SpaceX Will Fail

The company is overstretched and poorly managed.

Photo by SpaceX on Unsplash

Icarus may have had wax wings, but imagine if he was also a racist neo-Nazi with more money than God. Well, that is precisely what is happening with Musk and SpaceX. Their Falcon 9 and Falcon Heavy rockets were designed by an ex-NASA team who already proved the technology worked in the ’90s with their DC-X prototype. As such, these rockets work and actually make sense. But, of course, Musk wasn’t satisfied with this proof and so took the wheel himself to create Starship and Starlink — two “revolutionary” technologies that would thrust humans into an interplanetary future, right? Well, no. You see, rather than flying too close to the sun, Musk has claimed that it’s a shiny pot of gold and flown directly towards its orbit, failing to notice that his wings may have already melted away. SpaceX is set to fail; the question isn’t “if” but “when.” Let me explain.

It is not hyperbole to state that the future of SpaceX entirely hinges on Starship. It didn’t have to be this way, but Musk has chosen to bet the entire company’s future on the project. Why? Well, Starship is SpaceX’s only viable route to increasing profits, and SpaceX needs these massive profits to repay the huge amount of investment dumped into Starship.

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Starship & Profitability

Okay, so why is Starship SpaceX’s only route to increasing profitability?

Well, the space launch market is actually tiny. There are only about 150 international customers, all wanting less than a single launch per year. What’s more, most of these customers want to launch small payloads to specific orbits. On top of that, the launch costs only account for a fraction of their total mission costs, so the launch price isn’t a big deal. This is why SpaceX’s smaller and more expensive Falcon 9 is far more popular than their Falcon Heavy, despite its larger payload capacity and much cheaper cost per kilogram to orbit.

SpaceX and its Falcon rockets already account for over 84% of the US’s space launches and a massive 60% globally. SpaceX dominates this market, which is an issue for them as the market isn’t growing. In fact, in some ways, it is shrinking as satellites are being designed to last longer, and projects like the ISS are being wound down.

For SpaceX to show growth, demand needs to be artificially boosted. Enter Starlink.

By now, you know that Starlink is a satellite internet company. But, unlike other satellite internet companies, it has been optimised to increase launch demand. Take Eutelsat. In Europe, it has similar speeds to Starlink yet has only launched a tenth of the number of satellites, as it uses both LEO (Low Earth Orbit) and geostationary satellites to offer a more comprehensive cover than Starlink’s purely LEO strategy.

These small LEO satellites only last a few years, meaning SpaceX has to constantly top up their numbers. As such, 66% of SpaceX launches last year were for Starlink! So, it is working; SpaceX can show growth on the books, as its own service is its primary customer.

All sounds good, right? Well, no. Starlink’s economics only work with Starship and its promised $100 per kilogram to LEO, not Falcon 9 and its roughly $2,700 per kilogram to LEO. As such, investigators have found that launch costs are too expensive for Starlink to be profitable and that SpaceX was cooking the books to hide this fact.

In other words, without a fully operational Starship, most of SpaceX’s launches aren’t profitable, and the company can’t grow its profit. This is a significant problem because SpaceX has some serious bills to pay.