News
SpaceX’s Starlink eyed by US military as co. raises $500-750M for development
In a reasonably predictable turn of events, SpaceX has been awarded a healthy $28.7M contract to study, develop, and test possible military applications of its prospective Starlink internet satellite constellation.
Previously reported by Teslarati in August 2018, FCC applications related to Starlink revealed that SpaceX had plans to develop and test Starlink interconnectivity with conformal antenna arrays installed on aircraft, all but directly pointing to military involvement with a reference to the need for aerial maneuvers “[representative] of a high-performance aircraft.”
The Air Force just gave @SpaceX $28.7 million for Starlink experimentation. https://t.co/fr2bBHJkDN
— Eric Berger (@SciGuySpace) December 21, 2018
Around the same time as those FCC documents surfaced, the US Air Force Research Laboratory (AFRL) spoke with AviationWeek about plans to experiment with the potential capabilities offered by a flurry of proposed low Earth orbit (LEO) internet satellite constellations, including the likes of SpaceX’s Starlink, OneWeb, a Telesat network, and others. While no specific companies were fingered in AFRL’s public statements, it was far too convenient to be a coincidence. Four months later, the below transaction was published in the Department of Defense’s running list of new contract awards:
“[SpaceX], Hawthorne, California, has been awarded a $28,713,994 competitive, firm-fixed-price … agreement for experimentation … in the areas of establishing connectivity [and] operational experimentation … [and] will include connectivity demonstrations to Air Force ground sites and aircraft for experimental purposes. For the proposed Phase 2, the awardee proposes to perform experiments [with] early versions of a commercial space-to-space data relay service and mobile connectivity directly from space to aircraft.” – Department of Defense, FBO FA8650-17-S-9300
Those dots were fairly easy to connect earlier this year, but this agreement confirms the apparent arrangement with certainty. Almost three months after SpaceX could have received its initial funding, it’s possible that the company has already begun basic testing along the described lines with the two prototype Starlink satellites currently in orbit, although no FCC or FAA filings (that I am aware of) have suggested that those tests are ongoing. SpaceX may be waiting for the launch of a second generation of Starlink prototype satellites to begin seriously putting its antenna and communications technologies through their mid-air paces.
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SpaceX seeks approval for Starlink internet tests on high-performance govt. planes https://t.co/FSUFgFXOQW
— TESLARATI (@Teslarati) August 15, 2018
Early answers to the biggest question
At this point in time, the viability and potential utility of Starlink and other large LEO constellations are well established. What has not been established, however, is how exactly any of the proposed constellations – especially Starlink – can go from paper to orbit. In other words, the reasonable question to ask of any company pursuing such an endeavor is how they plan to fund the acquisition of capital-intensive manufacturing infrastructure and launch services.
Ultimately, SpaceX will receive $19.1M of the full $28.7M sum from the DoD in FY2019 (Oct 1, 2018 to Sept 30, 2019). This absolutely dwarfs all other contracts awarded thus far under the AFRL’s Defense Experimentation Using Commercial Space Internet (DEUCSI) program, which began in August 2017 and has since awarded $2.5M and $5.6M contracts to Iridium and L3, respectively. In the grand scheme of things, ~$30M is a pittance in the face of the extensive investments SpaceX needs to make if it hopes to mass-produce high-performance satellites at a truly unprecedented scale.
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- An unofficial analysis of SpaceX’s first ~1600 Starlink satellites. (Mark Handley)
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- One of the first two prototype Starlink satellites separates from Falcon 9’s upper stage, February 2018. (SpaceX)
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- SpaceX’s Starlink satellite constellation efforts could provide the company with valuable experience that can be applied around Mars. (unofficial logo by Eric Ralph)
This is where a duo of major investment and fundraising developments come into play. In the last several months, word has gotten out that SpaceX secured a respectable $250M loan through the sale of debt, and more recently wrapped up an equity investment round to the tune of $500M, playing off of long-time investors with a demonstrated interest in belief in the company’s long-term vision. For unknown reasons, SpaceX had originally looked into raising the full $750M through a debt-equity loan, but – despite reports that its market was very healthy – soon cut the offering to $500M and eventually $250M, which it ultimately secured in November. Combined with a traditional $500M equity-investment uncovered earlier this month, SpaceX appears to have nearly completed fundraising of more than $750M in the second half of 2018 alone.
.@WSJ reports that @SpaceX is raising $500M to get its #Starlink broadband satellite service off the ground: https://t.co/dQTKE10NpB H/T @RolfeWinkler pic.twitter.com/ufx02xNWLv
— Alan Boyle 👽 (@b0yle) December 18, 2018
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Put a different way, SpaceX has very rapidly gotten very serious about doubling down on Starlink. According to the Wall Street Journal, who originally broke the news of a new $500M equity round, that funding is to be predominately focused on getting Starlink up and running as a serious venture capable of mass-producing satellites. According to a recent Reuters analysis of the Starlink program, CEO Elon Musk challenged the company to begin dedicated launches of operational Starlink satellites as early as June 2019, and the company also plans to launch another round of improved (Gen 2) satellite prototypes early next year.
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Tesla CEO Elon Musk said that flying cars will be coming to the market, something that his own company has hinted at previously.
Musk said on X, in response to a post that read, “We were promised flying cars and all we got is infinite superintelligence for everyone,” “You will get flying cars.”
You will get flying cars
— Elon Musk (@elonmusk) August 12, 2026
The post rang back to when Musk teased flying and hovering capabilities for the Tesla Roadster, the company’s supercar that has been delayed more times than anyone cares to count. It was set for an unveiling earlier this year, but it was then pushed back to August. There is still no sign of it coming.
However, that does not mean it won’t. But one of the biggest features of the Roadster that was teased was a SpaceX package that featured cold gas thrusters on the rear end that would help with white-knuckle acceleration. Another set would face the ground and would help the Roadster gain small bits of altitude, potentially helpful to jump over obstacles.
Elon Musk hints at Tesla Roadster’s “hovering” abilities in SpaceX package
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But it is not a straightforward thing for Musk. As a serial entrepreneur, he tends to spend his time on major disruptors; currently, his largest projects are artificial intelligence and compute power, as well as SpaceX’s launches that will eventually make life multiplanetary.
In the past, he has been critical of flying cars and has been in favor of tunnels, one of the big reasons he started the Boring Company. In 2017 at a TED talk, he said:
“There is a challenge with flying cars in that they’ll be quite noisy. The wind force generated will be very high. Let’s just say that if something’s flying over your head, if there are a whole bunch of flying cars all over the place, that is not an anxiety-reducing situation…You’re thinking, ‘Did they service their hubcap? Or is it going to come off and guillotine me as they’re flying past?’”
However, he’s never been against them. He has also said he’s in favor of both tunnels and flying cars.
Contrary to press reports, I’m not against flying cars. Just said it was important to consider both pros and cons.
— Elon Musk (@elonmusk) March 24, 2015
Most recently, Musk said that anyone who wants a flying car should be able to get one. This was stated last October on the Joe Rogan Experience:
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“My friend Peter Thiel once reflected that the future was supposed to have flying cars, but we don’t have flying cars… I think if Peter wants a flying car, we should be able to buy one.”
Whether the Roadster will be Tesla’s flying car or potentially another one remains in the mind of Musk. Of course, the Roadster will have to make its way to production lines before we find out.
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
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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.
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.
Tesla CEO Elon Musk says flying cars are coming
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
