Impact of SpaceX rideshare on small sat launchers market

[matthewkantar]

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.

What sort of no good dastardly monopolist thinks like that!?!

[the_big_boot]

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.

thank you

And I was talking about cost lol. I never stated that RL would drop the price if costs go down, just that internally it would cost about 4.3 million per booster at 24 launches (plus 50% reuse), assuming imprezive is correct in that it costs RL 7.3 m now to produce a rocket  (and that sounds about right)

and I mean I'd like to believe that RL would lower the price of them, but IIRC RL wants a 50% gross profit on all their businesses so it wouldn't surprise me if they kept the price about the same at it is now

[XRZ.YZ]

I always thought that why all those companies given extremely high future launch rate for small rockets during their funding rounds or IPO/SPAC documents is because if they tell after successfully launch their small rocket, they will immediately goes to R&D a larger rocket. The venture capitalist will not come.


And recent industry consensus of there will be enough market for one or two small launchers to is hide that the small launch industry is collectively defrauding investor money from beginning.

[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.

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

Just to be clear I was responding to the person who said Electron would be profitable this year. If they hit 24 launches per year with reuse it seems quite reasonable they would be profitable… but that ain’t happening this year. $7.3M is from their Q3 2022 SEC filings so I would assume it’s correct.

[Dmitry_V_home]

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.
...

It seems that the market for "nanolaunchers" collapses before it has time to be born

[john smith 19]

thank you

You're welcome.

And I was talking about cost lol. I never stated that RL would drop the price if costs go down, just that internally it would cost about 4.3 million per booster at 24 launches (plus 50% reuse), assuming imprezive is correct in that it costs RL 7.3 m now to produce a rocket  (and that sounds about right)

and I mean I'd like to believe that RL would lower the price of them, but IIRC RL wants a 50% gross profit on all their businesses so it wouldn't surprise me if they kept the price about the same at it is now

You'd be surprised how many people confuse cost with price.  Probably as many as confuse a free(ish) market with a monopoly.

So the question becomes "Are they getting enough business at the current price that a reduction of that level of their costs would give them significant benefit"? Or "What level of price do they need to lower to for their market share to be good enough to cover all their costs"? Obviously with most of the numbers around these areas being pretty closely held it's quite difficult to figure out.

[john smith 19]

What sort of no good dastardly monopolist thinks like that!?!

You don't really get the difference between a market in something and a monopoly, do you?

If  you did you'd know a monopolist would leave the price the same, as they would know their customers had no choice but to buy from them. That's pretty much the definition of a monopoly. RL has nowhere near a monopoly.

The problem is the lack of price elasticity in the launch market but since you're not clear what is and is not a monopoly to begin with I think I'll just leave that for the time being.

[matthewkantar]

What sort of no good dastardly monopolist thinks like that!?!

You don't really get the difference between a market in something and a monopoly, do you?

If  you did you'd know a monopolist would leave the price the same, as they would know their customers had no choice but to buy from them. That's pretty much the definition of a monopoly. RL has nowhere near a monopoly.

The problem is the lack of price elasticity in the launch market but since you're not clear what is and is not a monopoly to begin with I think I'll just leave that for the time being.

Uh, sarcasm?

[john smith 19]

Uh, sarcasm?

Which show why it's so difficult to do humor over the interwebs.

Why ascribe something to humor when it can be explained by simple ignorance instead? 

[matthewkantar]

Uh, sarcasm?

Which show why it's so difficult to do humor over the interwebs.

Why ascribe something to humor when it can be explained by simple ignorance instead? 

You’re correct. Poor reading comprehension is a sort of ignorance.

[john smith 19]

You’re correct. Poor reading comprehension is a sort of ignorance.

The absence of upvotes for  you OP means
a)"Poor reading comprehension" is widespread in this group.
b)It wasn't very funny.

Now, shall we return to the actual topic of this thread and you can ponder that question on your own?

[M.E.T.]

https://twitter.com/sciguyspace/status/1628801563824103425?s=46&t=NUvXH8X_iuI_twjBjZBghA

This revenue breakdown illustrates my point quite clearly.

In 2022, even with total market dominance and a record cadence, SpaceX launch revenue was only $2.4B. Across all launch categories - Small, Medium, Heavy and Crewed.

Let’s say you can double that if you count Starlink launches as revenue generating. So call it $5B.

That’s basically the pot of gold everyone is fighting over. And no newcomer is going to get all of it, or even most of it, as SpaceX will continue to claim the bulk of it, even with new competition emerging.

And that’s before they start dropping prices to hold on to as much of it as possible.

It’s a fool’s errand for the new arrivals.

[Robotbeat]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

[M.E.T.]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

So to categorise:

1. Develop launch as a support service for your own constellation - that’s basically Blue Origin (if you fudge the lines between Blue and Amazon). But at much higher cost to Amazon than if they went with SpaceX. And Blue is not going for dedicated small launch, so this doesn’t support the small launch business case.

2. New tech which is a category all on its own, and yes, better tech than SpaceX is indeed the one use case that I agree with. A big assumption to base one’s business case on, though.

3. Atruism rather than profit as a motivation. In that case business cases become irrelevant - as long as continued subsidization keeps flowing in from somewhere.

[imprezive]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

Transformative tech doesn’t make a difference. The customer is just paying for their satellite to go a place in space at a specified time. Unless the tech makes them substantially cheaper it’s not going to matter. Unless you are a diversified company, like Rocket Lab or Blue, you have to burden your launches with the entire cost of your company. It’s going to be extremely hard to be cost competitive even if your rocket itself costs less unless you are launching A LOT.  That’s assuming you have the capital to run the company for years until you can establish yourself as schedule and reliability competitive with the existing players like SpaceX, Rocket Lab, ISRO, and Ariane.

I do agree you could in theory dog food it if with your own megaconstellation but then you have to pay for that too and compete against other megaconstellations that aren’t hobbled by also developing their own launch vehicle. I don’t see how anyone gets funding for that when there are already multiple deep pocketed players in the space.

[M.E.T.]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

Transformative tech doesn’t make a difference. The customer is just paying for their satellite to go a place in space at a specified time. Unless the tech makes them substantially cheaper it’s not going to matter. Unless you are a diversified company, like Rocket Lab or Blue, you have to burden your launches with the entire cost of your company. It’s going to be extremely hard to be cost competitive even if your rocket itself costs less unless you are launching A LOT.  That’s assuming you have the capital to run the company for years until you can establish yourself as schedule and reliability competitive with the existing players like SpaceX, Rocket Lab, ISRO, and Ariane.

I do agree you could in theory dog food it if with your own megaconstellation but then you have to pay for that too and compete against other megaconstellations that aren’t hobbled by also developing their own launch vehicle. I don’t see how anyone gets funding for that when there are already multiple deep pocketed players in the space.

Yes, the big assumption with someone like Stoke is that they will have such amazing tech, and develop it at such a pace that they can launch cheaper than SpaceX, as reliably as SpaceX and ramp to a massively large cadence to meet the economies of scale required to make their overall business competitive with SpaceX.

Not a tall order at all.

[Robotbeat]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

Transformative tech doesn’t make a difference. The customer is just paying for their satellite to go a place in space at a specified time. Unless the tech makes them substantially cheaper it’s not going to matter. Unless you are a diversified company, like Rocket Lab or Blue, you have to burden your launches with the entire cost of your company. It’s going to be extremely hard to be cost competitive even if your rocket itself costs less unless you are launching A LOT.  That’s assuming you have the capital to run the company for years until you can establish yourself as schedule and reliability competitive with the existing players like SpaceX, Rocket Lab, ISRO, and Ariane.

I do agree you could in theory dog food it if with your own megaconstellation but then you have to pay for that too and compete against other megaconstellations that aren’t hobbled by also developing their own launch vehicle. I don’t see how anyone gets funding for that when there are already multiple deep pocketed players in the space.

Yes, the big assumption with someone like Stoke is that they will have such amazing tech, and develop it at such a pace that they can launch cheaper than SpaceX, as reliably as SpaceX and ramp to a massively large cadence to meet the economies of scale required to make their overall business competitive with SpaceX.

Not a tall order at all.

Clearly. But they're addressing rapid upper stage reuse in a way SpaceX has not yet done.

[imprezive]

The only argument they could have is if they’re using it to enable their own megaconstellation without helping fund their competitor. Also, if their tech is potentially truly transformative like Stoke’s. Or if they’re just content over lower returns plus enabling humanity to become more spacefaring.

Transformative tech doesn’t make a difference. The customer is just paying for their satellite to go a place in space at a specified time. Unless the tech makes them substantially cheaper it’s not going to matter. Unless you are a diversified company, like Rocket Lab or Blue, you have to burden your launches with the entire cost of your company. It’s going to be extremely hard to be cost competitive even if your rocket itself costs less unless you are launching A LOT.  That’s assuming you have the capital to run the company for years until you can establish yourself as schedule and reliability competitive with the existing players like SpaceX, Rocket Lab, ISRO, and Ariane.

I do agree you could in theory dog food it if with your own megaconstellation but then you have to pay for that too and compete against other megaconstellations that aren’t hobbled by also developing their own launch vehicle. I don’t see how anyone gets funding for that when there are already multiple deep pocketed players in the space.

Yes, the big assumption with someone like Stoke is that they will have such amazing tech, and develop it at such a pace that they can launch cheaper than SpaceX, as reliably as SpaceX and ramp to a massively large cadence to meet the economies of scale required to make their overall business competitive with SpaceX.

Not a tall order at all.

Clearly. But they're addressing rapid upper stage reuse in a way SpaceX has not yet done.

Yeah but why does it matter? What’s the benefit to the customer?

[Robotbeat]

Much cheaper per-launch cost than Starship. Potentially a competitive per-kg cost, too. Which means SpaceX will need to lower the price on Starship. Both of those are pretty awesome for the customer.

SpaceX is under no compulsion to offer prices that are just above cost. SpaceX will make profit where they can. So don't expect prices to go that low without competition.

[imprezive]

Much cheaper per-launch cost than Starship. Potentially a competitive per-kg cost, too. Which means SpaceX will need to lower the price on Starship. Both of those are pretty awesome for the customer.

SpaceX is under no compulsion to offer prices that are just above cost. SpaceX will make profit where they can. So don't expect prices to go that low without competition.

SpaceX isn’t the only game in town. Electron, LauncherOne, Vega, SSLV and PSLV all exist a lower per launch cost for smaller payloads and you’ve got Firefly, ABL, and Relativity coming soon-ish. Even if Stoke gets their cost down crazy low to let’s say $1M, they will need to cover the costs of running the company too. Even running lean but at a high cadence that’s probably $10M/mo. That’s 10 launches a month … just to break even. That was effectively Astras plan and we see how that worked out.