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Elon Musk is redefining the ‘ICE age,’ turning combustion engine cars into museum relics
Tesla might be bringing in a new definition for the term “Ice Age.” Instead of “a long period of reduction in the temperature of the Earth’s surface and atmosphere, resulting in the presence or expansion of continental and polar ice sheets and alpine glaciers,” Tesla’s Ice Age has to do with the disappearance of ICE, meaning Internal Combustion Engines. A relatively small percentage of the world’s vehicles are powered by battery cells, with the overwhelming majority of passenger modes of transportation being fueled by gasoline or diesel. However, Tesla is turning the tide by offering enhanced battery cell technology and making their cars more appealing than their gas counterparts.
Simply put, the development of Tesla’s battery-powered cars are bringing in a new era of transportation. Soon enough, gas cars will be the minority, and Teslas, along with other electric vehicles, will be the most popular cars on the road. How this will happen for the next twenty to thirty years comes down to the development of electric vehicles and the process of making them better than their adversary. Without a doubt, Tesla and Elon Musk are leading the charge.
Interestingly, Musk’s development of affordable electric transport is strikingly similar to Henry Ford’s development of the Model T. In 1908, Ford produced the first Model T, a step toward making cars a more mainstream and widely-affordable type of transportation for everyday people. While the rich and wealthy had been riding around in cars since the 1880s, Ford knew that the way cars were made had to be streamlined and that people would eventually need something affordable.
One hundred years after Ford produced the first Model T, Tesla was releasing the first Roadster. An expensive, but functional and revolutionary machine, the Roadster was really the first electric car that could be taken seriously. It had performance, range, and a car company that was only focusing on EVs had built it, so consumers knew it was the specialty of the company, not just some interesting side project.
The similarities between the two situations are resemblant to each other because both Musk and Ford knew that: 1) Transportation had to be revolutionized, and 2) Cars needed to be affordable.
Before the first cars were being built, people were primarily traveling by horse and buggy, by water, or by passenger trains. A combustion engine was the next best thing at the time because Ford knew how to make it affordable for the average person. It also gave people the freedom to travel where they wanted, and the time they desired instead of being packed into train cabins like a pack of sardines.
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Musk’s situation is that, while cars were already functional and nearly everybody had one, the industry needed to be revolutionized once again. Gas cars dominated the market because there was really no other option, but Musk saw a better way.
While the 2008 Roadster certainly wasn’t a perfect fit into everyone’s financial plan, it gave Tesla a headstart in the EV sector. Tesla was forced to work out the kinks that other car companies are experiencing now early on in its existence. The car’s hefty price tag definitely wasn’t for everyone. Still, it allowed Tesla to round up additional cash for its future projects, which included more affordable models and ramped production lines.
It is pretty rare that anyone sees a Model T on the road. Apart from if you’re in Los Angeles and you happen to see Jay Leno strolling around in his, or if you’re at Hershey Park riding on the Sunoco “Fast Lane” ride, you’re more than likely not going to see one puttering around. The fact that many people have never seen a Model T in real life is a sneak preview of what is to come in the automotive industry over the next 50 to 100 years: a disappearance of gas-powered cars. In their place, electric vehicles will roam the streets, free of noise and fossil fuel-driven pollution.
While the combustion engine was improved over time to increase efficiency and performance, the same thing needed to be done with batteries. Tesla’s Battery Day event on Tuesday brought to light how the electric automaker plans to deal with this roadblock. The company’s cars need to continue to improve. Efficiency needs to get better, longevity, performance, you name it. Tesla unveiled a new battery cell during the event that will effectively usher in the beginning of the new ICE Age.
Tesla debuts new 4680 battery cell: 500% more energy, 6X power, range increase
With the developments, gas-powered engines are beginning to appear pointless. When the cost of battery cell manufacturing goes down, people will be forced to reconsider what they’re driving now, especially if it is a gas-powered vehicle. While EVs are already appealing because of their low maintenance requirements, they will also be the same price as gas cars within the next 3-5 years, which is really the biggest factor in why consumers buy cars, to begin with.
Just like a tube television, in a few decades, the young children will point at cars with tailpipes and say, “Mommy, what’s that Tesla with a pipe coming out of the back of it?” The Mother will answer, “Oh honey, that’s a gas car. They’ve been extinct for nearly 20 years.” This conversation will happen while both begin to breathe significantly cleaner air, and the average global temperature will be reduced. Not to mention, the quick back and forth will also occur at an Automotive History Museum, because gas cars will be so rare, that will be the only place most will see them.
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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.
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.
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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.
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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.
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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
