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Tesla’s long road to maturity teaches a hard lesson for electric vehicle startups

Credit: Tesla Greater China/Twitter

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Elon Musk may be prone to incredibly optimistic release estimates for Tesla’s products, but there is one aspect of the company that the CEO has been very realistic on — the challenges involved in mass production. Over the years, Elon Musk has highlighted this point. In the Q2 2021 earnings call alone, Musk reiterated these challenges when describing just how difficult it was to ramp the production of Tesla’s custom 4680 cells. “Limited production is easy, prototype production is easy but high-volume production is hard. There are a number of challenges in transitioning from sort of small-scale production to large volume production,” Musk said.

Tesla is now a mature electric vehicle company, but it has not always been that way. Before its eight consecutive profitable quarters, Tesla was fighting an uphill battle, coming close to ruin more than once. Today, Tesla is a strong automaker, weathering the issues brought about by the chip crisis admirably and securing $1 billion quarterly profit for the first time in Q2 2021. That’s not bad at all for an 18-year-old company competing in one of the most unforgiving segments in the market. 

Tesla Model Y body shop in Gigafactory Texas. (Credit: Tesla)

One thing that may be forgotten today is just how long the road was for Tesla before it was able to secure the stable ground that it stands on today. This long, arduous road, paved with several trips through “production hell,” would likely be faced by other electric car makers as well. This would likely be especially true for companies like Lucid, which entered the stock market even before it delivered its first car to consumers. 

There is a trend now among electric vehicle makers. Unlike Tesla, which went public after delivering the original Roadster to customers, other EV makers have gone public through special purpose acquisition companies (SPACs). This was the case for controversial hydrogen truck maker Nikola, which saw its stock climb rapidly before plummeting down as issues about its founder Trevor Milton emerged. Nikola is not alone in the SPAC trend, with companies like Lucid and Fisker also going public through SPACs. 

As noted in a Bloomberg report, a good number of these EV makers have seen quite a bit of volatility. Nikola’s rapid rise and fall aside, companies like Faraday Future have exhibited volatility not long after they debuted on the Nasdaq. Faraday saw gains in its inaugural day of trading, for example, but the company saw a 23% drop over the next two sessions. 

(Credit: Lucid Motors/Instagram)

It’s almost expected now that new EV makers that enter the stock market through a SPAC would likely see notable gains and some steep losses. And now that they are publicly traded, management decisions and strategies would likely result in their respective stocks seeing some movement.

This was experienced by Lucid Motors. The SPAC that took Lucid public earlier this year saw dips in its stock after the EV maker postponed the initial production of its Air sedan, which CEO Peter Rawlinson explained was due to the pandemic. What is quite interesting is that Lucid is already one of the more prepared EV makers that are looking to follow Tesla into the mainstream auto segment, since it has a ready product and management that seems to have things in order.

Other EV makers that have gone public through SPACs, such as Nikola, Canoo, and Lordstown Motors, ended up experiencing management turmoil even before they went public. This means that many electric car companies, particularly those who may be entering the stock market through a SPAC, may very well have to learn a hard lesson about how difficult it is to transition from being a maker of EV prototypes to a mass manufacturer of electric cars that can stand beside Tesla in the mainstream auto market. 

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Don’t hesitate to contact us with news tips. Just send a message to tips@teslarati.com to give us a heads up. 

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

SpaceX showcases exactly how it plans to catch Starship next month

SpaceX played a new Starship Flight 15 simulation showing the ship caught by tower chopsticks.

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Concept video of SpaceX’s Flight 15 Starship held in the launch tower’s chopstick arms after a catch. (Credit: SpaceX)
Concept video of SpaceX’s Flight 15 Starship held in the launch tower’s chopstick arms after a catch. (Credit: SpaceX)

SpaceX gave its clearest look yet at how it plans to catch a Starship upper stage, playing a roughly 80 second animation of the maneuver during its third quarter earnings webcast on Tuesday. The clip ran under an “Up Next: Ship Catch” banner moments after Elon Musk confirmed that Flight 15, expected next month, will try to catch both the Super Heavy booster and the ship with the launch tower.

The animation opens at ground level, looking up through the launch mount at a tower with its chopstick arms spread wide. It then cuts to the ship gliding back through the atmosphere in its horizontal belly flop position, with its forward and aft flaps steering the descent. A wide shot from the Starbase shoreline follows, where the ship is a small dot in the sky before it swings vertical and drops toward the launch towers. The final shots show the ship sliding down past the top of the tower, a close view of the hardware along its side meeting the arms, and the vehicle hanging in the chopsticks.

 

Musk called the catch the step that closes Starship’s reuse loop. “If we succeed, it will be the first time that an orbital launch vehicle has been fully recovered,” he said. He put the odds of success on the first attempt at “more likely than not,” and said SpaceX has “a steady stream of Starship flight attempts through the end of this year” if Flight 15 falls short.

The sequence mirrors work SpaceX has already done with real hardware. In September, Ship 42, the vehicle assigned to Flight 15, was lifted by the Pad 2 chopsticks into a simulated catch position, where crews cycled the arms and connected the ship quick disconnect arm while it hung from the tower. NASASpaceflight has since reported that SpaceX removed Ship 42’s engines before its static fire and sent it back for another cryogenic test.

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Gwynne Shotwell covered the regulatory side on the same call. After what she called “significant constructive engagement with the FAA,” SpaceX expects the Flight 15 license “to include return to launch site and tower catch for both stages.” Bringing the ship home means reentering toward land instead of the open ocean, which Musk said in February would only happen once the chance of the ship breaking up over land was very low, after two perfect soft landings at sea.

SpaceX has caught Super Heavy with the tower three times, on Flights 5, 7 and 8, but the ship returns from orbit at far higher speed and has never been caught. Flight 14 on September 28 was the first Starship to reach orbit, and it deployed 26 Starlink V3 satellites before splashing down, a mission SpaceX counted as its first revenue flight in the Q3 results it reported Tuesday.

The timing lines up with what Musk told the crowd at Giga Texas earlier this month, when he said Flight 15 would probably launch a little before Thanksgiving and that Flight 16 could refly both stages. On Tuesday’s call he went further, saying Starship should fly weekly at some point in the first half of 2027 and twice weekly or more by the end of next year as SpaceX works toward landing a rocket and launching it again with no refurbishment.

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Elon Musk just confirmed the Tesla and SpaceX merger step everyone was waiting for

Tesla and SpaceX formed special committees to weigh a merger, and Elon Musk supports it.

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Elon Musk confirmed Tuesday that Tesla and SpaceX have each formed special committees of independent directors to study a possible merger, the first formal step toward combining the two companies after months of speculation.

Musk made the disclosure during SpaceX’s third quarter earnings call. “Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders,” he said. “Because I’m a conflicted party, I can’t actually be in the discussions of the special committees.” He described the setup as “an odd kabuki dance where two groups of people are talking and I can’t be in the conversation.”

Musk did not hide where he stands. “Do I think it would be a good idea? Yes,” he said, pointing to shared work on super intelligence software, chip design, the Terafab facility in Austin, robotics, mass to orbit and connectivity. “I do think there’s a lot of merit to combining the companies as we are pretty much in the super intelligence singularity.”

He also tried to cool expectations. The committees have not agreed on terms for any transaction, and Musk said assuming a merger is a certainty “would be overstating it.” Any deal would go to shareholders, and on the Tesla side it would need approval from 50 percent of all outstanding shares, not just the shares that are voted. Musk called that “quite a high hurdle.”

That bar has tripped Tesla up before. The company’s 2025 attempt to declassify its board won support from only 39.4 percent of outstanding shares and failed. Musk’s own voting stake sits near 20 percent after he exercised his 2018 options in June, so a deal would need broad backing from institutions and a retail base that often leaves votes uncast.

Timing is another open question. Tesla filed its proxy statement Monday for its December 3 annual meeting, and the ballot has only three items: director elections for Musk, Robyn Denholm and JB Straubel, a say on pay vote and auditor ratification. Barclays analyst Dan Levy had argued that an announcement would need to land by late October or early November to make the annual meeting, as Teslarati noted in its SpaceX earnings preview. With no terms agreed, any vote would likely require its own special meeting.

Elon Musk gives his most telling Tesla-SpaceX merger conversation yet

Musk has been edging toward this for weeks. At the All-In Summit in September, he asked “who can imagine what action one might take when there’s so much close collaboration,” Teslarati reported. Last week’s Roadster unveil, built around SpaceX derived cold gas thrusters, pushed the talk further. The two companies already share the Terafab chip project, and Tesla holds a small SpaceX stake that came from its earlier investment in xAI.

SpaceX brought strong numbers to the conversation. It reported Q3 revenue of $14.58 billion, up 161 percent year over year, with its Super Intelligence segment now its largest at $7.56 billion. A higher SpaceX valuation would shape any exchange ratio Tesla holders are offered.

Tesla reports its own third quarter results after the close on Wednesday, October 21. Investors had already ranked merger timing among the top retail questions for SpaceX’s call, and the committees will almost certainly come up again on Tesla’s.

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Investor's Corner

SpaceX delivers blockbuster Q3 results as Super Intelligence segment booms

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Credit: SpaceX

SpaceX reported its third-quarter 2026 financial results on October 20, posting the company’s first solidly profitable quarter since going public earlier in the year under the ticker $SPCX.

Revenue reached $14.58 billion, up 161 percent year-over-year from $5.6 billion, and well ahead of consensus estimates in the $12.7 to $12.9 billion range. The results highlight a rapid shift in SpaceX’s center of gravity toward artificial intelligence/super intelligence, while Starlink and traditional space operations continue to show robust progress.

Here are the key financial results for the quarter:

  • Revenue of $14.58 billion (+161% YoY)
  • Adjusted EBITDA of $8.8 billion (+306% YoY)
  • GAAP net income of $4.4 billion (versus a $1.1 billion net loss in the prior-year quarter)
  • Adjusted EPS of approximately $0.35 (versus roughly $0.13–0.16 expected)
  • Income from operations of $2.8 billion

The AI/SI segment generated $7.56 billion in revenue, an 830 percent year-over-year increase, making it the company’s largest segment for the first time. Growth was primarily driven by the activation of major cloud services agreements, the integration of Cursor (acquired earlier in 2026), and rising usage of Grok models and the newly introduced Grok Bot personal agent.

SI adjusted EBITDA reached $5 billion, and nameplate compute capacity stood at 1.7 GW at quarter-end, up from 1.4 GW in June and 0.6 GW a year earlier. Capital expenditures totaled $19.6 billion, with the majority allocated to AI infrastructure, including continued expansion of the Colossus facilities.

The Connectivity segment, which primarily surrounds Starlink, produced $5.25 billion in revenue, a 69 percent year-over-year and 22 percent sequentially. These are pleasant results to see and expected, considering how many airlines have adopted Starlink over the past year.

Starlink consumer subscribers reached 13.6 million, an 89 percent increase from the prior year, and a sequential gain of 1.6 million. Consumer average revenue per user improved to $69. Meanwhile, Enterprise and Government revenue also grew strongly, and Starlink is now installed on more than 3,800 aircraft, making internet more accessible and better performing than previous options.

The Space segment also performed well and contributed $1.77 billion in revenue, up 6 percent year-over-year and 84 percent sequentially. A major milestone was the successful first revenue-generating Starship mission (Flight 14), which deployed 26 V3 Starlink satellites. Those satellites added roughly 10 times the downlink capacity of a typical Falcon 9 Starlink launch.

SpaceX completed 12 customer launches during the quarter, including NASA’s Nancy Grace Roman Space Telescope mission, and continued to grow its backlog of crewed, national security, and commercial flights.

CFO commentary noted that the combination of launch leadership, recurring Starlink revenue, and rapid SI expansion is producing meaningful operating leverage.

The company ended the quarter with roughly $90 billion in cash and marketable securities, providing substantial resources for ongoing investment while targeting an investment-grade balance sheet. Sequential revenue nearly doubled from the $7.81 billion reported in the second quarter, illustrating the pace of the AI-driven acceleration. Things are looking strong for SpaceX.

What’s incredibly striking is the fact that SI has grown to be larger than the rest of the company in such a short amount of time. CEO Elon Musk said on the earnings call that Grok Bot is the “fastest-growing product I’ve ever seen,” so it seems that it could be a true keystone of SpaceXSI over the next few years.

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