Investor's Corner
Tesla Model 3 production hits 5k/week, 7k including Model S & Model X
Tesla has managed to scale Model 3 production to 5,000 vehicles per week. As noted by Elon Musk in an email to employees, Tesla did not only produce 5,000 Model 3 in seven days; it was also able to maintain the pace of 2,000 vehicles per week for the Model S and Model X.
The signs were already there in the days leading up to the end of the second quarter. This weekend alone, a series of images from workers at Fremont were uploaded on social media, suggesting that the company had hit its all-elusive production goal for the compact electric car. Among the most prominent was a “Model 3 5k Club” banner with signatures of workers from the Fremont factory. Casual snapshots from the facility’s grounds and assembly line, as well as a vehicle labeled “5000th” on its windshield, also suggested that the company had produced its 5,000th Model 3 for the week.
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- [Credit: Tesla Daily/Twitter]
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- [Credit: Tesla Daily/Twitter]
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- [Credit: Tesla Daily/Twitter]
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- [Credit: The Tesla Life/Twitter]
While the images coming out from Fremont incited speculations, they were eventually confirmed by a leaked email from Elon Musk himself. A partial copy of Musk’s email was provided to Teslarati by an anonymous insider.
“We did it!! What an incredible job by an amazing team. Couldn’t be more proud to work with you. It’s an honor. The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible.
“Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked. Not only did we factory gate over 5,000 Model 3’s, but we also achieved the S & X production target for a combined 7,000 vehicle week!”
The 5,000/week target for the Model 3 has proven to be elusive for the electric car and energy company. During the vehicle’s unveiling last year, Elon Musk estimated that Tesla could attain the milestone by the end of 2017. When the company failed to hit this goal, Tesla opted to move the deadline to the second quarter of 2018, placing a target of 2,500 Model 3 per week at the end of Q1 2018.
The first Model 3 Performance Dual Motor rolls off the assembly line. [Credit: Elon Musk/Twitter]
Tesla did not meet this goal, though it did manage to manufacture more than 2,000 vehicles during the final week of March. During the 2018 Annual Shareholder Meeting, however, Elon Musk announced that Tesla was on track to hitting its 5,000/week target by the end of Q2 2018. Musk’s reassurance ultimately helped push Tesla stock towards a meteoric rise, at one point even coming close to its all-time high.
Tesla’s Model 3 production milestone did not come easy for the Elon Musk-led company. During the second quarter, the company had to shut down the vehicle’s manufacturing twice to make way for upgrades on the production line. New robots and other machinery were also flown in from Europe to Gigafactory 1 in order to help address bottlenecks in the production of the vehicles’ battery packs.
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In an unprecedented move this June, Tesla also erected a massive sprung structure on the grounds of the Fremont factory to house another assembly line for the Model 3. The move, deemed “insanity” by critics, ultimately allowed the company to augment its capability to manufacture the compact electric car.
According to a Reuters report, Tesla is now targeting a pace equivalent to 6,000 Model 3 per week within the next month. As noted by Elon Musk in his email to employees, the recently attained milestone might have very well established Tesla as a formidable car maker.
“I think we just became a real car company,” Musk wrote.
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.
Elon Musk
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
Elon Musk again denies a Tesla China split as new SpaceX merger speculation resurfaces quickly.
Elon Musk restated that Tesla has no plans to separate its China business from the rest of the company, responding to a new round of merger speculation from ARK Invest.
On the firm’s “Brainstorm” podcast, Cathie Wood’s team, including chief futurist Brett Winton and research director Nick Grous, argued a Tesla and SpaceX combination remains likely, with an announcement possible before the end of the year even if the deal itself would not close that quickly. Winton called Tesla’s Shanghai operations a “small ish wrinkle” for a merger rather than a real obstacle, since SpaceX’s national security work with the U.S. government sits uneasily next to Tesla’s manufacturing base in China.
Musk pushed back on the framing directly. “China is awesome. I strongly encourage people to visit,” he wrote on X. He also repeated language he first used in late July, when the Wall Street Journal reported that Tesla executives had been told to prepare for a possible spinoff, sale, or closure of the China business ahead of a SpaceX tie up. Musk called that report “absurdly fake news” at the time, adding that a separation had “never even come up in a discussion ever,” a line he echoed again this week.
The repeated denial has not settled the underlying question, because Shanghai’s role in Tesla’s business is exactly what makes a merger complicated. Gigafactory Shanghai still ships more than half of Tesla’s global deliveries and functions as the company’s main export hub for Europe and Asia. Teslarati previously reported on Musk’s initial denial, and the merger conversation itself has been building since SpaceX’s IPO gave it public shares to use as acquisition currency.
Wedbush’s Dan Ives has pegged the odds of a Tesla SpaceX merger at 80 to 90 percent by early 2027, and ARK’s prediction of a year end announcement adds another data point to that timeline, even as Musk keeps rejecting the specific mechanics reporters have described. Neither position rules out the other. Musk can deny a China spinoff was ever discussed while analysts still expect some form of combination to move forward, since ARK and Ives are both describing convergence at the corporate level, not necessarily the internal restructuring the Journal described in July.
For now, Tesla’s China business remains intact, and Musk’s comments this week make clear he has no interest in publicly walking that position back, no matter how often the merger question resurfaces.
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Tesla has one big financial question to answer for investors: Morgan Stanley
SpaceX AI investment gamble will make it a big winner, firm says
