Investor's Corner
Wired Takes a Tesla Factory Tour with Diarmuid O’Connell
Wired got a tour of the Tesla factory recently in the company of Diarmuid O’Connell, vice president of business development. The tour turned into a discussion of the core values that are the foundation of everything Tesla does.
Wired UK editor Michael Rundle recounts his recent tour of the Tesla factory with Vice President of Business Development, Diarmuid O’Connell. What started off as a jaunt through the factory soon became a deep dive into the philosophy that underpins everything Tesla stands for.
O’Connell was the 50th person hired by Tesla and the first who was not a trained engineer. He is a firm believer in the gospel according to Musk, but he is far from the only one. As reported by Wired UK, one company staffer was overheard during the tour saying the company’s mission is to discomfort “petrodictators.”
O’Connell starts off by telling Rundle that Tesla is not in the business of making automobiles. “Tesla is in the business of inspiring competition. The more electric vehicles the better.” Then he adds, “It would be a fulfillment of our mission if the biggest manufacturer in the US put a mass-market EV on the road. We’re hopeful that they will and frankly that everyone else does.”
He suggests that Tesla is bent on securing the future of “sustainable transport” as a whole, not just making a profit. If it can establish that EVs are viable, more cars, more charging infrastructure, more battery research and development, more greening of the electrical greed, and a reduced dependence on foreign oil will follow, Tesla will make money. But if Tesla loses its bet on the future, not only will it fail, but the environment and the world will lose as well.
For those who criticize the company for being slow to get its products to market, O’Connell has an answer. “If we had been able to produce [the Model S] out of the box 12 years ago, we would have done so. We had no brand, no capital, no manufacturing base and no developed technology,” he says. “This is the classic technology introduction model that has led to the mass market for everything from air travel to cell phones. … This is how you do it if you’re starting from zero.”
Tesla relies too much on government subsidies and the sale of emissions credits, some critics charge. O’Connell has an answer for that too. The oil and gas industries receive “$2 trillion in global subsidies” every year, he points out, but he saves his most severe criticism for “the $25 billion R&D tax credit that Exxon Mobile and some of the other big American gasoline petroleum producers still enjoy 120 years into the development of that technology.” Why doesn’t the press talk about that, he wonders?
Asked about how autonomous cars and ride sharing may affect the environment going forward, he says, “I think what’s important is the emissions profile of any car, whether it’s shared or owned. Big or small. We’re trying to move as quickly as possible where the emissions profile of a vehicle is zero, and the emissions profile of the original electron going into the vehicle is as close to zero as possible.”
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As Tesla expands its markets to other countries, it will source as many components as possible from local sources. That includes building more Gigafactories nearby, whether in Europe, China, Japan or any other country. Doing so is only common sense, he argues.
With all the buzz about the Chevy Bolt, new competition from Faraday Future, Atieva, NextEV, BYD and BAIC, O’Connell takes a “What have you done for me lately?” attitude. “The path of getting there — that’s the question. And the promise of doing something two- and three- and four years hence do not impress me,” O’Connell says. “People doing stuff now? That impresses me.”
Finally, O’Connell gets down the bottom line, the real nitty gritty, the foundation Tesla is built on. “[Y]ou also have to put on the table how are we as a society thinking about larger issues, and moving ourselves towards taking other than strictly market oriented actions, to deliver public health benefits,” he says. “Maybe survival [depends] on how you think about carbon intensity and the logical progression of too much carbon in our atmosphere.”
There a lot of people who think a social conscience is not the proper role of business. It’s not the capitalist model they teach in business school. Some would go so far as to say Tesla is foolish for letting such considerations as respect for the earth color its business plans and detract from the quest for profits.
Maybe so, but if you listen to Diarmuid O’Connell, who obviously gets his convictions from Elon Musk himself, someday in the not too distant future, we will find out who is foolish…..and who are really the fools.
Photo credits: Tesla
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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.
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