At the southernmost tip of Texas, alongside the Gulf of Mexico, a gleaming
stainless steel rocket has been rising from the salt marshes.
At nearly 400ft, the new SpaceX rocket will eventually be taller than the
Saturn V that carried Nasa’s Apollo missions to the moon, and its 33 engines
will deliver twice the thrust. For Elon Musk, SpaceX’s founder, it is meant
to play a key role in one day establishing a human colony on Mars.
But the rocket, dubbed the Starship, could have a far more immediate impact
on a space industry that has already been shaken by Musk’s ambitions. With
the power to carry as much as 100 tons into low orbit around the Earth, his
admirers claim Musk is about to transform the economics of the launch
business.
“It’s game over for the existing launch companies,” says Peter Diamandis, a
US space entrepreneur. “There’s no vehicle out there on the drawing board
that could compete.”
Musk’s space company still has some way to go to live up to the promise,
including winning regulatory clearance to launch Starship from its Texas
site and showing that it can reliably reach space while returning both the
rocket’s stages for reuse — an essential step in reducing launch costs.
Also, many experts question whether a large rocket designed to colonise
another planet can double up as an all-purpose transport for more varied and
mundane tasks closer to Earth. But SpaceX’s success in turning its current
rocket, the Falcon 9, into the main workhorse for reaching space has made
others in the commercial space industry nervous.
“If you’re not careful, SpaceX will be the only game in town,” says Fatih
Ozmen, co-founder of Sierra Nevada Corp, a private US company that has been
contracted by Nasa to fly cargo to the International Space Station. Blue
Origin, Jeff Bezos’ private space company, makes a blunter claim: SpaceX
could end up with “monopolistic control” of US deep space exploration.
Musk’s venture has put itself in a commanding position in the new commercial
space industry with surprising speed. It is only 13 years since it became
the first private company to launch its own rocket into orbit, breaking into
an industry previously dominated by nation states. It has also leapt ahead
of contractors such as Boeing and Lockheed Martin, whose joint venture,
United Launch Alliance, had carried the flag for US space launch — though
using Russian engines.
SpaceX’s ascendancy has been underlined over the past six months by a
striking series of wins.
They include a $2.9bn contract awarded by Nasa to use the Starship to land
its astronauts on the moon as early as 2024. It was the space agency’s
decision to pick only one supplier for this programme, after earlier
indicating it would select two, that brought the warning from Blue Origin.
Nasa officials point out that they have only awarded SpaceX a single
mission, leaving them open to choose other suppliers for future landings.
But Blue Origin claims that adapting its systems to work with the Starship
will force design changes that will lock the agency into a dependence on
SpaceX in the long term.
Musk went on to upstage Bezos a second time late last month. Just weeks
before, the Amazon founder and Sir Richard Branson had each made personal
trips to the edge of space on their company’s respective rockets. The brief
moments they enjoyed in microgravity were eclipsed when SpaceX carried four
passengers more than five times higher for a three-day joyride around the
Earth, making them the first all-civilian crew to reach space.
SpaceX also announced the first 500,000 orders for its Starlink broadband
network, making it the first in a new generation of broadband communications
companies operating from a constellation of satellites in low orbit, around
500km above the earth.
And last week, Nasa said two astronauts who had been scheduled to fly on a
Boeing spacecraft would be switched to SpaceX’s spaceship instead. The
company that defined an earlier era of aerospace has hit too many technical
obstacles to carry astronauts on its first commercially developed spaceship,
putting it well behind what until recently was just a scrappy start-up.
Rocket science
At the heart of SpaceX’s spate of successes is the Falcon 9, which has
brought down the cost of reaching space and become a springboard both for
the company’s wider business and Musk’s ultimate goal of reaching Mars.
“In terms of performance, cost and reliability, it really is the most
successful rocket ever built,” says Diamandis.
SpaceX’s share of the global launch market, excluding China, climbed above
50 per cent for the first time in the first half of 2021, according to
BryceTech, a space research and consultancy firm. And while China launched
nearly as many rockets as SpaceX in that period, the US company lifted
nearly three times as much weight into space.
The tactics that turned the Falcon 9 into the era’s most widely used rocket
are now being applied to the Starship. They echo many of the things that
also account for the breakout success of Musk’s electric car company, Tesla.
Foremost has been the success of Musk and SpaceX’s chief operating officer,
Gwynne Shotwell, at pushing disruptive technologies into mainstream
production. In the case of the Falcon 9, that meant using 3D-printing for
its engines, the most complex part of the rocket, and reusing the main
booster, for future launches.
To master new techniques like these, SpaceX worked on almost every detail of
designing and creating its own rockets rather than relying on suppliers,
with Musk himself acting as a chief engineer in the early days to goad his
team on. SpaceX also took on the full development risk itself, rather than
being able to fall back on guaranteed payments from Nasa, forcing much
greater financial discipline. As a result, the space agency estimates that
the $400m SpaceX spent to develop the Falcon 9 rocket was 10 times lower
than the likely cost of a rocket built under traditional government
contracting.
Another advantage that SpaceX has shared with Tesla has been its ready
access to cheap capital, thanks to the high valuation investors have been
prepared to put on its business. Musk has raised more than $6.5bn for the
company in the private market, lifting its valuation to $74bn earlier this
year. Share sales by some of its investors have since valued it at more than
$100bn, according to CNBC.
Most rivals have to generate cash from their existing businesses to fund new
ventures, says Steve Collar, chief executive of satellite company SES. The
ease with which SpaceX has been able to tap investors has opened the way for
it to take much bigger risks, he adds.
One result of the ample cash, along with the company’s access to its own
launch service, has been Starlink, which has beaten would-be rivals like
OneWeb and Amazon’s Kuiper to launch its broadband service.
Racing to be first has involved technical gambles with its satellite
designs, and Starlink is already on its third generation of technology. But
even if it ends up writing off billions of dollars’ worth of satellites on
the way to perfecting its constellation, the setback would not hurt the
company the way it would a rival without access to such cheap capital, says
Collar.
Rivals complain that as a result, SpaceX risks squeezing out other companies
that haven’t yet achieved its scale and don’t enjoy its funding advantages.
Blue Origin, which has lodged a formal complaint over Nasa’s moon landing
award, said losing the contract would rob it of one important market for its
New Glenn rocket, which has already cost $2.5bn to develop and has yet to
leave the launch pad.
SpaceX’s vertically integrated manufacturing approach will also deprive
other US suppliers of business, weakening the wider industrial base the
country had built up to support its long-term ambitions in space, Amazon and
others warn.
However, SpaceX’s customers — including those in government — do not seem to
share the misgivings.
“Before SpaceX we only really had the ULA, so we’re in a better position
than we were,” says Phil McAlister, director of Nasa’s commercial space
flight division.
Diamandis goes further: “The US government is lucky to have a company like
SpaceX based here,” he says, since its efficiencies feed through directly
into the US space programme. And companies that compete with SpaceX in some
markets seem more than happy to use its launch services, despite supporting
a rival.
“When they came into the [satellite] industry, that freaked people out a bit
— but I don’t think it needs to,” says Collar of SES, which is still happy
to rely heavily on SpaceX rockets.
Soaring demand
The warnings that a vertically-integrated rocket company could weaken an
important supply chain also gets short shrift in many parts of the emerging
commercial space industry. Most new rocket companies have adopted a similar
model. Jory Bell, a partner at Playground Global, a venture capital firm
that has invested in the space industry, also points out that the
traditional supply chain has served more of a political purpose than a
commercial one. Having suppliers spread across the country has enabled a
larger number of politicians to claim success by winning a share of
government space contracts.
The most telling argument against the risk of monopoly, though, is that the
plunging price of reaching space has brought a boom in demand that is far
more than any one company can manage. Much of it is coming from new
communications networks aiming to launch constellations comprised of
thousands of satellites, as well as more governments eager to reach space
for national defence or to take part in deeper space exploration.
“This is a market that will be supply-constrained for many years,” says
Edison Yu, an analyst at Deutsche Bank. The space launch market will be
worth $37.5bn a year by the end of the decade, he predicted — five times as
much in 2021.
That should leave more than enough room for at least one big rival to SpaceX
to emerge, according to many in the industry. And even if some existing
launch companies struggle, held back by older technologies, uncompetitive
manufacturing approaches or cultures built on government contracting, a new
generation of disruptive rocket companies is rapidly emerging.
Along with Bezos’ own Blue Origin, they include Relativity Space, a company
led by former SpaceX executives, which has raised $1.3bn and plans to make
entire rockets using 3D printing, not just the engines.
“We don’t have to beat SpaceX — we just have to beat everyone else,” says
Bell at Playground Global, one of Relativity’s financial backers. A
generation of engineers and space entrepreneurs trained by SpaceX is helping
to build an entire industry based on its ideas, he added.
Satellites and beyond
Starship’s first orbital flight, when it comes, will still reverberate
through the space industry. Its sheer scale will change the economics of
getting to orbit, setting a new pricing benchmark against which others are
likely to be judged.
The Falcon 9 has already brought the price for customers willing to share a
launch with others down to $5,000 per kilogramme, around a third of what it
was before, says Yu. That price could fall to $1,000, and perhaps even as
low as $500, once Starship becomes fully operational, he predicts.
How well adapted it will be for the satellite launches that make up the
bread and butter of today’s space industry is another matter. Since Starship
will not be able to deposit its large payloads into multiple orbits, the
satellites it carries will need their own propulsion to manoeuvre into
place, making them considerably more expensive, says Yu.
“You need to get a lot of mass to orbit for some things — and you need speed
and agility and precision for other things,” says Dan Hart, chief executive
of Virgin Orbit, which reached orbit for the first time this year after
launching a rocket from under the wing of a Boeing 747.
That is likely to give the Starship “a capability that’s more suited to Mars
than commercial satellites”, says Collar at SES.
Some also question how committed SpaceX will be in the coming years to
battle for market share in the routine satellite launch business. Falcon 9
was always intended as a stepping stone, to develop the cash flow and the
technology needed to carry the company much deeper into space.
Musk should be taken seriously when he muses about turning away from the
Falcon 9 and redirecting all of SpaceX’s effort to the Starship and the goal
of reaching Mars, according to supporters like Diamandis. “He kills his old
products and burns the ship,” he says — one reason he has often succeeded at
ambitious new undertakings.
With a lock on today’s launch market, it is probably still far too soon to
write the epitaph for the Falcon 9. But when the Starship finally takes to
the heavens, it is likely to draw a clear dividing line between one era of
space exploration and the next.