in four or five years, AI will be 99% of the value of SpaceX,” he told staff, adding that digital intelligence would eventually run “a trillion times” ahead of biological intelligence as computing scales. He tied that growth to the company’s founding mission, telling employees “we must win on AI, because the future is overwhelmingly AI and robots,” with the payoff meant to help fund Starship and a Mars program that increasingly runs through Terafab, the joint Tesla, SpaceX and xAI chip plant.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
-
None of this is entirely new territory. SpaceX told investors much the same story during its first earnings call as a public company on August 4, where Musk moved the company’s $1 trillion revenue target up a year to 2030 and said Starlink could someday carry a majority of the world’s internet. What the all hands video adds is a hard deadline and a specific power figure Musk had not given publicly before, along with a franker pitch to his own workforce that AI, not launch cadence, is now the thing SpaceX is betting its future on.
The AI revenue itself is not coming from SpaceX training its own models. It is largely Starlink acting as the network layer for xAI’s workloads, plus SpaceX renting out compute capacity directly, the same approach behind the roughly $16 billion the company spent on AI infrastructure in a single quarter.
Musk closed the video with a pitch aimed at recruiting and retention rather than investors, telling employees that anyone who helps SpaceX win the AI race will eventually get the chance to go to the moon or Mars themselves. Whether SpaceX can turn 1.4 gigawatts into 10 in seventeen months is the more immediate question, and one that will show up in quarterly numbers well before anyone leaves Earth.
In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
-
Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
-
High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
-
Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Tesla has one big financial question to answer for investors: Morgan Stanley
