Impact of SpaceX rideshare on small sat launchers market

[DeimosDream]

The proof is in the pudding. Where is this demand, given that Electron is sitting idle with a wide open manifest?

I'm curious... what is your threshold for 'idle'? 'Any Spare Capacity for Growth'? I could understand dismissing Launcher One as idle, but Electron was the 5th on the global leaderboard for most launches last year, and will have a busier schedule this year.

At the moment empirical evidence suggests there is sufficient demand willing to pray a hefty dedicated premium to support at least one micro-launcher. The challenge for a sLV operator then is to have a business plan that works with 5-15 flights/year... and not the pipe dream Astra sold investors.

As an addendum to the excellent discussion of Tom Choi's quote above on the previous page: Either Launcher One an overpriced under-performing rocket or it is evidence that while the market will grudging pay for Electron there isn't demand for a dissimilar micro-launch alternative, especially not within the same region. I'll agree the market doesn't want more options, its just dreaming of a lower priced equally reliable option.

So for marginal profitability (revenue exceeding cost of revenue):
Electron - Profitable this year, 2023.
Terran-1 - 2024. Different market segment than Electron, and 3D printing a new Terran-1 on the same equipment as Terran-R will keep overhead down, which is important with a market segment that's about to become as crowded as 700-1400kg SSO with Alpha and RS1 also entering the market in the US alone.
Launcher One - RIP. Virgin Orbit is doing a valiant effort trying to sell internationally, but they haven't gotten any momentum and will soon loose the 'launch from European soil' market to Orbex Prime / Skyrora XL.
Astra v4 - RIP. They pivoted away from v3 too late. I'm not even confident the company will remain solvent long enough to get to orbit.

Alpha/RS1 - Along with Terran-1 the market for 600kg+ to SSO is about to go from undeserved to really really crowded. I'm skeptical that the market is big enough for two, much less all three. I don't think either will be profitable until Terran-1 or the other exists the business, and Terran-1 will probably stick around as long as Terran-R stays in development/operation. Also the market will get even worse if/when Starship lowers the rideshare rate on payloads in this size category.

[RedLineTrain]

Jeff Foust has a good wrap-up of this discussion in The Space Review.  I think Tom Choi is making a specific argument.  Electron is not big enough to be relevant for him.  He wants more competitors in the 500kg to orbit range.

“I would highly encourage people who are thinking about launch vehicles or people who are already making launch systems to continue to develop their systems,” he said, including vehicles with payload capacities as small as 500 kilograms.

https://www.thespacereview.com/article/4531/1

[greybeardengineer]

Jeff Foust has a good wrap-up of this discussion in The Space Review.  I think Tom Choi is making a specific argument.  Electron is not big enough to be relevant for him.  He wants more competitors in the 500kg to orbit range.

“I would highly encourage people who are thinking about launch vehicles or people who are already making launch systems to continue to develop their systems,” he said, including vehicles with payload capacities as small as 500 kilograms.

https://www.thespacereview.com/article/4531/1

Here is the key statement from that article.

During a side meeting at last August’s Small Satellite Conference in Utah, Jarrod McLachlan, director of rideshare sales at SpaceX, said all of its Transporter missions in 2023—the company launches three or four a year—were already fully booked and “getting pretty full” for 2024. “We’ve really seen a strong market demand.”

[RedLineTrain]

I think M.E.T. has a strong argument.  From the perspective of a venture capitalist, it looks difficult to find "market fit" for a small launcher.  It takes several years and a hundred million dollars to find that out.  And then the potential payoff is modest.

We need to be realistic about how much the funding landscape has changed lately.  It's not just that we are now in a venture funding winter, but also that the venture capitalists have alternatives for their investing dollars.  Those alternative investments have become extremely cheap and quick to spin up to see if you can find market fit.  The potential payoff is enormous.

It doesn't seem fair to conclude that Rocket Lab has found market fit with the Electron.  Apparently, it's too small by about half.  So why didn't Rocket Lab just increase the size 2x?  Or size it 4x and then build in some reusability?  RL appears to have come to the hard conclusion that they would not find market fit there either.

[imprezive]

So for marginal profitability (revenue exceeding cost of revenue):
Electron - Profitable this year, 2023.
Terran-1 - 2024. Different market segment than Electron, and 3D printing a new Terran-1 on the same equipment as Terran-R will keep overhead down, which is important with a market segment that's about to become as crowded as 700-1400kg SSO with Alpha and RS1 also entering the market in the US alone.
Launcher One - RIP. Virgin Orbit is doing a valiant effort trying to sell internationally, but they haven't gotten any momentum and will soon loose the 'launch from European soil' market to Orbex Prime / Skyrora XL.
Astra v4 - RIP. They pivoted away from v3 too late. I'm not even confident the company will remain solvent long enough to get to orbit.
Alpha/RS1 - Along with Terran-1 the market for 600kg+ to SSO is about to go from undeserved to really really crowded. I'm skeptical that the market is big enough for two, much less all three. I don't think either will be profitable until Terran-1 or the other exists the business, and Terran-1 will probably stick around as long as Terran-R stays in development/operation. Also the market will get even worse if/when Starship lowers the rideshare rate on payloads in this size category.

What makes you think that Electron will be profitable this year or Relativity next? Electron was far from profitable last year and they aren’t off to a strong start this year with only a single launch so far. Doesn’t mean they won’t get rolling still but doesn’t seem assured by any means. I don’t see how Terran 1 ever makes money. They have huge overhead and it’s effectively a test vehicle for Terran R.

[DeimosDream]

So for marginal profitability (revenue exceeding cost of revenue):
Electron - Profitable this year, 2023.
Terran-1 - 2024. Different market segment than Electron, and 3D printing a new Terran-1 on the same equipment as Terran-R will keep overhead down, which is important with a market segment that's about to become as crowded as 700-1400kg SSO with Alpha and RS1 also entering the market in the US alone.
Launcher One - RIP. Virgin Orbit is doing a valiant effort trying to sell internationally, but they haven't gotten any momentum and will soon loose the 'launch from European soil' market to Orbex Prime / Skyrora XL.
Astra v4 - RIP. They pivoted away from v3 too late. I'm not even confident the company will remain solvent long enough to get to orbit.
Alpha/RS1 - Along with Terran-1 the market for 600kg+ to SSO is about to go from undeserved to really really crowded. I'm skeptical that the market is big enough for two, much less all three. I don't think either will be profitable until Terran-1 or the other exists the business, and Terran-1 will probably stick around as long as Terran-R stays in development/operation. Also the market will get even worse if/when Starship lowers the rideshare rate on payloads in this size category.

What makes you think that Electron will be profitable this year or Relativity next? Electron was far from profitable last year and they aren’t off to a strong start this year with only a single launch so far. Doesn’t mean they won’t get rolling still but doesn’t seem assured by any means. I don’t see how Terran 1 ever makes money. They have huge overhead and it’s effectively a test vehicle for Terran R.

Optimism. 
Rocket Lab's 4Q projections estimated an EBITDA loss of $14M with only two launches. Add in a third launch per quarter (12/year) and subtract the upfront pad construction costs of establishing Mahia LC-1B / MARS LC-2 and it is plausible Electron could be marginally profitable for 2023. I'll conceded it isn't a sure thing.

Relativity ain't going to be profitable any time soon.
Terran-1 however can succeed thanks to the magic of Hollywood accounting: simply bill all overhead and expenses to Terran-R and attribute all revenue to Terran-1! Just kidding. I mean part commonality. With the same engine (after phase-2 engine upgrade) and same tooling (printers) as Terran-R most of the overhead is shared. Lets suppose Relativity builds 2x Terran-R test vehicles and 4x Terran-1's in 2024. The Terran-1s would only make up what... 1/5th the factory time? That would put Terran-1's share of the overhead on par with Astra, but with 10x the revenue.
Terran-1 breaking even with 4+ flights/year seems plausible to me.

[imprezive]

So for marginal profitability (revenue exceeding cost of revenue):
Electron - Profitable this year, 2023.
Terran-1 - 2024. Different market segment than Electron, and 3D printing a new Terran-1 on the same equipment as Terran-R will keep overhead down, which is important with a market segment that's about to become as crowded as 700-1400kg SSO with Alpha and RS1 also entering the market in the US alone.
Launcher One - RIP. Virgin Orbit is doing a valiant effort trying to sell internationally, but they haven't gotten any momentum and will soon loose the 'launch from European soil' market to Orbex Prime / Skyrora XL.
Astra v4 - RIP. They pivoted away from v3 too late. I'm not even confident the company will remain solvent long enough to get to orbit.
Alpha/RS1 - Along with Terran-1 the market for 600kg+ to SSO is about to go from undeserved to really really crowded. I'm skeptical that the market is big enough for two, much less all three. I don't think either will be profitable until Terran-1 or the other exists the business, and Terran-1 will probably stick around as long as Terran-R stays in development/operation. Also the market will get even worse if/when Starship lowers the rideshare rate on payloads in this size category.

What makes you think that Electron will be profitable this year or Relativity next? Electron was far from profitable last year and they aren’t off to a strong start this year with only a single launch so far. Doesn’t mean they won’t get rolling still but doesn’t seem assured by any means. I don’t see how Terran 1 ever makes money. They have huge overhead and it’s effectively a test vehicle for Terran R.

Optimism. 
Rocket Lab's 4Q projections estimated an EBITDA loss of $14M with only two launches. Add in a third launch per quarter (12/year) and subtract the upfront pad construction costs of establishing Mahia LC-1B / MARS LC-2 and it is plausible Electron could be marginally profitable for 2023. I'll conceded it isn't a sure thing.

Relativity ain't going to be profitable any time soon.
Terran-1 however can succeed thanks to the magic of Hollywood accounting: simply bill all overhead and expenses to Terran-R and attribute all revenue to Terran-1! Just kidding. I mean part commonality. With the same engine (after phase-2 engine upgrade) and same tooling (printers) as Terran-R most of the overhead is shared. Lets suppose Relativity builds 2x Terran-R test vehicles and 4x Terran-1's in 2024. The Terran-1s would only make up what... 1/5th the factory time? That would put Terran-1's share of the overhead on par with Astra, but with 10x the revenue.
Terran-1 breaking even with 4+ flights/year seems plausible to me.

The problem with Electron is they cost $7.3M per launch to Rocket Lab and they don’t always sell for that much. For the first 3 quarters in 2022 they actually lost money on a per launch basis. If they launch more the costs might come down but that’s not certain.

Similarly the only Terran 1 we know the contract value for is the VCLS mission that was $3M. Maybe they are getting list price from other customers but for a rocket without even a launch attempt it seems unlikely.

[Robotbeat]

Terran-1 is essentially a risk reduction effort for Terran-R.

[russianhalo117]

Terran-1 is essentially a risk reduction effort for Terran-R.

*a limited risk reduction*

[koraldon]

With the new 1-ton class smallsat LVs, you'll have to rideshare as well. The only difference between them and Transporter is whether you rideshare with 10 other smallsats or 100 other smallsats.

You are missing the point. If your satellite doesn’t care about where, when or any other requirement regarding its orbit - then it can rideshare in the cheapest ride to orbit.
Those customers are also poor most the time so no big revenues from a single customer.

But if you do care about the orbit, the price of the LV matters - for example the Eros launch late last year was a dedicated falcon 9 launch for a 400kg satellite. They presumably selected falcon 9 not because of its costs but because of its reliability and availability.
That is a prime example of the market share that small LV can benefit from that rideshare doesn’t offer competition.
It would have saved ~50 million USD to the satellite operator in this case of switching from Falcon 9 to a small dedicated launcher.

[DanClemmensen]

With the new 1-ton class smallsat LVs, you'll have to rideshare as well. The only difference between them and Transporter is whether you rideshare with 10 other smallsats or 100 other smallsats.

You are missing the point. If your satellite doesn’t care about where, when or any other requirement regarding its orbit - then it can rideshare in the cheapest ride to orbit.
Those customers are also poor most the time so no big revenues from a single customer.

But if you do care about the orbit, the price of the LV matters - for example the Eros launch late last year was a dedicated falcon 9 launch for a 400kg satellite. They presumably selected falcon 9 not because of its costs but because of its reliability and availability.
That is a prime example of the market share that small LV can benefit from that rideshare doesn’t offer competition.
It would have saved ~50 million USD to the satellite operator in this case of switching from Falcon 9 to a small dedicated launcher.

Based on this example, customers who need a dedicated launch also have lots of money, but we don't know how elastic this demand is. If SpaceX chooses to price Starship at $20 million for a dedicated launch, that market may grow.

If SpaceX chooses to price that launch at $20 million for any payload up to (say) 20 tonne, then I suspect a whole lot of experimenters will choose to build heavier, more capable satellites.

[john smith 19]

Based on this example, customers who need a dedicated launch also have lots of money, but we don't know how elastic this demand is. If SpaceX chooses to price Starship at $20 million for a dedicated launch, that market may grow.

If SpaceX chooses to price that launch at $20 million for any payload up to (say) 20 tonne, then I suspect a whole lot of experimenters will choose to build heavier, more capable satellites.

Maybe, or maybe they'll charge F9 prices for F9 sized payloads (with custom pricing for GTO), FH pricing for FH size loads and fully custom pricing for beyond FH payloads.

Because based on past experience they will retire F9 ASAP with the possible exception of Dragon flights to ISS. And I expect they'd push hard for that as well, with a plan to demonstrate that SS does not need a crew escape system because it actually achieves the goals for LOM that Shuttle was meant to achieve.

By extension a SS Rideshare would be whatever capacity is left over from the Starlink deployment missions, but SS can deploy a lot more starlinks. Also if you deploy that many are you likely to engage in more plane change manouvres? How does that affect the propellant available to carry non-Starlink payloads to orbit in the first place?

That is once they've demonstrate a full flight to orbit and return of course.

[imprezive]

With the new 1-ton class smallsat LVs, you'll have to rideshare as well. The only difference between them and Transporter is whether you rideshare with 10 other smallsats or 100 other smallsats.

You are missing the point. If your satellite doesn’t care about where, when or any other requirement regarding its orbit - then it can rideshare in the cheapest ride to orbit.
Those customers are also poor most the time so no big revenues from a single customer.

But if you do care about the orbit, the price of the LV matters - for example the Eros launch late last year was a dedicated falcon 9 launch for a 400kg satellite. They presumably selected falcon 9 not because of its costs but because of its reliability and availability.
That is a prime example of the market share that small LV can benefit from that rideshare doesn’t offer competition.
It would have saved ~50 million USD to the satellite operator in this case of switching from Falcon 9 to a small dedicated launcher.

You’re assuming that the smaller launcher has similar reliability and schedule reliability. Eros could have conceivably also launched on Vega or PSLV and saved money but they didn’t. You’re really talking about having to float a new launcher company for 5-10 years of regular money losing launches to begin to address the market you’re talking about. That’s just a ton of capital.

[DeimosDream]

With the new 1-ton class smallsat LVs, you'll have to rideshare as well. The only difference between them and Transporter is whether you rideshare with 10 other smallsats or 100 other smallsats.

You are missing the point. If your satellite doesn’t care about where, when or any other requirement regarding its orbit - then it can rideshare in the cheapest ride to orbit.
Those customers are also poor most the time so no big revenues from a single customer.

But if you do care about the orbit, the price of the LV matters - for example the Eros launch late last year was a dedicated falcon 9 launch for a 400kg satellite. They presumably selected falcon 9 not because of its costs but because of its reliability and availability.
That is a prime example of the market share that small LV can benefit from that rideshare doesn’t offer competition.
It would have saved ~50 million USD to the satellite operator in this case of switching from Falcon 9 to a small dedicated launcher.

You’re assuming that the smaller launcher has similar reliability and schedule reliability. Eros could have conceivably also launched on Vega or PSLV and saved money but they didn’t. You’re really talking about having to float a new launcher company for 5-10 years of regular money losing launches to begin to address the market you’re talking about. That’s just a ton of capital.

No, I don't think those launch vehicles were options. Eros was launched into a 140° retrograde orbit. I don't think either Guiana Space Centre or Satish Dhawan Space Centre have a launch corridor that fits. Or at least neither has ever launched past 100° before.

[imprezive]

With the new 1-ton class smallsat LVs, you'll have to rideshare as well. The only difference between them and Transporter is whether you rideshare with 10 other smallsats or 100 other smallsats.

You are missing the point. If your satellite doesn’t care about where, when or any other requirement regarding its orbit - then it can rideshare in the cheapest ride to orbit.
Those customers are also poor most the time so no big revenues from a single customer.

But if you do care about the orbit, the price of the LV matters - for example the Eros launch late last year was a dedicated falcon 9 launch for a 400kg satellite. They presumably selected falcon 9 not because of its costs but because of its reliability and availability.
That is a prime example of the market share that small LV can benefit from that rideshare doesn’t offer competition.
It would have saved ~50 million USD to the satellite operator in this case of switching from Falcon 9 to a small dedicated launcher.

You’re assuming that the smaller launcher has similar reliability and schedule reliability. Eros could have conceivably also launched on Vega or PSLV and saved money but they didn’t. You’re really talking about having to float a new launcher company for 5-10 years of regular money losing launches to begin to address the market you’re talking about. That’s just a ton of capital.

No, I don't think those launch vehicles were options. Eros was launched into a 140° retrograde orbit. I don't think either Guiana Space Centre or Satish Dhawan Space Centre have a launch corridor that fits. Or at least neither has ever launched past 100° before.

That’s fair I forgot it was retrograde. Still any of the new 1 ton class vehicles will have to compete with Vega and PSLV for most payloads.

[trimeta]

The problem with Electron is they cost $7.3M per launch to Rocket Lab and they don’t always sell for that much. For the first 3 quarters in 2022 they actually lost money on a per launch basis. If they launch more the costs might come down but that’s not certain.

How much of that $7.3M is ongoing costs needed to keep the Electron manufacturing and launch sites operating? In other words, if they launch more often, does that per-launch cost go down? $7.3M does seem like a plausible value given a cadence of 3-4 launches per quarter, since during the Q4 earnings call Adam Spice basically said "if we sell three launches in a quarter for $7.5M each, we'll be net profitable that quarter," but in theory if they were to increase cadence past that (which honestly, may not be realistic), unit costs may drop too.

[imprezive]

The problem with Electron is they cost $7.3M per launch to Rocket Lab and they don’t always sell for that much. For the first 3 quarters in 2022 they actually lost money on a per launch basis. If they launch more the costs might come down but that’s not certain.

How much of that $7.3M is ongoing costs needed to keep the Electron manufacturing and launch sites operating? In other words, if they launch more often, does that per-launch cost go down? $7.3M does seem like a plausible value given a cadence of 3-4 launches per quarter, since during the Q4 earnings call Adam Spice basically said "if we sell three launches in a quarter for $7.5M each, we'll be net profitable that quarter," but in theory if they were to increase cadence past that (which honestly, may not be realistic), unit costs may drop too.

It might go down but they have more launch sites to cover now too. They also launched Capstone and several NRO missions last year so revenue per launch could be less this year too. Time will tell. I don’t think it’s impossible at all but takes some things going there way.

[Bananas_on_Mars]

My opinion is the SpaceX Transporter missions are priced to stimulate growth in satellite businesses and with the intention to shift investment money from smallsat launchers to the satellite business.

That way they‘re shaping their market by putting pressure on their competitors and enable emerging satellite businesses to test and prove their technology, possibly to the point where they will buy a dedicated launch in the future.

[the_big_boot]

The problem with Electron is they cost $7.3M per launch to Rocket Lab and they don’t always sell for that much. For the first 3 quarters in 2022 they actually lost money on a per launch basis. If they launch more the costs might come down but that’s not certain.

How much of that $7.3M is ongoing costs needed to keep the Electron manufacturing and launch sites operating? In other words, if they launch more often, does that per-launch cost go down? $7.3M does seem like a plausible value given a cadence of 3-4 launches per quarter, since during the Q4 earnings call Adam Spice basically said "if we sell three launches in a quarter for $7.5M each, we'll be net profitable that quarter," but in theory if they were to increase cadence past that (which honestly, may not be realistic), unit costs may drop too.

It might go down but they have more launch sites to cover now too. They also launched Capstone and several NRO missions last year so revenue per launch could be less this year too. Time will tell. I don’t think it’s impossible at all but takes some things going there way.

RL has stated before that an increased launch cadence will lower cost, even going to far as to show us that with 24 launches a year (plus 50% reuse), they'd save 42% of costs so if it's 7.3 million per booster now that means it would drop to about 4.3 million per booster at 24 launches per year

[john smith 19]

RL has stated before that an increased launch cadence will lower cost, even going to far as to show us that with 24 launches a year (plus 50% reuse), they'd save 42% of costs so if it's 7.3 million per booster now that means it would drop to about 4.3 million per booster at 24 launches per year

Welcom to the forum.

You are mistaken. Cost <> Price.  A lowering of RL's internal costs could result in a reduction in their standard list price. This is not guarenteed, although it might (depending on the size of price cut) stimulate demand.

Or not. Leave the price as is and increase the dividend.