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German auto industry wary of EV innovations inspired by Tesla
More than 300 high-ranking representatives of the German automotive industry gathered in Berlin recently to hear the President of the German Association of the Automotive Industry (VDA) express firm views that “the calls to ban combustion engines are becoming louder.”
VDA President Matthias Wissmann explained that the German automotive industry has already invested 14 billion euros in electric mobility, and, with 30 electric models in series production, it is currently one of the world’s leading providers of electric mobility. Electric mobility is an important component for achieving climate targets, reducing emissions of pollutants, and lowering CO2. The VDA expects that the country’s automotive manufacturers will more than triple the number of electric vehicle models to nearly 100 by 2020 as battery costs decline and electric ranges increase toward 500 km. That will edge closer to the distances gasoline and diesel cars can travel on a single tank.
Wissman warned that, if energy policy follows developments, both passenger cars and commercial vehicles would need to adhere to increased regulations and automakers would have to engage in some serious self-examination. “This industry is not start-up company that can constantly procure fresh funding despite persistent losses,” he said in a remark likely directed at Tesla. “Today we can imagine that in 2025, 15 to 25 percent of new passenger car registrations worldwide could be electric vehicles. The trend is accelerating – just a short while ago experts thought a share of only 3 percent was more likely. Every fourth or fifth new car sold will then have an electric drive.” Tesla, it must be noted, paid back its Department of Energy loan nine years early.
The German car industry is investing 40 billion euros in alternative drivetrains. This amount includes research and development expenditures as well as assets such as equipment and tools for production. Late last month BMW, Daimler, and the Volkswagen Group were among European automakers that signed a declaration of intent to start next year with the construction of a quick charging network for electric cars based on the CCS standard. Of course, Tesla has also joined the CharIN group, which created and promotes the CCS charging standard commonly found on the SAE-Combo plug.
The German automotive industry has recently intensified research and development activities in the fields of digitization and connected driving. Instead of having “to worry about the new competition,” Wissman said the German automotive industry aims to be right at the forefront of developments. These were more lightly-veiled references to Tesla Motors, Inc., with its Model S now performing as the best selling luxury car in Western Europe, accelerating past traditional high-status and internal combustion engine powered favorites like the Mercedes S class, BMW 7 Series, Audi A8, and Porsche Panamera. Wissman also affirmed that European automakers could not switch immediately to electric vehicles and eliminate combustion engines from their catalogs, as they employ hundreds of thousands of workers around the world – many of which build diesel and gasoline engines.
To accelerate the evolution toward innovative automotive methods, Wissman described how the German automotive industry is now working intensively on new mobility concepts that generate totally new business models. “This trend arises from a rapidly changing expectation on the part of customers, who no longer demand just a product, but instead a mobility service,” Wissmann said. “In addition, completely new players are appearing on the market, such as large IT corporations. We take this challenge seriously, and are also tackling it.”
The VDA recognizes that increased efficiency, recycling, and a reduction in emissions benefit both companies and consumers as is preserving natural resources is an integral part of national and European regulation. They note on their website that, according to figures published in the national Inventory Report of the German Environmental Agency, CO₂ emissions produced by road traffic in Germany from 1999 to 2012 dropped by about 30 million metric tons. “In the last ten years the average fuel consumption by newly registered passenger cars in the EU has been brought down by over one quarter, and CO2 emissions have fallen in parallel,” Wissman noted. “The potential has not yet been exhausted. We expect that in the next few years we can increase the efficiency of gasoline and diesel vehicles by at least another 10 to 15 percent.”
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Since 2006, German road traffic CO₂ emissions have been below 1990 levels for the seventh successive year and are around 5 million metric tons less than the 1990 figure. No other Western European country has so far succeeded on a sustained basis in reducing road traffic CO₂ emissions below the level of 1990, according to the VDA. German automakers’ shifts to more fuel-efficient and carbon-reducing vehicles, however, can only help reduce these levels further.
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.”
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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.
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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.
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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.
Tesla headlights have caused a recall of over 20,000 of the company’s two most popular vehicles, the Model 3 and Model Y, due to the low-beam bulb exceeding the maximum allowed intensity according to federal standards.
Tesla initiated the recall with the National Highway Traffic Safety Administration (NHTSA) this morning, stating that the low-beam output “exceeds the maximum allowed intensity in the outer upper-right and outer upper-left areas of the 10U and 90U zone, as prescribed in FMVSS No. 108.”
Tesla sourced the impacted headlights from Marelli Automotive Lighting, a Mexico-based company. The recall impacts 2020-2023 Model Y vehicles and 2017-2023 Model 3 vehicles. It is estimated that every VIN in this recall is impacted by the defect.
🚨 Tesla is recalling 20,349 2020-23 Model Y vehicles and 2017-23 Model 3 vehicles due to an excessively bright headlamp low beam.
Currently, there is no remedy plan in place, as it is still being developed. pic.twitter.com/y34cIO2U0B
— TESLARATI (@Teslarati) August 11, 2026
Typically, Tesla would remedy recalls of this nature through an Over-the-Air software update, which has been a major focus of criticism by the company and its supporters because the NHTSA still refers to it as a “recall,” even though it requires no action by the vehicle owner. The fix is shipped over the internet and downloaded to the car.
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However, there appears to be a potentially different solution for this problem. Tesla has not developed a remedy for this issue, so it could potentially be on the way. The big issue appears to be the fact that these recalled lamps are out of production, and this is an old body style for both vehicles. The headlights and front-end designs are completely different.
Tesla switched to another supplier when the affected headlight design was discontinued. It plans to begin notifying owners of their remedy options by September 15.
Tesla filed a petition protesting the recall to fix the vehicles’ headlight issue, but the NHTSA denied it. Now, Tesla will come up with a solution to fix it.
Tesla has one big financial question to answer for investors: Morgan Stanley
SpaceX AI investment gamble will make it a big winner, firm says
