SpaceX Falcon Heavy Discussion (Thread 6)

[Coastal Ron]

Around 2022, if BFR is flying, SpaceX might be selling F9 and FH flights at real knock down prices.

That one point I don't agree with. They may not want to force the change to BFR but they also don't want to delay it. They have no reason to make Falcon cheap once they have the capacity to do things with BFR.

I would think that NOT lowering the price of Falcon 9/H would actually accelerate the transition to the BFR, since customers would not have a monetary incentive to stay with Falcon 9/H but would have a business case for expanded capabilities by switching to the BFR.

[meekGee]

It all depends on the actual schedules of BFS and NG...

In some scenarios, if all goes really well, a lot of F9/FH's potential will be "thrown away".

If NG is late, SpaceX can do pretty much anything it wants.

If BFS is late and NG is on time, having a large fleet of already paid-for rockets will be the only way to compete with BOs infinite supply of operating funds.

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ABCD: Always Be Counting Down

[speedevil]

If BFS is late and NG is on time, having a large fleet of already paid-for rockets will be the only way to compete with BOs infinite supply of operating funds.

S2 reuse could be an enormously powerful iron in the fire if it can be gotten working in that case.

The $6M/launch number mentioned by Elon in passing as '2-3 years out' for wholly reusable F9 is basically identical to BFS launch cost, and for a large fraction of launches, that would be quite adequate.
For the remainder, on-orbit refueling would be a major capacity booster, or payload swapping from a launched-with-heavy payload to a launched empty stage.

If everything breaks right, the impact of BFS being delayed might be quite small. (barring Mars)
Until, at least, payloads grow a lot.

[meekGee]

If BFS is late and NG is on time, having a large fleet of already paid-for rockets will be the only way to compete with BOs infinite supply of operating funds.

S2 reuse could be an enormously powerful iron in the fire if it can be gotten working in that case.

The $6M/launch number mentioned by Elon in passing as '2-3 years out' for wholly reusable F9 is basically identical to BFS launch cost, and for a large fraction of launches, that would be quite adequate.
For the remainder, on-orbit refueling would be a major capacity booster, or payload swapping from a launched-with-heavy payload to a launched empty stage.

If everything breaks right, the impact of BFS being delayed might be quite small. (barring Mars)
Until, at least, payloads grow a lot.

I think it allows them to take it slowly (heh in SpaceX rates...) and get BFS right. 

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ABCD: Always Be Counting Down

[speedevil]

If everything breaks right, the impact of BFS being delayed might be quite small. (barring Mars)

BFS fail would of course also impact lunar tourism in more than a dragon round the moon sense.

[TripleSeven]

If BFS is late and NG is on time, having a large fleet of already paid-for rockets will be the only way to compete with BOs infinite supply of operating funds.

S2 reuse could be an enormously powerful iron in the fire if it can be gotten working in that case.

The $6M/launch number mentioned by Elon in passing as '2-3 years out' for wholly reusable F9 is basically identical to BFS launch cost, and for a large fraction of launches, that would be quite adequate.
For the remainder, on-orbit refueling would be a major capacity booster, or payload swapping from a launched-with-heavy payload to a launched empty stage.

If everything breaks right, the impact of BFS being delayed might be quite small. (barring Mars)
Until, at least, payloads grow a lot.

I dont know (I have my doubts) that Musk can get F9 down to 6 million a launch but even if he could do that, why would he do that without someone or something else driving him to lower cost?

One never lowers price of a product unless 1) the product "cost" allow it (OK say it does) 2) the operational cost of the total business which depends on it can still be covered, 3) it repays your R&D coffers and 4) it repays your total investments or investors?

one can always tell when  company is on the brink of going out of business...that is when they start lowering cost just to bring in enough money to cover short term cost, and ignore long term ones thinking that somehow the world improves and they can keep going

Musk is about to entire (or is in) something that so far as I can tell he has not done in a long time...developing a product BFR/BFS with no real established customer or "money sink" and it is one that is going to be enormously expensive to develop

If he could get the cost of a reflight down to say 30 million dollars...why would he drop the price, unless a competitor was forcing him to do that?  He needs that 30 million profit because well its not really profit..

this is what gives him the edge over say Blue introducing the New Glenn.  first its an unproven launch vehicle and second unless NG has better operating cost (and I would be surprised if that happens just off the bat) OR has some performance spec that makes it better (ie it carries payloads F9 cannot and thats the mass of the payload) then the one that is going to have to have an "introductory" price is the NG.

now if both their cost and performance are equal, well that is thenice thing about price wars. 
 

[speedevil]

If BFS is late and NG is on time, having a large fleet of already paid-for rockets will be the only way to compete with BOs infinite supply of operating funds.

S2 reuse could be an enormously powerful iron in the fire if it can be gotten working in that case.

The $6M/launch number mentioned by Elon in passing as '2-3 years out' for wholly reusable F9 is basically identical to BFS launch cost, and for a large fraction of launches, that would be quite adequate.
For the remainder, on-orbit refueling would be a major capacity booster, or payload swapping from a launched-with-heavy payload to a launched empty stage.

If everything breaks right, the impact of BFS being delayed might be quite small. (barring Mars)
Until, at least, payloads grow a lot.

I dont know (I have my doubts) that Musk can get F9 down to 6 million a launch but even if he could do that, why would he do that without someone or something else driving him to lower cost?

Because cost is not price.

[alexterrell]

One never lowers price of a product unless 1) the product "cost" allow it (OK say it does) 2) the operational cost of the total business which depends on it can still be covered, 3) it repays your R&D coffers and 4) it repays your total investments or investors?
 

Cheap sell off of out of date stock fulfills all those 4 criteria.

My earlier point was that, if BFR is flying, and SpaceX has a few dozen F9 cores lying around, would SpaceX:
a: Scrap the cores, or donate them to museums and high schools
b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

[speedevil]

b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

If customers are not pressing to launch on FH, this may make no sense, as it assumes that the cost to spacex to launch them does not exceed the cost to launch the payload on BFR.

This may not - if BFR is working well - be true, and it may be cheaper to scrap them than to ever use them.

[TripleSeven]

One never lowers price of a product unless 1) the product "cost" allow it (OK say it does) 2) the operational cost of the total business which depends on it can still be covered, 3) it repays your R&D coffers and 4) it repays your total investments or investors?
 

Cheap sell off of out of date stock fulfills all those 4 criteria.

My earlier point was that, if BFR is flying, and SpaceX has a few dozen F9 cores lying around, would SpaceX:
a: Scrap the cores, or donate them to museums and high schools
b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

I suspect that the instant 1) they cannot be sold due to a lowerprice product, that 2) hopefully has a price below what the old product is...the old product goes away   I dont expect that for at least 10 years

[clongton]

One never lowers price of a product unless 1) the product "cost" allow it (OK say it does) 2) the operational cost of the total business which depends on it can still be covered, 3) it repays your R&D coffers and 4) it repays your total investments or investors?
 

Cheap sell off of out of date stock fulfills all those 4 criteria.

My earlier point was that, if BFR is flying, and SpaceX has a few dozen F9 cores lying around, would SpaceX:
a: Scrap the cores, or donate them to museums and high schools
b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

I suspect that the instant 1) they cannot be sold due to a lowerprice product, that 2) hopefully has a price below what the old product is...the old product goes away   I dont expect that for at least 10 years

I would proudly display one on my front lawn.

[su27k]

Cheap sell off of out of date stock fulfills all those 4 criteria.

My earlier point was that, if BFR is flying, and SpaceX has a few dozen F9 cores lying around, would SpaceX:
a: Scrap the cores, or donate them to museums and high schools
b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

All else being equal, I think they'll go with option a. Isn't this already sort of happened? I think there's a 6th F1 core which was found via satellite imaging, it's in the scrapyard until recently, it's now part of the exhibit in Hawthorne factory...

Oh, there's also the F9R-dev2 core, which never got to fly, not sure where that is right now.

[docmordrid]

I'm sure many will go to the rocket garden at the upcoming KSC facility. Next to the Jetson's tower

[gongora]

This thread is really straying from FH.  Maybe ya'll should make a separate thread on what to do with Falcons if BFR someday replaces them.

[hkultala]

One never lowers price of a product unless 1) the product "cost" allow it (OK say it does) 2) the operational cost of the total business which depends on it can still be covered, 3) it repays your R&D coffers and 4) it repays your total investments or investors?
 

Cheap sell off of out of date stock fulfills all those 4 criteria.

My earlier point was that, if BFR is flying, and SpaceX has a few dozen F9 cores lying around, would SpaceX:
a: Scrap the cores, or donate them to museums and high schools
b: Use them, at a price people are prepared to pay (=, approx, BFR launch rates)

You still don't understand how market economy works.

As long as there is no competitor offering cheaper launches, SpaceX has no need to lower the prices.

When BFR starts launching at fully reusable mode, spaceX can just price it to very close to F9/FH pricing and get bigger profits from BRF launches than F9/FH launches.

[UKobserver]

I have a feeling that people are arguing at cross-purposes here, ie some of you are discussing what will happen to F9/H cores once SpaceX no longer has an internal use for them (undercut on price by BFR), and others are discussing how/when that will come about. Allow me to add my own thoughts on the latter;

I think the key is that the publicly stated reason for SpaceX existing, above all else, is to colonise Mars. Reducing the PRICE of access to space for the general public/industry/government, to encourage the commercialisation of space, is only a secondary goal of the company, and is by definition made possible if you achieve colonisation of Mars, because Elon has clearly stated that this would only be possible if (internal) launch costs are reduced by a factor of 100/1000 or more.

It is really important that we separate (internal) cost TO SpaceX from (external) price of launch charged BY SpaceX.

It is also really important to note that by definition they become possible at the same time (i.e SpaceX could choose to reduce their external prices as soon as they achieve internal cost savings), but that SpaceX will almost certainly decouple them and delay the lowering of their external prices, even as their internal costs are lowered, in order to reap higher profits that they desperately need to pay for their Mars project.

Remember that the biggest problem that Elon/SpaceX still hadn't solved at IAC 2016, and still haven't today, was how to raise the huge sums to pay for this project.

With Starlink still several years away from being a revenue generator, as opposed to an additional massive cost itself, their only options for funding the Mars project are either a) seeking outside investors, or b) maximising profit from their current operations (ie money they can reinvest after paying wages and the costs of actually building the rockets and launching the payloads that are their lifeblood).

So while you are seeing them leave no stone unturned as they try to reduce their INTERNAL costs (manufacturing efficiencies, streamlined launch flows, S1 re-use, minimal refurb costs, intent to re-use fairings, research into recovering S2, and designing the BFR/BFS architecture for absolute lowest possible cost of operation, bear in mind that they can't afford to pass on all of those savings to their customers without sabotaging their own Mars aspirations.

Achieving their primary goal (successful colonisation) may require that they deliberately delay their secondary goal (of price reductions to the wider industry) in order that they can make and reinvest higher profits.

I do still expect (and we are seeing) some external price reductions, because Elon is a man of conscience (not greedy) and as an act of good faith to customers, but he has already tried to start explaining why they wont initially be able to pass all of those internal savings on.

So even if fairing and S2 re-use are achieved and become the norm, and even if that allows the internal cost of a F9 launch (which must include a proportion of the wage bill, overheads and launch costs) to sink as low as $6m, I would envisage that the PRICE charged to external customers will remain in the $30-40m range for some time to come, until Starlink is generating revenue and their reliance on that enhanced profit from external launches goes away. Once they are no longer dependent on that enhanced profit I would imagine that they will revert back to the typical 20-25% profit that it seems Elon (as a person of conscience) thinks is the most it is right and fair for a company to seek to charge customers. This is the ball park figure they seem to aim for at Tesla, with each of their products.

Remember that they have imminently got to (internally) cover the cost (still significant even with S1 re-use) of a huge number of dedicated Starlink launches (including the cost of the satellites themselves) before that constellation can start to generate enough revenue to a) first cover the ongoing costs of further building out the constellation, and then b) contribute meaningfully to the Mars project funding.

Finally I would like to stress how differently SpaceX (and we in turn) must treat calculation of BFR/BFS external pricing, due to a) the much higher capital outlay required for construction of each vehicle, which mainly comes from it's sheer size, and b) that they wont be able to simply recoup that vehicle construction cost from the first external customer that uses each particular vehicle, as they have been able with F9.

With F9 they have been able to pay for the entire vehicle construction cost within the price they charge that first customer, and even make a profit on top of that. That's a great position to be in, as you then only need to ensure that refurb costs of a used S1 are less than the contruction cost of a new one in order to reap enhanced profits on any subsequent reflights.

However with the INTERNAL cost to SpaceX of constructing each BFR/BFS vehicle forecast by them to be several hundred million dollars apiece (and might never get below $100m even after years of experience and production efficiencies found), they are going to have to adopt a business model whereby they internally cover most of that upfront cost of construction of each vehicle, and then charge a bit of it to each customer that flies on the vehicle over the course of it's usable lifetime (it will be rated for a maximum number of flights based on their engineering analysis, much like the fatigue life of an airplane).

This amortising of an initial construction/purchase cost of an item is what we all do as businesses and individuals as a matter of course in life, but hasn't previously been relevant in the rocket industry, where the vehicle was previously always destroyed on it's very first flight. The other reason that it wasn't relevant is because the customer was willing to pay for that entire cost of construction of each vehicle in return for just one flight. But that changes with BFR/BFS. It changes first and foremost because the cost to construct each vehicle will (at least initially) make it more expensive than any other vehicle on the market, so SpaceX will have no option but to amortise if they are to get any business at all. But they will also be starting to change expectations and the norm, so once customers see that a vehicle has a usable life of many flights, they will start to demand that they only be asked to pay for a proportion of it's construction. Obviously with F9 already being the cheapest on the market, and with no other competitor able to offer a re-usable vehicle, SpaceX can currently afford to politely ignore any such customer requests, but they wont be able to with BFR.

So what price will SpaceX charge external customers for BFR/BFS flights initially? Well it definitely wont be $6m for a very long time. Even if that's all it costs them internally to refurbish each vehicle between flight and refill it with fuel, they will still want to charge a much higher price to claw back the massive cost of construction as quickly as possible, and thereby enable them to afford to build their next one and slowly create the fleet of vehicles they need to make Mars colonisation realistic in our lifetimes. Consider how huge an INTERNAL construction cost number that will be, and how likely it is that they will fail in their endeavour if they are forced to cover all of that cost themselves. They need external customers to pay much or all of that tab, which means that the PRICES they charge external customers for commercial launch must remain quite high for some time to come. There will obviously be some in-depth internal calculations going on as to whether they can stimulate the market to their ultimate funding advantage by a certain amount of price lowering, but beyond a certain point they just end up pushing the date by which they can achieve Mars colonisation further and further out into the future.

So don't expect either F9, FH or BFR/BFS external (customer) launch prices to get stupidly low anytime in the near future, SpaceX can't afford to turn away that extra profit until they replace that revenue with something else.

SpaceX want to build up their Mars fleet as quickly as they can, and the only number that matters for that (other than how cheaply they can get Starlink deployed) is how much profit they can get from each external payload launch. So if they calculate that they can bank more profit internally (for the exact same price charged to the customer) by launching a particular payload on a F9 rather than a BFR/BFS, then you can bet your bottom dollar that they will do so in a heartbeat and use the additional profit to fund the construction costs (which don't then need to be amortised) of additional BFR/BFS vehicles, and reserve usage of them for colonisation missions, which F9 and FH aren't capable of. Bear in mind that BFR/BFS will also have a given fatigue life of it's own, and SpaceX will be loathe to use that up launching small F9 size payloads if they can make as much or more profit making use of the remaining fatigue life on their F9/FH fleet.

So SpaceX may try to get as many flights as their engineers say they can out of every F9/FH booster they have before they allow each one to be retired. It really comes down to the data they accrue on ongoing refurb and operations costs for each vehicle and which is lower, F9/FH or BFR/BFS, plus a calculation of how many flights you can get out of each vehicle before it has to be retired, and therefore what using up one of these flights (from it's total permitted fatigue life) costs you internally as a company ie. the initial vehicle construction cost divided by the number of flights it will be allowed to make over it's lifetime. If using up a F9 flight costs you less then it makes sense to do that while you have them available. What PRICE you choose to charge an external customer can obviously be a completely different number, based on what the market will bear and your conscience allows.

[Joffan]

With Starlink still several years away from being a revenue generator, as opposed to an additional massive cost itself, their only options for funding the Mars project are either a) seeking outside investors, or b) maximising profit from their current operations (ie money they can reinvest after paying wages and the costs of actually building the rockets and launching the payloads that are their lifeblood).

:

Remember that they have imminently got to (internally) cover the cost (still significant even with S1 re-use) of a huge number of dedicated Starlink launches (including the cost of the satellites themselves) before that constellation can start to generate enough revenue to a) first cover the ongoing costs of further building out the constellation, and then b) contribute meaningfully to the Mars project funding.

I'm not by any means an expert on this, but my understanding is that Starlink can and should pay for launches, at a market or near-market rate, to the launch business. And they can do that from loaned money which doesn't have to come from the rest of SpaceX.

Consider Starlink as a separate company (or a separately accounted division if you will). Then Starlink will have a business plan that shows them increasing the value of the company/division at the cost of the building and launching the satellites. That is a perfectly good use of startup debt that they would fully expect to service from operating revenue once they have a sufficient constellation, but in the mean time the value of Starlink owning satellites in orbit is sufficient to make the debt attractive to lenders.

I also note Matt Desch's remarks that space is a great place to store satellites even before you bring them into service. :-)

However with the INTERNAL cost to SpaceX of constructing each BFR/BFS vehicle forecast by them to be several hundred million dollars apiece (and might never get below $100m even after years of experience and production efficiencies found), they are going to have to adopt a business model whereby they internally cover most of that upfront cost of construction of each vehicle, and then charge a bit of it to each customer that flies on the vehicle over the course of it's usable lifetime (it will be rated for a maximum number of flights based on their engineering analysis, much like the fatigue life of an airplane).

Acknowledging that this is new to rocketry, this is nevertheless a similar case to the above. When they build a BFR, SpaceX are constructing an asset that increases the value of the company, not an operating consumable that must be covered in the price of service. This again is a perfectly appropriate use of debt if necessary.

[IntoTheVoid]

...because the cost to construct each vehicle will (at least initially) make it more expensive than any other vehicle on the market...

Depending on timing, I'd venture that an expendable BFS may be cheaper than a Delta IV Heavy

... If using up a F9 flight costs you less, then ...

Given that there is talk of F9/H reentry tests, not a reusable S2, if an F9 or FH flight costs less than a BFS flight due to the amortization then BFR/BFS has failed to meet a large portion of its goals.

[Spudley]

With Starlink still several years away from being a revenue generator, as opposed to an additional massive cost itself, their only options for funding the Mars project are either a) seeking outside investors, or b) maximising profit from their current operations (ie money they can reinvest after paying wages and the costs of actually building the rockets and launching the payloads that are their lifeblood).

:

Remember that they have imminently got to (internally) cover the cost (still significant even with S1 re-use) of a huge number of dedicated Starlink launches (including the cost of the satellites themselves) before that constellation can start to generate enough revenue to a) first cover the ongoing costs of further building out the constellation, and then b) contribute meaningfully to the Mars project funding.

I'm not by any means an expert on this, but my understanding is that Starlink can and should pay for launches, at a market or near-market rate, to the launch business. And they can do that from loaned money which doesn't have to come from the rest of SpaceX.

Consider Starlink as a separate company (or a separately accounted division if you will). Then Starlink will have a business plan that shows them increasing the value of the company/division at the cost of the building and launching the satellites. That is a perfectly good use of startup debt that they would fully expect to service from operating revenue once they have a sufficient constellation, but in the mean time the value of Starlink owning satellites in orbit is sufficient to make the debt attractive to lenders.

I never understood why Musk didn't launch Starlink as a separate company like he did with the Boring Company. He could have generated loads of hype and funding for it, probably a lot more than he has by keeping it internal to SpaceX.

(yes, sorry I know this is going off topic)

[tyrred]

...because the cost to construct each vehicle will (at least initially) make it more expensive than any other vehicle on the market...

Depending on timing, I'd venture that an expendable BFS may be cheaper than a Delta IV Heavy

... If using up a F9 flight costs you less, then ...

Given that there is talk of F9/H reentry tests, not a reusable S2, if an F9 or FH flight costs less than a BFS flight due to the amortization then BFR/BFS has failed to meet a large portion of its goals.

Let's not put the cart before the horse, though.  FH has flown once.  Looking forward to the next flight....