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SpaceX begins installing Raptor engines on first Super Heavy booster
SpaceX has installed a Raptor engine on a Super Heavy booster prototype for the first time, defying expectations and setting the rocket up for two major tests as early as this week.
On Thursday, July 8th, SpaceX briefly filled Super Heavy Booster 3’s (B3) propellant tanks with benign nitrogen gas. The vehicle seemingly came to life for the first time that morning when it was spotted using its tank vents – a generally incontrovertible sign that the complex mechanical system that is a rocket is functional. Later that day, the public highway and beach adjacent to SpaceX’s launch site were briefly closed for what was expected to be an ambient pressure and/or cryogenic proof test.
Booster 3 never got to the cryogenic proof test – easily confirmed thanks to the frost that forms on most rockets’ exteriors as main tanks are filled with extremely cold liquid nitrogen. No such frost formed, no major venting occurred, and the road was only closed for the first two hours of a six-hour test window.
According to Next Spaceflight’s Michael Baylor, SpaceX did complete a “brief ambient proof” during that relatively short closure, though very little activity was visible during the test. Friday’s 14-hour test window was canceled the next morning, leaving SpaceX the rest of the weekend to prepare the first functional Super Heavy booster for its first truly challenging test – cryo proof.
Instead, late on Saturday, July 10th, SpaceX rolled Raptor 57 (R57) from build site to launch pad and began installing the engine on Booster 3 just a few hours later. Prior to Raptor 57’s installation, most prominent (albeit unofficial) voices in the SpaceX fan community anticipated no more than cryogenic proof testing for Booster 3 – no static fires, in other words.
However, it was fairly apparent that Super Heavy Booster 3 and the modified suborbital launch mount it was installed on were both outfitted for testing more complex than a cryo proof alone. Notably, B3 rolled to the pad with multiple labeled methane pressure vessels (COPVs), extensive plumbing, and autogenous pressurization control panels installed – all of which continued to be actively worked on after the booster was installed at the launch site.
While it’s technically not impossible to build a ground testing Starship prototype that’s capable of a wide variety of tests but never actually used to its full extent, doing so would be well out of character for SpaceX and make little sense in general. As such, it’s not a major surprise that SpaceX has now begun to install Raptor engines on Super Heavy Booster 3. What is surprising is that SpaceX is installing Raptor engines on a first-of-its-kind Super Heavy prototype before any fully integrated booster has completed cryogenic testing.
Based on Starship’s ~18-month test history, there is a real possibility Super Heavy B3 will fail during cryogenic proof testing. Even accepting that SpaceX’s testing processes and expertise have matured dramatically after dozens of Starship tests on the ground and in flight, the chance remains. In other words, SpaceX’s decision to begin installing Raptors on Super Heavy before ensuring structural and mechanical integrity implies some combination of unusual confidence in a prototype as unproven as Booster 3 and a distinct lack of concern at the prospect of losing at least two Raptor engines in a hypothetical test failure.
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Knowing SpaceX and CEO Elon Musk’s goals for Raptor, the latter implication isn’t much of a surprise but it’s always interesting to have direct visual evidence that Raptor is, in fact, so cheap to build and easy to install that the minor effort and few days of possible delays required to reduce the risk of losing multiple engines just aren’t worth it.
As such, it’s now clear that Super Heavy Booster 3 will have at least one or two Raptor engines installed during its very first cryogenic proof test – currently no earlier than 12pm to 8pm CDT (UTC-5) on Monday, July 12th. Assuming SpaceX’s confidence is well-placed and Booster 3 passes its first cryogenic tests without issue, the real question now is how many Raptors will be installed and ignited during Super Heavy’s first static fire test?
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
