Investor's Corner
Tesla Model 3 headlights gain the IIHS’ elusive ‘Good’ rating after design update
Earlier this year, the Insurance Institute for Highway Safety (IIHS), a nonprofit organization dedicated to reducing the number of accidents and injuries on the road, awarded the Tesla Model 3’s headlights with an “Acceptable” rating. While the IIHS’ tests gave a “Superior” rating for the vehicle’s front crash avoidance features then, the safety organization only listed the vehicle’s headlights as “Acceptable,” due to glaring issues from the Model 3’s low beams.
In a recent Twitter announcement, though, the IIHS noted that the Tesla Model 3 now earns a “Good” rating for its standard LED reflector headlights. The IIHS stated that the vehicle’s improved, updated score reflects the headlights of Model 3 that were produced after June 2018, a time when Tesla was starting to hit its stride with the production of the electric sedan.
The IIHS’ updated results could be seen in the Model 3’s page on the nonprofit’s website. So far, though, the IIHS has not released the Model 3’s official full safety ratings, which include metrics such as “Roof Strength” and “LATCH ease of use.”
That said, the Model 3’s “Good” rating for its headlights says a lot about Tesla’s focus on designing an incredibly safe electric car. The IIHS, after all, utilizes one of the strictest metrics for testing headlights. The headlights of the Tesla Model S, for one, were given a “Poor” rating by the IIHS. The Chevy Bolt EV’s headlights, which are incredibly bright, were also rated as “Poor.”
The IIHS evaluates headlights based on the lamps’ reach as the vehicle travels on straight and curved lines. Low beams are measured on five approaches — straightaways, left and right curves on an 800-foot radius, and sharp left and right curves on a 500-foot radius. The IIHS weighs low beams more heavily than high beams since they are used more often when driving. During the Model 3’s initial tests earlier this year, the vehicle’s low beams exhibited a 15.2% glare during straightways, preventing the Model 3 from earning the IIHS’ “Good” rating. As noted by the IIHS, this particular issue was addressed in Model 3 produced after Q2 2018.
The updated score of the Model 3’s headlights highlights Tesla’s unique tendency to update its vehicles as soon as improvements are available. This was pointed out by Elon Musk on Twitter, when he stated that when it comes to Tesla’s electric cars, there is “no such thing as a full refresh” since all vehicles are “partially upgraded every month as soon as a new subsystem is ready for production.” This practice was also mentioned by Tesla President of Automotive Jerome Guillen in an interview with CNBC, when he noted that the company’s technology is always in a process of evolution.
The 2018 Tesla Model 3 now earns a good rating for its standard LED reflector headlights for models built after June 2018. Previous models earn an acceptable rating. https://t.co/EUWXFLBnkm pic.twitter.com/TOctSTGaAl
— IIHS (@IIHS_autosafety) December 26, 2018
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In a statement to CNET, IIHS senior vice president for communications Russ Rader explained the organization’s focus on headlights as a metric for vehicle safety. Rader also noted that headlights must be seen not just as a decorative component of a vehicle. Instead, they should be perceived as safety equipment.
“When one vehicle’s low beams only illuminate the right side of a straightaway for 148 feet, and another vehicle’s low beams allow a driver to see more than twice as far, there’s a problem. IIHS has incorporated headlight performance into our Top Safety Pick awards. We’re already seeing manufacturers make improvements, especially tightening up aim at the factory. Headlights shouldn’t just be about what looks cool. They’re important safety equipment. When they perform well, they can help drivers spot trouble sooner and avoid a crash.”
Apart from the IIHS, the Model 3 is also gaining accolades from other safety organizations. The National Highway Traffic Safety Administration (NHTSA), for one, has given the Model 3 a flawless 5-Star Safety Rating. The organization tested the Model 3 on frontal crash, side crash, and rollover safety; and in all categories and subcategories, the electric car displayed a level of industry-leading driver and passenger safety. As highlighted by Tesla in a following blog post, the scores of the Model 3 from the NHTSA’s tests place the electric car as the vehicle with the “lowest probability of injury” among all cars tested by the NHTSA to date.
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.
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 CEO Elon Musk says flying cars are coming
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
