Some of these videos seem to missing some sections. I'm getting it from 49:50 in this video:
My impression is that Elon was expecting someone/government/entity to step up after the last IAC to show some potential to back the company in its ambitions. I think they received less of a response on the monetary side than they hoped for. So now they've learned a few things and are falling back to a "we're going to pay for this whole thing ourselves" plan. I think they've also opened themselves up to the idea that some entities want to do something on the Moon. If so, then SpaceX needs to be willing to take them there and get some serious profits for doing so. The US government has shown a desire to go back to the Moon and maybe NASA has mentioned this to Elon. So if SpaceX creates a super heavy lifter that can do more than colonize Mars then that system can test some of the primary technologies that ITS was based around.
Just look at the improvements done to Falcon 9 over the years. If you extrapolate similar improvements to Raptor and the support systems then you'd have one heck of a game changing rocket with all the abilities of such a superior system thoroughly tested. With a well tested system like that, Elon could realistically generate a rocket system that could be used to colonize Mars and not have it be too fanciful.