OT, but only sort-of.
After the SpaceX talk tonight this whole thing has kind of sunk in.
This is the first time I’ve ever really felt we have a chance at being multi-planet/ leaving the bounds of this earth.
It’s kind of profound. I’m glad to be a part of the “team” sort of. Even if it’s in a distant way.
A major SpaceX (or Boring) update is absolutely on topic in my opinion for several reasons. I've been intending to write this for months because I keep seeing SpaceX stuff described as off topic.
1) Indicator of the engineering results of the Elon Way
If SpaceX is winning big with unique methods, and Tesla is using those same methods, then events of SpaceX success should bump up our estimate of Tesla's probability of future success.
Likewise for Boring Co's probability of success, which is important because of the massive complementary benefits to Tesla and TSLA of building a subterranean network of robotaxi racetracks. Thus, the importance of SpaceX's success is actually amplified because of the implications it has for the budding Tesla-Boring symbiosis.
2) Technology transfer
Many insiders (including the Big Man himself if I remember correctly) have said that Tesla and SpaceX have significant free flow of technology breakthroughs between them. Especially importantly, I have heard they share a lot of materials engineering research resources. SpaceX uses Model 3 motors for actuators. Cybertruck uses SpaceX stainless steel alloy. Etc. Pace of innovation is allegedly the only thing that matters in the long run, and the collaboration with SpaceX is certainly an innovation speed booster. I think this is a major factor in Tesla and SpaceX accomplishing so much innovation on such parsimonious R&D budgets.
3) People - Talent recruitment and engagement
I would bet my bottom dollar that a majority of the Tesla workforce--and potential future workforce--is pretty effing excited about life going multiplanetary. Substantial progress in the Mars endeavor attracts positive attention around the world and increases Elon's credibility as a leader. He's repeatedly said talent is the ultimate limiting factor on Tesla's growth. Therefore, anything that attracts and excites the right people towards Tesla's mission is beneficial.
Additionally, as can be seen in this very forum, Tesla customers, fans and investors are also excited about SpaceX. YouTube data indicates that tens of mIllions of people watched the Inspiration 4 launch for St Jude's hospital and saw the astronauts rolling to the pad in Model Xs, which the announcers made sure to mention every couple minutes. You can't beat that kind of free product exposure.
Tesla dominates largely with their mastery of the art of fostering intrinsic emotional motivation in the workforce. Optimism about the future of humanity and about the transformational power of technology is a fundamental driver of this motivation for the team. It helps get them through the grueling 12-hour workdays. When SpaceX wins, I'd have to imagine the employees at Tesla are celebrating too.
4) Bringing Americans together, strengthening the US economy and improving the USA's global reputation
Being primarily based and headquartered in the USA, being run by a leadership team mostly of Americans (of whom about half voluntarily chose to immigrate here), and having a majority of sales in the American market for at least the next several years, Tesla is heavily dependent on continued overall American success. It is no secret that our country is (once again) in some social turmoil these days and we need inspiring achievements to increase our optimism and unity. I agree with Elon's assessment that this nation is a distillation of the human spirit of adventure and exploration. In recent years, I genuinely have not seen anything uniting Americans and exciting this adventurous spirit within us more than SpaceX launches. This is the country that invented the airplane and developed it with great companies like Hughes, Douglas and Boeing; that took on Werner Von Braun from Nazi Germany to build NASA; that put the first footprints on the Moon. It is no accident that SpaceX was founded here. Furthermore, many Americans deeply desire this nation to be an admired world leader committed to the advancement of the human condition in terms of global freedom, prosperity and peace, and I think the achievements of SpaceX represent the ultimate embodiment of the American dream.
Next, the USA also is second only to China in total fossil fuel consumption and has a populace with an unusually large number of people skeptical of the dangers of this situation. We can't afford to have so many Americans thinking that BEVs, solar power and mega grid batteries are merely a big socialist scam pushed by hippies, communists, and the Globalist Elite. The American people, and by extension, American elected leaders, must get on board with decarbonization if Tesla's mission is to succeed. SpaceX, Starlink and the Launch America joint venture with NASA all help greatly with this.
SpaceX succeeding draws in more American youth towards science and engineering careers in general, much like President Kennedy's great moonshot goal of the 1960s, which was a major factor in the USA's global ascension in the latter half of the 20th century and the eventual fall of USSR-style totalitarianism. This in turn draws more skilled and motivated people into Silicon Valley, SpaceX, and Tesla.
Finally, Tesla's market success in Canada, China, Europe and elsewhere depends partially on how people in these markets view America and American products. Even if built locally, Tesla products are still seen as American and thus this reputation matters. SpaceX is merely one of many factors influencing our nation's global reputation, but it is a highly visible one and will be increasingly so in this decade as they blanket the rural regions of this planet in high-speed affordable broadband internet and send humans to the Moon and Mars with rockets designed and built by Americans and launched from American soil.
5) Elon's stress levels and time availability
When SpaceX is having problems such as the current Raptor manufacturing debacle, Elon's time, focus and mental energy is sapped from being able to help with Tesla matters.
When SpaceX is humming along nicely, Tesla can get more of Elon.
6) The Captain goes down with this ship
How many times have we heard Elon say that Tesla will go bankrupt if and only if he also goes bankrupt? That he was the first one to put in big money and will be the last one out? This is the guy who risked everything in 2008 to pull the company just barely away from the jaws of financial doom.
The more SpaceX is successful at achieving their ambition of Starship launch costs, durability and reuse cycle time, the more SpaceX has cash flow and access to capital. Likewise for commercial success of Starlink. Elon owns the majority of the equity. Thus, the more money SpaceX commands, the more Elon commands, and by extension the more protection and insurance Tesla has from serious extended cash flow doomsday scenarios because he will provide liquidity by borrowing debt collateralized by his SpaceX equity, or by paying out a dividend. By such time that SpaceX is earning $50B+ annual profits, Tesla could financially survive a Great Depression 2.0 without question.
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In conclusion, any TSLA investment thesis ought to have valuation estimates taking into account the miraculous success of SpaceX emerging over time as they smash difficult milestones. If the first successful demonstration of orbital launch of Starship does occur this year, and with a freaking full-flow staged combustion engine no less, a rational valuation for TSLA will increase materially. If the market does not respond as such, I will be increasing my stake.
We choose to go to Mars this decade and do the other things, not because they are easy, but because they are hard. Because that challenge is one we are willing to accept, one we are unwilling to postpone, and one we intend to win.
