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[Update: not so fast…] SpaceX retires brand new Starship to focus on orbital launch buildup
SpaceX has moved its newest finished Starship straight from its Boca Chica, Texas factory to a nearby ‘rocket garden,’ all but guaranteeing an early retirement.
Built as the first of several planned backups to Starship SN15, which debuted a number of significant upgrades in April and May, it appears that Starship serial number 16 (SN16) has been retired to a display stand after its only sibling became the first full-size prototype to successfully survive a launch and landing on May 5th. SN16 actually reached its full height before SN15 lifted off and was more or less complete by May 10th. Since then, the prototype has remaining more or less untouched, seemingly waiting for SpaceX to decide its fate in lieu of Starship SN15’s major success.
Ultimately, with SN16 now sitting side by side with SN15 at what will likely become a sort of open-air SpaceX museum, it appears that the company has made up its mind.
Once SN15 touched down, safed itself, and remained standing after a near-flawless 10 km (6.2 mi) test flight, questions about Starship SN16’s fate almost immediately arose. From the outside looking in, replicating that spectacular success was judged a logical next step by many in light of the four variously unsuccessful Starship launches that closely preceded it. If SpaceX could land SN15 and then successfully recover an entirely separate Starship weeks later, it would all but eliminate the possibility that – much like several different failure modes popped up on SN8 through SN11 – the first total success was a fluke.
Given that SN16 was quite literally completed within days of SN15’s launch and landing, it seemed an almost foregone conclusion that SN16 would fly. For a few weeks, it even looked possible that SpaceX would attempt to reuse Starship SN15. However, SpaceX appeared to decide against reuse and rolled its first flight-proven full-size Starship from the pad to a plot of land expected to host a future ‘garden’ for retired SpaceX rockets.
After its three intact flight-proven Raptor engines – valuable in their own right – were removed, Starship SN15 was seemingly retired around May 26th. Three weeks later, SN16 has (quite literally, to an extent) followed in SN15’s footsteps, bowing to an apparently virulent desire within (or at least atop) SpaceX to launch Starship into space and orbit as quickly as possible. From that perspective, assuming enough data was gathered by Starship SN15 to encourage significant confidence that its survival wasn’t an ‘accidental success,’ reusing Starship SN15 or flying Starship SN16 would only really benefit a line of prototypes that had just made itself obsolete.
Much like Starship SN15 debuted “hundreds of improvements” across the board, CEO Elon Musk revealed that Starship SN20 would also involve a “major technology [revision]” to produce the first prototypes with full heat shields, a stage separation mechanism, vacuum-optimized Raptor engines, and more. In fact, that process may still be ongoing, which could explain why SpaceX has yet to begin assembling Starship SN20 – various subsections and components of which have already been completed in Boca Chica.
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Confirmed by Musk in March, SpaceX has been working towards a target of no later than July 2021 for Starship’s first orbital test flight. Given that Starship SN20 has yet to enter the assembly phase and that Super Heavy “Booster 2” (BN3) will be the first of its kind and likely need to pass several major tests on its own, July is no longer within reach. Of course, an orbital launch attempt anytime in 2021 would still be a staggering achievement for SpaceX, beating the likes of Vulcan Centaur, New Glenn, and Ariane 6 to the punch despite Starship’s superior performance, unprecedented design challenges, and grander ambitions.
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.”
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.
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.
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
