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No, Tesla wasn’t “cheated” in the Model 3 headlight safety test by the IIHS
With the Insurance Institute for Highway Safety’s release of initial crash test information for the Tesla Model 3 came cries from many in the electric vehicle community that Tesla was “being cheated.” This isn’t entirely true as the new IIHS test removes a lot of cars out of the Top Safety Pick+ rating, the highest accolade the independent safety tester will give a car.
The Insurance Institute for Highway Safety (IIHS) is an independent testing organization funded by insurance companies and some of the banks who back them. The IIHS purchases every car it tests–usually several of each–and tests these vehicles in their highest-available safety configuration. These crash tests usually destroy the vehicles in question, of course, but give an independent, third-party result not otherwise available.
When the IIHS’ initial safety results for the Tesla Model 3 were released, they included ratings for only two of the seven total ratings given to a vehicle. Those ratings, posted to the IIHS.org website, created a lot of response from the community regarding the failure of the Model 3’s headlamps to pass muster.
The tests so far include only the non-invasive, non-destructive tests normally conducted by the IIHS. Namely to crash mitigation systems and headlamps. It’s likely that the next test to see release on the Model 3 will be for LATCH child safety system use, another non-destructive test. From there, crash testing will begin. For that, IIHS needs to receive more Model 3 vehicles (5 in all), the rest of which are on order and expected later this year. Like any other Model 3 buyer, delays in manufacturing have put the IIHS’ ownership of the cars for evaluation on hold.
How the IIHS Conducts Headlight Tests, and Why
The IIHS conducts headlamps tests because, according to the organization, about half of all fatal crashes in the U.S. occur in the dark and many of those are on unlit roads where headlamps are the only thing illuminating whatever’s in front of the car. Although headlights are mandatory and minimum illumination requirements are required by law for all street-legal vehicles, there is a wide variance in how much (and how useful) that illumination can be. Especially with the advent of new lighting technologies.
“Headlight technology has been developing rapidly in recent years. LED and high-intensity discharge (HID) lamps have begun to replace the traditional halogen ones,” IIHS explains on its website. “Many automakers offer curve-adaptive headlights, which respond to steering and swivel according to the direction of travel. Many also offer high-beam assist, a feature that can increase the use of high beams..” These and other variables mean that headlights of the same type on one vehicle can be much worse than they can on another. Even little things like how the lights are focused, what type of light they emit, etc. can change effectiveness.
[Credit: Parker Smith via YouTube]
For those reasons, the IIHS instituted a headlight testing methodology in 2016. Starting this year (2018), these test results directly affect a vehicle’s eligibility for Top Safety Pick+ status. So far in 2018, only a handful of models have received TSP+ ratings. Somewhat surprising for luxury and high-end car buyers is the fact that almost all of those TSP+ vehicles are lower-end vehicles from makes like Hyundai and Subaru.
Testing for headlamps is conducted using a multi-part evaluation using a hypothetical, clear, two-lane road. The tests include measurements in a straightaway, measuring both the length and amount of illumination as well as the amount of glare the lights create for oncoming drivers. Then a gradual left- and right-hand turn and a steeper left- and right-hand curve are measured for a total of five directions in all.
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Results are taken from varied distances at 10 inches high and 3-feet, 7-inches high (from the ground) to mimic where the driver is looking (out and down) and where oncoming vehicle drivers are seeing from (higher up). Ratings are then assigned according to how these measurements line up with a hypothetical ideal headlight system. Both low and high beams are tested the same way with the low beams being weighted for scoring as they are used most often in the real world. Vehicles with automatic high beam systems are given more points as the high beams will be used more often.
The Controversy Surrounding the IIHS Headlight Test
The inherent weakness in this IIHS test is similar to that of most of its advanced testing: it’s only tested on the ideal vehicle trim level and options. In other words, the testing is most likely happening on the most expensive model being sold, not necessarily on the most mainstream version of the vehicle. This becomes obvious when the bulk of the Top Safety Pick+ list is comprised of vehicles like the 2018 Subaru WRX.
The WRX is a great car, sure; a personal favorite in fact. But its winning of a TSP+ badge is a little misleading. The volume-selling model WRX is the mid-tier Premium trim, which doesn’t include the LED headlights or the automatic high beam control tested by the IIHS. To get those, one has to go up to the more expensive Limited trim point and add the EyeSight system. That latter point can only come if the buyer of this driver’s car is willing to drop their manual transmission for a CVT. That’s another sticking point as the WRX has a large percentage of buyers who want to shift the gears themselves.
What all of this means is that the 2018 WRX is a great car, but it’s not likely to be purchased in the configuration which the IIHS used to test its headlamps with. Other cars on the TSP+ list are much the same.
The interesting note here is that unlike actual crash tests, the slightly more subjective headlamp tests of the IIHS fall into the non-destructive tests for other safety equipment that, while respected, are also flawed for the same reason: only top-end models tend to have all of that equipment on them. Unlike those other safety items, however, the headlamp tests can hurt higher-end models while lower-end options would ace them. Why? Because LED headlamps, which consistently appear to fail most of the glare testing that the IIHS does, are generally only found on top-end models or luxury vehicles. There could be a lot of reasons for that, but my personal theory is that it has to do with automakers having to find a median between maximum safe illumination and glare due to how reflective LED lamps are designed.
The current IIHS Top Safety Pick+ list includes no midsize luxury cars (which the Model 3 is considered), though the overall midsize car category has five entries. All of them with caveats as to what must be included (usually top trim point items or options). Last year, under the old rules, most midsize and midsize luxury cars made the TSP+ list and Tesla’s Model S failed to make the list in part, again, for headlights.
It’s difficult to say what will happen with the Insurance Institute’s testing going forward. Likely manufacturers will come up with solutions to receive better scores on the headlamps test, perhaps by changing LED lighting designs or gaming the IIHS tests (as they have in the past with the small front overlap).
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Tesla has some smart engineers and could probably figure out a way to remedy the lighting problem that’s kept their vehicles from rating high on IIHS tests in recent years. With a mainstream attempt like the Model 3, that could become a very important goal as buyers in the midsize sedan category tend to be safety conscious consumers.
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Investor's Corner
SpaceX and Nvidia team up on Musk’s orbital AI bet
SpaceX revealed a new Nvidia satellite partnership, then Musk pledged an exclusive Nvidia hardware commitment.
SpaceX and Nvidia are now working together on the hardware that will power Musk’s orbital data center ambitions. SpaceX announced on X on Tuesday that it is partnering with Nvidia to design the compute payload for Starmind AI1, the first satellite in a planned constellation built to run AI workloads directly in orbit. Each Starmind satellite will carry Nvidia’s Rubin GPUs and Vera CPUs, according to the post, which included renderings of the payload design.
The announcement landed hours before SpaceX’s first earnings call as a public company, where Musk went further, saying the company has committed to building its AI infrastructure exclusively on Nvidia hardware. “We think the Vera Rubin architecture is the best architecture. We think it’s the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia,” Musk told investors on the call,. “So we’re exclusive to Nvidia.”
Musk said SpaceX plans to deploy Nvidia’s Vera Rubin NVL72 rackscale system, codenamed Kyber, both on the ground and in space. He set a target of 2 gigawatts of compute capacity online by the end of this year, scaling to roughly 10 gigawatts by the end of 2027.
SpaceX’s newest Starmind will make earth data centers obsolete
Starmind has been in development since Musk confirmed the name in June, following an xAI trademark filing that tipped off the project before SpaceX made it official. The idea is massive in scope and instead of moving data down to ground based servers, satellites equipped with onboard processors and large solar arrays would compute AI workloads in orbit and beam results back to Earth. SpaceX has already filed with the FCC for a constellation of up to one million satellites to support the effort, citing constant solar power and the absence of zoning restrictions as advantages over terrestrial data centers.
The Nvidia exclusivity marks a shift in tone from just two weeks ago, when Musk was busy knocking down a report that SpaceX had ordered $52 billion worth of Nvidia GPUs through Foxconn, calling it fake news at the time. The dollar figure in that rumor may have been wrong, but the underlying direction seems correct. SpaceX’s AI division already leases Colossus compute capacity to Anthropic and Google, and Tuesday’s earnings report showed AI revenue climbing sharply as those deals ramp up.
Nvidia shares rose roughly 3% in Tuesday trading on the news, while SpaceX stock climbed nearly 9% during the day before giving back gains after hours as investors digested the earnings report’s capital spending figures.
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SpaceX (NASDAQ: SPCX) reported a beat in revenues and EBITDA in its first earnings call report while also minimizing losses as its business continues to gain momentum.
After its IPO in July, SpaceX saw some tough losses on Wall Street due to a major selloff after a delay in its 13th Starship test flight. The ship launched later that week and completed what was arguably the most successful IFT operation in the Starship program’s history.
Nevertheless, the company is continuing on and reported some encouraging financials while also promoting what appears to be a robust outlook moving forward in its Space, AI, and Connectivity divisions.
SpaceX to report first-ever earnings today: here’s what to expect
Earnings Results
- Revenues: $7.8 billion reported vs. $6.7 billion expected
- Adjusted EBITDA: $3.5 billion vs. $2 billion expected
- Net loss of $541 million, an improvement of $467 million from net loss of $1.0 billion
Additionally, CFO Bret Johnsen had these comments:
“2026 has been a momentous year so far, and the second quarter demonstrated the true power of SpaceX. Revenue growth accelerated across all our business segments and we delivered strong operating leverage, with significant margin expansion led by our new AI compute agreements. Our unparalleled leadership in launch, Starlink subscriber growth, new enterprise and government partnerships, and best-in-class AI infrastructure underscore our ability to drive meaningful scale and deliver attractive returns. As a newly public company, we are delighted to welcome our broad base of shareholders and bondholders. We ended the second quarter with $100 billion of cash, cash equivalents, and marketable securities, and $47.5 billion in backlog. This financial strength gives us substantial capacity to invest in Starship, Starlink Broadband and Mobile satellites, and our AI platform, while maintaining a disciplined long-term capital allocation framework.”
Space Business Highlights
SpaceX shared some of its biggest Space Business Highlights for Q2:
- Space revenues grew 55% sequentially and 29% year-over-year to $962 million, driven by a higher number of large customer launches and a favorable customer shift compared to the prior year
- Total costs and expenses for the Space segment were up by $389 million year-over-year, as we continued to accelerate R&D investments in our Starship program, which we believe will reduce the cost to orbit by 99% or more relative to the historical average, and unlock significant revenue potential across all business segments
- Leading launch provider for the world with 78 launches and 1,041 metric tons of mass to orbit deployed over the six months ended June 30, 2026, primarily allocated to Connectivity for the deployment of our Starlink constellation
- Starship V3 development continued to advance towards full and rapid reusability:
- Completed Starship V3’s first suborbital mission in May, Flight 12, which achieved a successful lift off from our new Starbase pad, a precision landing of Starship’s upper stage, and deployment of modified V2 Starlink satellites
- Subsequent to the second quarter, completed Starship Flight 13 in July, which achieved all flight objectives including deploying 20 production V3 satellites, demonstrating in-space relight of a Raptor engine, and executing the softest ever splashdown of Starship, providing critical views of an intact heatshield
SpaceX will report its earnings today at 4:30 P.M. EDT.
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Elon Musk issued a second pointed warning to SpaceX short sellers on Tuesday, just hours before the company was set to release its first quarterly earnings as a publicly traded firm. Responding to a report highlighting elevated short interest, Musk wrote on X: “I try to warn them, but they just double down …”
The comment came as data from S3 Partners showed roughly 95 percent of available SPCX shares to borrow were on loan, translating to about 34 percent short interest as a percentage of the float. The stock has traded under pressure since its record-breaking IPO in June 2026, declining significantly from early peaks.
I try to warn them, but they just double down … 🤷♂️
— Elon Musk (@elonmusk) August 4, 2026
This marks the second such message from Musk in under three weeks.
On July 17, amid post-IPO volatility, he stated: “The survival probability of firms who maintain a significant short position in SpaceX over time is very low.” At that time, SPCX had fallen roughly 30 percent from its peak above a $2.6 trillion valuation, with short sellers reportedly realizing gains of about $8.7 billion.
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Musk’s warning aligned with optimistic analyses projecting that Starship-driven cost reductions could enable a multi-trillion-dollar space economy through applications such as orbital solar power, asteroid mining, data centers, and Mars-related projects, positioning SpaceX as critical infrastructure.
SpaceX is scheduled to report second-quarter results after the market close later today, followed by a webcast. Analysts anticipate revenue near $6.9 billion, reflecting growth in Starlink, launch services, and AI-related segments. The earnings release precedes a major lockup expiration on August 6 that could free hundreds of millions of insider shares.
Musk has a long track record of confronting short sellers, particularly regarding Tesla, where he has argued that persistent bearish positions underestimate transformative technologies. Critics view his optimism as overly ambitious given near-term stock fluctuations, while supporters see temporary dips as opportunities in a longer-term expansion of the space economy.
As SpaceX opens its books to public scrutiny for the first time, the high short interest and Musk’s repeated cautions set the stage for heightened market attention on the results and management’s commentary.
SpaceX and Nvidia team up on Musk’s orbital AI bet
SpaceX reports beat in first earnings while minimizing losses
