My guess is it’s just another example of his habit of trying to use one of his companies to manufacture demand for another of his companies’ products.
Specifically: Starship makes no economic sense. There simply isn’t any pre-existing demand for the kind of heavy lift capacity and cadence that Starship is designed to deliver. Nor is there anyone who isn’t currently launching heavy payloads to LEO but the only thing holding them back is that they need weekly launches because their use case demands a whole lot of heavy stuff in space on a tight schedule and that’s an all-or-nothing thing for them.
So nobody else has a reason to buy 50 Starship launches per year. And the planned Starlink satellites are already mostly in orbit. So what do you do? Just sell Starship to xAI, the same way he fixed Cybertruck’s demand problem by selling heaps of them to SpaceX.
There might be a lot of induced demand from starship. I’m sure defense is a big one.
No, but really, where will it come from?
If (as seems to be the case) nobody can identify a specific source of latent demand that is large enough to soak up the two order of magnitude increase in the supply of heavy lift launch capacity that Elon wants to deliver, then that strongly suggests that SpaceX does not actually have a business plan for Starship. Or at least, not a business plan that’s been thought through as clearly as a $5 billion (and counting) investment would warrant.
“Defense” is not nearly specific enough to count as an answer. What kind of defense application, specifically, do you have in mind, and why does it need specifically this kind of heavy lift capacity to be viable?