SpaceX
SpaceX’s first dedicated Starlink launch announced as mass production begins
SpaceX has announced a launch target of May 2019 for the first batch of operational Starlink satellites in a sign that the proposed internet satellite constellation has reached a major milestone, effectively transitioning from pure research and development to serious manufacturing.
R&D will continue as SpaceX Starlink engineers work to implement the true final design of the first several hundred or thousand spacecraft, but a significant amount of the team’s work will now be centered on producing as many Starlink satellites as possible, as quickly as possible. With anywhere from 4400 to nearly 12,000 satellites needed to complete the three major proposed phases of Starlink, SpaceX will have to build and launch a minimum of ~2200 satellites in the next five years, averaging 37 high-performance, low-cost spacecraft built and launched every month for the next 60 months.
A shift in the Stars
Despite the major challenges ahead of SpaceX, things seem to be going quite smoothly with the current mix of manufacturing and development. As previously reported on Teslarati, SpaceX CEO Elon Musk forced the Starlink group through a painful reorganization in the summer of 2018, challenging the remaining leaders and their team to launch the first batch of operational Starlink satellites no later than June 2019. As a consequence, a sort of compromise had to be reached where one additional group of quasi-prototype satellites would be launched before settling on a truly final design for serious mass-production.
According to SpaceX filings with the FCC, the first group of operational satellites – potentially anywhere from 75 to 1000 or more – will rely on just one band (“Ku”) for communications instead of the nominal two (“Ku” and “Ka”), a change that SpaceX says will significantly simplify the first spacecraft. By simplifying them, SpaceX believes it can expedite Starlink’s initial deployment without losing a great deal of performance or interfering with constellations from competitors like OneWeb.
Somewhere along the line, SpaceX would iteratively improve each subsequent ‘generation’ of Starlink satellites until they reached the nominal performance characteristics outlined in the company’s original constellation application. Knowing SpaceX, improvements would continue for as long as lessons continued to be learned from operating hundreds and eventually thousands of orbital spacecraft.
As one concrete example, recent SpaceX FCC documents stated that the first 75 Starlink spacecraft would feature a less-optimized reentry design, meaning that a select few components will not entirely burn up during reentry, creating debris that poses a
While the FCC has yet to grant SpaceX’s requested modifications, the other major goal is to reduce the operating orbit of the first phase of 1584 satellites to 550 km (340 mi), a change that SpaceX says will drastically reduce the potential lifespan of any orbital debris in the unlikely event of their creation. A lower altitude also places a major cushion between SpaceX’s first ~1500 satellites and the orbits of several other planned constellations, including OneWeb and Telesat.
Hello, Production Hell, my old friend
Meanwhile, SpaceX’s Starlink program has begun the often painful steps of transitioning from a venture primarily focused on research and development to one focused mainly on building production lines and supply chains and manufacturing hardware. SpaceX’s Starlink facilities are currently housed in three nearby buildings located in Redmond, Washington, likely offering approximately 150,000 square feet (14,000 m^2) for a mix of office, development, and production spaces. At least one of the three non-office buildings could potentially become dedicated to production while one building – approximately 40,000 ft^2 (~3500 m^2) – has already been completely transformed into a prototype of a Starlink satellite production line, supporting manufacturing for first several dozen quasi-prototype spacecraft. For reference,
Mass-producing spacecraft at the scale needed to build even half of those needed for the first phase of ~4400 Starlink satellites will be a feat unprecedented in the history of the space industry. Barring FCC exemptions (possible but unlikely), SpaceX needs to launch ~2200 Starlink satellites between now and April 2024. To complete the first phase, the final number of satellites rises to ~4400. Adding on a proposed constellation of very low Earth orbit (
Perhaps SpaceX will be able to garner invaluable insight from the lessons its sister company learned during Model 3’s torturous “production hell”, in which the car company had to grow its production volume by almost a magnitude as quickly as possible. Ironically, it may even be the case that SpaceX has the easier task relative to Tesla.
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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.
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.
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.
Elon Musk
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
Elon Musk again denies a Tesla China split as new SpaceX merger speculation resurfaces quickly.
Elon Musk restated that Tesla has no plans to separate its China business from the rest of the company, responding to a new round of merger speculation from ARK Invest.
On the firm’s “Brainstorm” podcast, Cathie Wood’s team, including chief futurist Brett Winton and research director Nick Grous, argued a Tesla and SpaceX combination remains likely, with an announcement possible before the end of the year even if the deal itself would not close that quickly. Winton called Tesla’s Shanghai operations a “small ish wrinkle” for a merger rather than a real obstacle, since SpaceX’s national security work with the U.S. government sits uneasily next to Tesla’s manufacturing base in China.
Musk pushed back on the framing directly. “China is awesome. I strongly encourage people to visit,” he wrote on X. He also repeated language he first used in late July, when the Wall Street Journal reported that Tesla executives had been told to prepare for a possible spinoff, sale, or closure of the China business ahead of a SpaceX tie up. Musk called that report “absurdly fake news” at the time, adding that a separation had “never even come up in a discussion ever,” a line he echoed again this week.
The repeated denial has not settled the underlying question, because Shanghai’s role in Tesla’s business is exactly what makes a merger complicated. Gigafactory Shanghai still ships more than half of Tesla’s global deliveries and functions as the company’s main export hub for Europe and Asia. Teslarati previously reported on Musk’s initial denial, and the merger conversation itself has been building since SpaceX’s IPO gave it public shares to use as acquisition currency.
Wedbush’s Dan Ives has pegged the odds of a Tesla SpaceX merger at 80 to 90 percent by early 2027, and ARK’s prediction of a year end announcement adds another data point to that timeline, even as Musk keeps rejecting the specific mechanics reporters have described. Neither position rules out the other. Musk can deny a China spinoff was ever discussed while analysts still expect some form of combination to move forward, since ARK and Ives are both describing convergence at the corporate level, not necessarily the internal restructuring the Journal described in July.
For now, Tesla’s China business remains intact, and Musk’s comments this week make clear he has no interest in publicly walking that position back, no matter how often the merger question resurfaces.
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
