SpaceX’s future depends on a gigantic rocket and 42,000 internet satellites

SpaceX wants to use its Starship rocket for the kind of trips to Mars and beyond that Elon Musk has long dreamed of pursuing.

It also forms an important basis for the future business strategy of its space company, which wants to use the vehicle in part to develop Starlink, the satellite internet service that many investors believe could eventually make up the bulk of the company’s revenue. business.

Space Exploration Technologies Corp., the official name of the company founded by Mr. Musk nearly two decades ago, faces considerable challenges in transforming Starship into a reusable rocket that would dramatically reduce launch costs. Mr Musk recently said the ship is taking him longer than any other initiative, and warned that the vehicle, as well as internet service, creates significant challenges for the company.

“Starship is a tough, tough, tough, tough project,” he said at an event in December hosted by The Wall Street Journal. “It’s the biggest rocket ever made.”

Tesla CEO Elon Musk talks about the future of Tesla and SpaceX, the role of government in business and provides an update on the launch of Starship. Photo: Ralph Alswang for The Wall Street Journal

The spacecraft, which would be put into orbit on a booster dubbed Super Heavy, is 160 feet tall and has a diameter of 30 feet, creating room to send hundreds of Starlink satellites into orbit at once, more than the dozen. that it is capable of currently deploying on one of its Falcon 9 rockets. More than half of the launches tracked by U.S. flight safety regulators the company has made in the past two years have been Starlink deployments.

The company plans to rapidly accelerate the pace of satellite launches in the coming years. SpaceX, in a July presentation to the Federal Communications Commission, said it has so far launched around 1,800 Starlink satellites and is active in more than 20 countries. The FCC has cleared SpaceX to launch about 12,000 satellites, but the company wants to add at least about 30,000 more, according to commission records.

Mr Musk told an industry conference this summer that SpaceX will likely invest at least $ 5 billion and possibly as much as $ 10 billion in Starlink before it fully begins to generate cash. , with continued investments thereafter.

In a tweet from NovemberMr. Musk said if a severe global recession reduces the availability of capital and liquidity as SpaceX loses billions on Starship and Starlink, then bankruptcy “while still unlikely, is not impossible.”

Over the past two years, the company has started selling stocks that have raised at least $ 3.8 billion, according to documents some private companies like SpaceX may be required to disclose under Securities and Exchange Commission rules. SpaceX does not publish financial statements.

A company spokesperson pointed to a recent statement posted on SpaceX’s website that the company’s upcoming year will partially include a potential first orbital mission for Starship and Starlink’s expansion.

Mr. Musk unveiled Starlink in 2015, with the goal of developing a network of smaller satellites in low orbit around the Earth that could provide high-speed Internet access around the world. SpaceX has set ambitious goals for Starlink, projecting more than 40 million subscribers that year by 2025, the Wall Street Journal previously reported.

SpaceX’s spacecraft would be put into orbit on top of a Super Heavy booster.


Photo:

Reginald Mathalone / NurPhoto / Zuma Press

SpaceX said this summer it has around 140,000 Starlink customers. Starlink lists the cost of the service at $ 99 per month, with a charge of $ 499 for an internet terminal, about half of the amount it costs the company to manufacture, Mr Musk said during summer.

Other companies, such as London-based OneWeb, are also setting up Internet satellite networks and an Amazon.com site. Inc.

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the unit plans to do so in the future. About 3.7 billion people worldwide are still not connected to the internet, according to a recent report from two United Nations agencies, while US officials have worked for years to improve high-speed internet access in areas underserved.

“There is a need for connectivity in places that don’t have it right now,” or where connections are very limited or expensive, Musk said this summer. In addition to consumers, Musk indicated that Starlink may offer services to other companies, recently saying in a tweet that travelers should ask airlines for Starlink.

The internet service creates a source of demand for Starship, said Matt Weinzierl, a Harvard Business School professor who studied space economics.

Historically, those who originate large rockets with no clear use have faced challenges: “If we don’t know why we built them, that can be a really losing proposition,” Weinzierl said, adding that he thinks the company will identify other uses for the rocket.

Starship, meanwhile, has at least one confirmed client in place: the National Aeronautics and Space Administration, which in April awarded SpaceX a $ 2.9 billion contract to develop a Starship to bring astronauts to the surface. from the moon.

While working on the development of Starship and Starlink, SpaceX built a business based on government clients such as NASA and commercial satellite operators.

The value of its contracts with public sector clients was $ 2.2 billion in the federal government’s 2021 fiscal year, up from $ 195 million a decade earlier, according to a contracts database. SpaceX typically charges private customers $ 60 million to $ 65 million for Falcon 9 launches, according to people familiar with the matter.

The company’s valuation skyrocketed as it proved that its spacecraft like Falcon 9 could perform as intended and began building its fleet of Starlink satellites. SpaceX was valued at $ 100 billion in October, more than double its valuation in the summer of 2020, according to PitchBook. The latest figure is largely based on Starlink’s outlook, as the potential demand for broadband internet service globally is far greater than the size of the launch market, according to investors.

Tim Farrar, a satellite industry consultant, said that in most places around the world Internet customers cannot afford what Starlink charges or are well served by existing broadband providers. The United States is the cheapest market in the world for customers who could afford around $ 100 a month for the service and have relatively poor broadband offerings, according to Farrar.

“To have the capacity to serve millions of people in the United States, they’re going to have to launch tens of thousands of satellites, and the only way to do that at a low enough cost is to have Starship,” he said. he declares. “On the other hand, it doesn’t necessarily mean the market will be there.”

Write to Micah Maidenberg at [email protected]

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