News
Tesla is building an empire with Model 3 drive units, custom chips, and loyal customers
When the Tesla Semi and the next-generation Roadster were unveiled last year, Elon Musk pointed out that the whole company was built on the original Roadster, an electric car which proved that EVs could be exciting, fun, and quick. Tesla is now at a point where it could become a threat to established premium automakers; and just like how Apple built a trillion-dollar empire on the back of the iPhone, Tesla seems poised to establish its own empire through its Model 3 drive units, its custom-made chips, and its passionate consumer base.
The brilliance of the Model 3’s drive unit was recognized by Detroit veteran Sandy Munro, whose company conducted a thorough teardown and analysis of the electric sedan. While Munro noted some points for improvement with regards to the vehicle’s chassis, he was incredibly impressed with the car’s suspension, batteries, and electric motor. Recently relating his findings to Bloomberg, Munro noted that the Model 3’s electric motor is a “game changer,” and that “everyone should be benchmarking (it).” The entire subframe where the drive unit is housed even detaches cleanly from the Model 3, seemingly allowing DIY enthusiasts in the future to resurrect drive units from damaged vehicles by using them for electric car conversions.
Tesla recently shared images of the Model 3’s drive system after being tested for over 1 million miles. Images of the drive system’s gears suggest that there was very little wear and tear despite extensive testing. With this in mind, Tesla’s idea of using the Model 3’s drive unit to power upcoming vehicles like the Semi and the Model Y, or possibly even the Tesla Truck and the upcoming compact car, could pay off in spades for the company. If teardowns of the Model 3 are any indication, after all, the electric car’s drive unit could very well be reliable, easy to manufacture, and even swappable if the need arises. It could, in a way, be a building block in Tesla’s emerging empire.
Beyond the Model 3’s drive units, Tesla is also starting to dip its feet into creating its custom chip. Such a strategy is very much in line with Tesla’s character, considering that the company already manufactures many of its vehicles’ components in-house. In an interview with Yahoo Finance last week, ARK Invest CEO and CIO Cathie Wood noted that the electric car maker’s initiatives towards the creation of its own hardware are a “replay of Apple.” Wood notes that in the same way Apple’s innovations with the iPhone pushed the tech giant to create its own silicon, Tesla’s progress with the intelligent tech in its vehicles are driving the electric car maker to design and build its own chips.
“This is a replay of Apple. Apple was moving so fast with the smartphone that it had to design its own chip to move that fast. This is what has happened to Tesla. Nvidia chips will be in mostly every other autonomous vehicle to hit the market. But Musk has a vision for this market that needs (a) faster, better, cheaper, sooner (solution) – and so he designed it himself,” Wood noted.
Elon Musk is optimistic about the potential of Tesla’s custom silicon. Designed by a team led by Pete Bannon, who used to work for Apple, Musk noted that Tesla’s custom hardware would be ” the world’s most advanced computer designed specifically for autonomous operation.” This custom chip, which would be included in Tesla’s Hardware 3, will be rolled out to all production cars in around six months; and if Tesla’s other in-house solutions are any indication, the introduction of its upcoming silicon would likely allow the company to establish a lead against rival automakers who are also dabbling in self-driving initiatives.
While Tesla’s vehicles and their components make the company a formidable player in the car industry, it is perhaps its dedicated consumer base that makes Tesla downright threatening to traditional auto. It is quite rare to see a car company command such a devoted following, though considering Tesla’s stance in the auto industry today, the strong brand loyalty displayed by Tesla owners is not very surprising at all. As Tesla grew over the years, after all, the company has practically transformed itself into an entity that is far more than a carmaker or a battery storage provider. Tesla has become a movement of sorts, populated by electric car owners who are willing to pay it forward when needed. This was shown in the final weeks of Q3, when owners mobilized to help the company deliver as many vehicles as it could before September ended.
The Tesla community’s dedication to the company’s mission and vision were in full force earlier this month as well, as 36 Tesla Owner’s Clubs from nine countries convened in Fremont, CA to meet and strategize initiatives that can help support the growing number of electric car owners across the globe. Denver Tesla Club President Sean M. Mitchell, who attended the meeting, believes that the source of enthusiasm among electric car owners is multifold. For one, the company was able to integrate technology in a way that made even something as ordinary as driving exciting once more. Sean also notes that the company’s grass-roots marketing approach, which relies primarily on word-of-mouth, fosters a very authentic and honest relationship among owners.
It remains to be seen if Tesla would be succeed in its mission to accelerate the world’s transition to renewable energy. That said, the company’s strategy in its electric vehicle business seems to be working, as legacy carmakers such as Porsche and Jaguar are starting to fully embrace the idea of a zero-emissions fleet. Companies such as Audi and Mercedes-Benz have also begun offering premium electric vehicles of their own. In South Australia, Tesla’s big battery is also triggering a clean energy movement, with similar renewable projects now underway after the Powerpack farm proved to be effective. Ultimately, Tesla’s empire might not be as tangible or evident today, but the components that would make it are already there, steadily growing.
Tesla CEO Elon Musk took to his social media platform X on Sunday to remind everyone that the Roadster’s true meaning is not about company growth or adding dollars to shareholders’ pockets. Sometimes, you just do things because you can.
Following the Roadster’s epic unveiling event last Thursday, skeptics and critics of the company or the project itself came out to say that the vehicle is a pointless project because it is not geared toward growing the company, delivering supreme margins for profitability, nor does it contribute to the big picture of Artificial/Super Intelligence.
But that’s just the thing: Roadster is not meant to be some shareholder dream; it’s meant to be a vehicle that people buy just because it is something awesome, unique, and the first of its kind.
Tesla Roadster: Three configs, one can fly, 0-60 in 0.8 seconds
Musk had to remind those who are skeptical about the Roadster’s importance to the company mission that while it is not a major contributor to Tesla’s long-term goals, it is something that is being built just because it can be:
“Optimus and Cybercab will be the vast majority of Tesla’s value. The only things that will scale to incredible size (K2 and beyond) economically are super intelligence, robots, solar power, and mass to space. And, of course, if you have the first two, the rest will follow. But Roadster is super cool, so we’re doing it anyway.”
Musk has said on many occasions that Optimus would be the project that would make up the vast majority of Tesla’s value in the coming years.
Robotics will be a major focus of Tesla over the coming years, especially as Musk believes Optimus will enable work to be optional for humans and will enable what he calls “High Universal Income.”
Optimus and Cybercab will be the vast majority of Tesla’s value.
The only things that will scale to incredible size (K2 and beyond) economically are super intelligence, robots, solar power and mass to space.
And, of course, if you have the first two, the rest will follow.
But Roadster is super cool, so we’re doing it anyway.
— Elon Musk (@elonmusk) October 18, 2026
Cybercab will be a passive income opportunity for owners, Musk and Tesla have said for a very long time, as a fleet of self-driving vehicles will operate within a ride-hailing Robotaxi service that won’t require a human driver to be present.
Tesla investors are more than enthusiastic about the company’s future projects, at least from a general consensus perspective. However, it is important to note that the Roadster is a fun and cool project that pushes the boundaries of what people thought was possible for an automobile.
What we saw last week was the first true example of a flying car, and despite the backlash about how it might not contribute to Tesla’s grand ambitions, it’s okay to have fun sometimes, too.
Investor's Corner
SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching
SpaceX reports earnings Tuesday as Wall Street watches AI spending, Starlink growth and Tesla merger
SpaceX reports third quarter results after the market closes Tuesday, with a webcast at 4:30 p.m. ET streamed on X, and Tesla follows a day later. Bloomberg consensus, cited by Pepperstone, calls for revenue of $12.89 billion, adjusted EBITDA of $6.62 billion and adjusted EPS near $0.15. That would be about 65% growth from the second quarter and SpaceX’s first profitable quarter since its IPO. Analysts expect roughly $6.4 billion from AI and $4.9 billion from Starlink, which is projected to reach 14.3 million consumer subscribers. Capital spending is forecast at $19.6 billion, leaving free cash flow near negative $11.6 billion.
The numbers matter because SpaceX has spent months trying to win over a skeptical market. It priced its record IPO at $135, spiked to $225.64, then sank near $105 in early August. Friday’s close of $146.03 sits about 28% below the June high. The Q2 report beat on revenue at $7.8 billion and put Starlink at 12 million subscribers, but $18.4 billion of capex hurt the stock. Since then SpaceX reached orbit on Starship Flight 14 with 26 Starlink V3 satellites, agreed to buy 800 MHz spectrum for about $8 billion as part of its Starlink Mobile push, and signed a fourth compute hosting deal in four months worth roughly $13 billion a year from December. Management is targeting more than 2 gigawatts of compute by year end and a $100 billion annualized revenue run rate. Evercore ISI, which raised its target to $275, said the quarter may be judged more on those targets than the reported figures
All of this sits under the Tesla merger question. Barclays analyst Dan Levy expects an all stock deal in which SpaceX buys Tesla at a premium, using reference values of $2.1 trillion and $1.5 trillion, and said an announcement would need to come by late October or early November to be voted on at Tesla’s December 6 annual meeting. Barclays estimates Musk would hold about 37% of the combined company and 56% of the votes. Musk said in July that combining companies cannot be discussed on an earnings call, but an investor question asking when SpaceX will merge with Tesla is sitting on SpaceX’s Q&A platform, and Teslarati has tracked how the Roadster demo revived the talk.
If a deal happens, Tuesday’s result would effectively set the price Tesla holders would receive. Their shares would convert into SpaceX stock, along with exposure to a company with a heavy investment on AI, while Tesla itself expects 2026 capex above $25 billion. A strong quarter and calmer spending would make that exchange easier to sell. Another round of heavy capex and a falling stock would make it harder.
News
SpaceX’s Gwynne Shotwell just made a quiet gesture toward Tesla
SpaceX president Gwynne Shotwell quietly followed Tesla on X, and merger watchers noticed right away.
SpaceX President and COO Gwynne Shotwell has started following Tesla’s official account on X, a small change that landed in the middle of a very loud merger conversation. Whole Mars Catalog joked about it on Sunday.
A follow is not an announcement, and neither company has said anything about a deal. What gives the moment weight is the timing. Barclays analyst Dan Levy has told clients that an agreement could come before Tesla’s annual meeting, which must be held by December 6, with SpaceX as the buyer in an all stock deal, as we reported after the Roadster unveiling. Wedbush’s Dan Ives has stuck with a 2027 timeline.
“Shit, I better start following their X account if i’m gonna be helping run the company”
— Whole Mars Catalog (@wholemars) October 18, 2026
Shotwell is the executive most worth watching if the two companies do move closer. When Musk was asked at the All In Summit why Tesla and SpaceX remain separate, Shotwell sat next to him and said SpaceX personnel had already moved into xAI to fill leadership and engineering gaps. The businesses were integrating “faster than I thought,” she said, though “not fully integrated yet.” Her responsibilities have also grown since SpaceX absorbed xAI, and she now oversees operations that include Grok and the company’s AI compute buildout.
The financial links are already there. Tesla’s $2 billion xAI investment turned into a stake of less than one percent in SpaceX, the two share the Terafab chip project in Austin, and Musk exercised his 2018 Tesla options a week after SpaceX began trading, a sequence analysts flagged as giving SpaceX public shares to use in a deal. Musk holds about 20 percent of Tesla and controls 85.1 percent of SpaceX’s voting power, according to our earlier breakdown.
The next test is close at hand. SpaceX reports its second earnings as a public company on Tuesday after the close, and Tesla follows on Wednesday. Musk told analysts in July that “we can’t talk about combining companies and that kind of thing on an earnings call,” so a direct answer is unlikely from either stage. Tesla shareholders can still submit and vote on questions through the Say portal until 4 p.m. EDT on Monday, and the merger is a recurring theme in the queue.
Tesla CEO Elon Musk reminds everyone about Roadster’s true meaning
SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching
SpaceX’s Gwynne Shotwell just made a quiet gesture toward Tesla
SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions
Tesla Roadster: Three configs, one can fly, 0-60 in 0.8 seconds
