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SpaceX’s Crew Dragon explosion investigation almost complete, says executive
Speaking at the 2019 AIAA Propulsion & Energy Forum, SpaceX Vice President of Build and Flight Reliability Hans Koenigsmann was significantly more confident that the company is just days or weeks away from wrapping up a serious Crew Dragon failure investigation.
On April 20th, flight-proven Crew Dragon capsule C201 experienced a catastrophic failure mode – largely a surprise to SpaceX – that completely destroyed the vehicle milliseconds prior to a planned static fire test. Given the obvious mortal danger such a failure would have posed to any crew aboard, SpaceX’s plans to conduct its first crewed Crew Dragon launch (Demo-2) in Q3 2019 were thrown out the window. Thankfully, Hans believes that SpaceX is just shy of concluding that investigation, “hopefully” permitting the launch of a critical abort test and Demo-2 before 2019 is out.
More specifically, Koenigsmann noted that SpaceX is currently planning to conduct a critical Crew Dragon in-flight abort (IFA) test in October or November, more or less in line with a recent report from NASASpaceflight.com that the test is targeted for November 11th, 2019. NASASpaceflight also confirmed that SpaceX still plans to fly Falcon 9 booster B1046.3 on the critical test flight, currently the only established plan to launch a thrice-flown booster, a potential first for SpaceX’s reusability program.
SpaceX’s IFA test is a continuation of the company’s suborbital Crew Dragon testing. Back in 2015, SpaceX successfully completed a pad abort test in which a low-fidelity Dragon mockup used its eight SuperDraco abort thrusters to replicate an escape from a rocket failure on the launch pad. SpaceX’s in-flight abort test will – like its namesake indicates – perform a similar test in flight, ensuring that Crew Dragon is able to safely escape from a failing Falcon 9 at Max Q, the point during launch where atmosphere-induced mechanical stress is at its peak.
In theory, demonstrating a successful pad and in-flight (Max Q) abort means that a given spacecraft is able to safely abort at all points during flight – from the pad all the way to orbit. It’s not clear if Crew Dragon is actually designed to be capable of what’s known as an “abort-to-orbit”, but the hardware is likely there if it’s needed.
On July 15th, Hans Koenigsmann and NASA Commercial Crew Program (CCP) manager Kathy Lueders went into significant detail with a preliminary Crew Dragon failure investigation update. They revealed that Crew Dragon’s April 20th explosion was traced to a likely mode, in which a “slug” of Dragon’s liquid oxidizer (nitrogen tetroxide, NTO) leaked and was subsequently smashed into a titanium valve by helium pressurized to several thousand PSI.
Said impact – effectively turning NTO into a bullet – thus created a spark in one or two ways: the titanium debris could have easily created sparks on its own, while NTO is also known to interact in violent and exotic ways with titanium under impact conditions. Either way, the fix is relatively simple (replace the valves and avoid titanium in the NTO pressurization system), but the fact that the design flaw existed in the first place serves as a much larger concern for the entirety of Crew Dragon’s joint SpaceX-NASA design and certification.
Ultimately, Hans seemed much more confident on August 19th than he was a month prior, indicating that the investigation is just shy of wrapping up. Once complete, SpaceX can complete the necessary modifications and get back on the saddle for Crew Dragon’s inaugural crewed launch and next abort test.
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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.
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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.
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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
