Has nothing to do with traditional or not. There is an amount of fixed cost in your production chain and there is an amount of variable cost towards recovery and reflight. Unless you know these you can't determine the flight rate required to make reuse cheaper than building a new core but the flight rate will definitely be higher than one flight a year.
If it's like the shuttle and is ONLY a reusable launch vehicle (RLV) the answer is different than if it's like F9R and can also be expendable.
The shuttle style vehicle isn't produced in quantity, it's designed to be reused many times and it's got a unit cost MUCH higher than comparable launch capacity on expendable rockets.
It has to fly enough to offset that difference when all reuse and fixed costs are accounted for in order to amortize it's cost. The issue only has meaning relative to what launch would have cost otherwise.
The F9R is profitable with a single use at current prices so it doesn't need to fly more than once to amortize it's cost. Recovery and reuse doesn't matter. if SpaceX wanted to lower launch prices for reuse they could, but it would cannibalize some business. Since SpaceX is currently the low cost provider they would be undercutting themselves.
The marginal cost for reflying a F9R could be extremely low (gas and go) even an order of magnitude lower than for expending a new rocket and still not make the case for lowering the customer price of a launch at all. SpaceX might take advantage of lower marginal costs with internal projects like the Internet constellation without changing prices.
So I guess you're saying that the F9, being an ELV, just needs to fly once to cover its costs.Just like every other ELV.
Depends on the elasticity of demand,
Quote from: pippin on 06/29/2015 10:39 amHas nothing to do with traditional or not. There is an amount of fixed cost in your production chain and there is an amount of variable cost towards recovery and reflight. Unless you know these you can't determine the flight rate required to make reuse cheaper than building a new core but the flight rate will definitely be higher than one flight a year.There is also the implicit assumption that the company that builds the RLV will operate the entire fleet.So imagine the cost implications of Boeing running an airline and only building aircraft for them and only getting revue from their own flights. [EDIT versus the number of aircraft of any Boeing design they actually sell to all air lines ]
Quote from: SoulWager on 07/06/2015 05:29 amDepends on the elasticity of demand,That's the brilliant economics in the SpaceX reuse concept. It works at any point of the elasticity curve. It can lower prices if more flights occur, it is very competetive if not.
Quote from: guckyfan on 07/06/2015 06:05 amQuote from: SoulWager on 07/06/2015 05:29 amDepends on the elasticity of demand,That's the brilliant economics in the SpaceX reuse concept. It works at any point of the elasticity curve. It can lower prices if more flights occur, it is very competetive if not.This is wrong. Their fixed costs don't go away. They lower the price and then can no longer pay their staff PLUS they have to pay for whatever maintenance the recovery requires.Nothing gained from the recovered core if demand isn't high enough to cover the fixed cost.
But for the moment, even with re-usability, they probably need to keep prices up to pay for Mars, but conversely, drop them enough to encourage more customers. Standard business balancing act.
But they presumably have wiggle room to reduce the costs before they hit the 'staff' costs issues, and with the EELV versions, they have no recovery costs.
The price to reuse can't be higher than the expendable cost (or reuse is an economic folly)
and their sell price can't be lower than their fixed costs
However, they are apparently profitable at the expendable end of the spectrum
so as long as reuse costs are less than new build costs then increasing reuse should lead to lower costs.
Who says they are profitable? SpaceX doesn't, SpaceX says they are cash-flow-positive which is something entirely different. I would be very, very surprised if they were profitable.
As an ELV they are very competetive right now.
They will be more competetive when they can refly
But unlike a vehicle like SpaceShuttle or Skylon which have skyhigh fixed cost they can compete at any number of flights, high or low.
There are statements that indicate they need about 15 launches a year to be profitable once NASA payments for development are gone.
Quote from: guckyfan on 07/06/2015 01:03 pmThere are statements that indicate they need about 15 launches a year to be profitable once NASA payments for development are gone.Source? Never, really, never, rely on hearsay for financial information. There's so much misunderstanding going on and it's so easy to make people misunderstand things you are saying. What does "need" in your example mean? To cover their fixed costs as they are now? To not have to shut down the whole company? To generate an operating profit? To create a return on the capital investment going into them? To fund their growth plans? Massive difference between these figures.
I assume he or the investors do not care much about return on investment.
As many of that staff is involved in development it would include the ongoing development efforts for the next generation rocket, Raptor and MCT. Probably not at present level for the satellite network. And not for building the factory and launch pad that requires. That is a major effort which will need additional funding beyond the 1 Billion $ Google put into the company recently.
We'll have to see.Seriously though. The brightest minds (at the time) engineered the STS. It offered lower cost and a higher flight rate.
The program did not deliver on its reusability promise and that affected its flight rate which then affected its cost.
Numerous programs, studies, and companies have produced viable reusable vehicles on paper and with prototypes, but they often fail on practicality.
It seems (with regards to SpaceX's F9R) the first question we should be asking is how much refurbishment (cost wise) after each flight F9R's first stage needs for reuse. Then SpaceX figures out in reality what it actually costs.
Not sure if what I said just made sense, but anyone that has worked in or studied the LV industry should know that studies and paper rockets are often "optimistic" and don't follow through with their "promises".
Any speculation based on these unproven studies and paper rockets becomes that more unpredictable and inaccurate.
Quote from: john smith 19 on 07/02/2015 07:45 amSo I guess you're saying that the F9, being an ELV, just needs to fly once to cover its costs.Just like every other ELV.Yes, just with the bonus that its first stage can fly again.
I can't imagine those because they would completely depend on how competent Boeing is at managing an airline, something we all don't know. There are no implicit cost implications of vertical integration, only business model implications.
Quote from: guckyfan on 07/06/2015 06:05 amQuote from: SoulWager on 07/06/2015 05:29 amDepends on the elasticity of demand,That's the brilliant economics in the SpaceX reuse concept. It works at any point of the elasticity curve. It can lower prices if more flights occur, it is very competetive if not.In which case why do you offer reuse when you're already the lowest cost provider in the first place?
That's the paradox of companies operating a builder/operator model for an RLV, or in SX's case a semi reusable LV.
What if (in addition to running the airline) Boeing planes could operate only from Boeing owned airports?
I will repeat no other transport mode operates in this way.
If anything it's the "IBM Mainframe" model of the 1905's and 1960's.
In which case why do you offer reuse when you're already the lowest cost provider in the first place?
I would suggest that as long as an LV architecture starts with a TSTO (or nSTO) ELV that is the way it will always operate due to the deep coupling of payload, vehicle and launch pad.
Well, if it meant Boeing could rake in all the subsidies going into airport construction around the world that alone would be a massive push to their business models. Airports are money sinks and the cost is not carried by the airlines. Which, again, aren't profitable on average and who are _also_ massively subsidized in many places around the world.
No, the big advantage of separating the two business models of building and operating airliners is of course that you have competition on both sides so that you can wipe out the more incompetent ones and only leave the better ones as has happened numerous times instead of having all the airline operations go down with the inefficient airliner manufacturer or the other way around.
Yea, and no transport sector is profitable on it's own, they all get their infrastructure subsidized. All of them.
QuoteIf anything it's the "IBM Mainframe" model of the 1905's and 1960's. Or the Google- and Facebook model of today.
Which kind of suggest the people who run airliner builders really well don't make good airline operators, and vice versa.
Actually that seems to work with all forms of transport except the launcher/launch services business.
Although I think Google and Facebook are much smarter at not looking like a monopoly.
The trouble is the in launch is either tied one type of LV (no such thing as a "universal pad") or range costs are sized on a "per vehicle" basis, so a small LV gets no benefit in lower costs for being small.
The question of frequency shouldn't come into it unless the storage costs (or other time-based costs) for a non-flying vehicle are a significant cost driver (which may be the case, not a professional reusable rocket accountant).
Sorry, but your cost model assumes a fixed cost structure with only variable costs and no changes to cost structure with utilization, this is completely unrealistic and does costing totally backwards.
Start with assumptions about manufacturing costs, capex, capacity, material cost, variable costs per launch and so on and build on that.
Your model is something you might be able to use to deduct SpaceX's cost structures if you _knew_ all these other figures (cost per launch, overall profit, both of the for a certain number of flights per year, utilization, investment,...) which would then allow you to build on that but since you know none of them except for some vaguely defined gross figures you can't use it to deduct anything.
What exactly are your goals here? The model simply says "with these assumptions this is the result."
If you don't like the numbers change them yourself.
If you think the model structure is wrong what would you rather it be?
It's good enough to show (roughly) how prices could change with reuse
Let me suggest you provide a better structure for answering the question in the thread title.
Controlling stake will not help Elon because investors will demand their own terms for investing, something that's totally common for privately funded companies. They will be much better protected than Musk.Dividends don't make sense in such a setup. Investors are not in for a cash flow but for a stake in the company and dividends would just reduce the cash available for the company they own anyway. You usually only start paying dividends when you generate so much cash that you can't use all of it for your growth anymore, SpaceX is far from there.But SpaceX, as I understand, has also taken up debt which will have to pay interest.All of this (except interest) isn't immediately important in the cost structure because investors only get paid in case of success, important aspects are ongoing investments they have to do (which require additional capital), personnel, machinery, real estate etc. a lot of which will be leased but nonetheless fixed. And then on the variable side contractors, materials and commodities sourced from outside suppliers. Non-commodities sourced from elsewhere fall somewhere in between, depending on the contract because you usually can't just buy more on a short-term basis and you usually have to guarantee certain quantities.
I don't think you understand the assumptions behind your model.You say your model was about what reuse does to price and profit but in fact it does nothing like that because it does in no way take SpaceX' cost structure into account. The results of your model are just random figures due to that.
C'mon, I wrote a _really_ long post about that.
I can't because I don't have the necessary data. But there's no value in creating random figures based on totally wrong calculation models instead and call them calculations. Could just as well roll some dice.Price and "profit" are irrelevant input values. You need to understand costs and costs structures to know whether reuse will actually reduce or increase said costs.
The comes understanding how reuse affects value for the customer (lower due to higher risk, lower flexibility? Higher due to lower risk? Same because it's just an insured flight? We don't know that, yet, neither does SpaceX or the customers) which in turn affects prices.When you know that you'll know whether profits increase or not.
Since you seem to know my spreadsheet better than I do why don't you tell me what the assumptions are?
your cost model assumes a fixed cost structure with only variable costs and no changes to cost structure with utilization
Again this sheet is all around the F9 and it's possible 1st stage reuse. You seem to want it to tell you wheather it will generate enough money to keep SX alive.
Quote from: john smith 19 on 07/07/2015 12:29 pmSince you seem to know my spreadsheet better than I do why don't you tell me what the assumptions are?I didQuote from: pippinyour cost model assumes a fixed cost structure with only variable costs and no changes to cost structure with utilizationWhat that means is: you assume that if SpaceX flies, say, 15 times and now has to build one less 1st stage because they can reuse it, they will save 1/15th (times cost share of Stage 1) of the production cost.But that's not the case. Depending on their contracts and their cost structure they will likely only save a small part of that (something like 25%-30% would be my guess, but it's really just that, a guess), they might not save anything at all.
We know there is a big discontinuity in SpaceX's costs at around 40 cores per year.
Above that Hawthorne is not large enough for core production. Setting up a second manufacturing site with room to grow is going to be very expensive. This alone makes the 'model' invalid.
A second point is that no model no matter how good will give useful results when fed wrong input data. We have no insight into SpaceX costs, encouraging people to put their own numbers in only produces more wrong results.
Not surprising, given we saw that 8 cores a year as about the right level for ULA's Decataur facility.
Not true. ULA launch rate is constrained by pads and not core production.
How is it constrained by pads?
Quote from: ClaytonBirchenough on 07/07/2015 07:24 pmHow is it constrained by pads?Atlas V is constrained by VIF/MLP turn around.
Or 8 flights a year is not the maximum, and you were just pointing out the limiting factor on Atlas V launches would be pad turn around not core production at the Decautar facility?
Quote from: MikeAtkinson on 07/07/2015 02:45 pmWe know there is a big discontinuity in SpaceX's costs at around 40 cores per year. I did not know that. Not surprising, given we saw that 8 cores a year as about the right level for ULA's Decataur facility.QuoteAbove that Hawthorne is not large enough for core production. Setting up a second manufacturing site with room to grow is going to be very expensive. This alone makes the 'model' invalid.No, it tells people either SX had better get their reuse plan sorted out before they try to launch 40cores in a year or they are going to need a shedload of money to set up a new factory. QuoteA second point is that no model no matter how good will give useful results when fed wrong input data. We have no insight into SpaceX costs, encouraging people to put their own numbers in only produces more wrong results.It's already shown me that it's very doubtful that SX will get savings some people are expecting.
No, it tells people either SX had better get their reuse plan sorted out before they try to launch 40cores in a year or they are going to need a shedload of money to set up a new factory.
It's already shown me that it's very doubtful that SX will get savings some people are expecting.
Quote from: john smith 19 on 07/07/2015 07:10 pmNot surprising, given we saw that 8 cores a year as about the right level for ULA's Decataur facility.Not true. ULA launch rate is constrained by pads and not core production.
The Decautar facility was originally designed for 40 cores a year.
Well, I believe _that_ is true, too. I don't have a good model but given how much fixed costs they have to have with their high vertical integration it's highly unlikely that they save more than 10-20% per flight and it's definitely not in the range of "orders of magnitude cheaper".
So it's back to square one: like for the Shuttle, everything depends on the flight rate...
Yes, but my figure for 8 was what ULA told the USAF they'd like per year for their block buy.