WASHINGTON — Industry executives argue that SpaceX’s dominant position within the launch market is making it difficult for small launch vehicles to compete, as a outstanding investor warns of a wave of bankruptcies amongst launch corporations.
In a panel on the Satellite Innovation conference Oct. 17, executives said that SpaceX’s line of smallsat rideshare missions has had a “hugely chilling” impact on the small launch industry that struggles to compete on price.
“They definitely control and have a dominant position out there,” said Curt Blake, former chief executive of launch services company Spaceflight who now leads the business space group at law firm Wilson Sonsini, of SpaceX. “I believe the true query is pricing, and what’s their cost, and why so low, so dramatically low?”
SpaceX began offering rideshare launch opportunities for smallsats as little as $5,000 per kilogram. The corporate has since raised those prices to $5,500 per kilogram and plans annual increases in future years. Nevertheless, typically those prices are far below what dedicated small launch vehicles offer.
“I don’t think that they had to go that low to have a commanding share of the market,” he said, estimating SpaceX could have gained significant business at prices of $10,000 to $12,000 per kilogram. “That needed to have a hugely chilling effect on every other money flowing into startup launch corporations.”
SpaceX’s Transporter line of rideshare launches has focused on missions to sun-synchronous orbit, where the majority of demand is today, but the corporate announced in August a brand new series of missions, Bandwagon, that can go to mid-inclination orbits. “They’re, little by little, taking up what the small launch vehicles are capable of accomplish,” he said, adding there remains to be room for dedicated small vehicles for missions to different inclinations. “But you’ve to think about it as a threat.”
Concerns about SpaceX’s pricing of its smallsat rideshare missions should not latest. At World Satellite Business Week in September, Marino Fragnito, senior vp of the Vega business unit at Arianespace, said SpaceX was offering pricing that “was not sustainable” out there, driving out other corporations. “Launcher corporations couldn’t live with that level of pricing.”
“Is SpaceX squeezing other people out of the market? I believe to a certain extent yes,” said Adam Spice, chief financial officer at Rocket Lab, on the Satellite Innovation panel. “It will be a bit naïve to think their strategies around rideshare aren’t very targeted towards limiting competition.”
SpaceX’s position out there reduces “forgivable failure” by other corporations, he said, and its approach is exacerbated by the difficulties many corporations are facing raising funding whilst SpaceX has “seemingly countless access to capital” in private rounds. “It makes that a really difficult entity to compete with, they usually can do very unnatural things for long periods of time to make it difficult on everybody else.”
Other panelists said they were searching for niches for his or her vehicles as ways to stay competitive out there. “The one-size-fits-all launch market isn’t necessarily the perfect method to go for the long terms so as to meet all the various government and business needs on the market,” said Patrick McKenzie, director of presidency business development at Firefly Aerospace.
He cited the corporate’s success with the Victus Nox responsive launch mission for the U.S. Space Force, launched Sept. 14 on an Alpha rocket, for instance of such a capability not offered through rideshare launches. But, he added, those services still have to be cost competitive. “You’ve got to get your price down. You’ve got to compete at a competitive price.”
Pablo Gallego, senior vp for sales and customers at Spanish launch vehicle developer PLD Space, said SpaceX has helped construct demand for smallsat launches at those low prices. His company has received interest in the corporate’s Miura 5 small launch vehicle in development for dedicated missions that may’t be served by rideshare missions.
“The market is so big,” he said, allowing room for each dedicated small launch vehicles and low-cost rideshare missions.
Wave of bankruptcies
The market will not be large enough, though, to support many small launch vehicle corporations. Earlier on the conference, Steve Jurvetson, co-founder of Future Ventures and an early investor in SpaceX and Planet, said he was puzzled by the big variety of corporations pursuing such rockets.
“You might have numerous corporations chasing it. It’s not clear to what end,” he said, citing data that claimed nearly 200 small launch vehicles in various stages of development and operations, although nearly 50 of them are classified as either dormant or canceled.
Jurvetson expects many more would fail. “I sadly predict over 100 of them will go bankrupt in the subsequent two years, and that’s going to place a pall on the investment domain for things like this or anything adjoining to it,” he said. “I believe, unfortunately, there’s going to be a little bit of a hangover within the investment community that will ripple through the entire space economy.”
He claimed that many investors in startups working on small launch vehicles were unaware of the scope of competition, many pondering there have been not more than 10 other corporations in the sector. “It’s astounding,” he claimed. “It’s the weirdest delusion and lack of know-how I’ve seen within the investment sector.”
Within the later panel, Rocket Lab’s Spice took issue with a few of Jurvetson’s data. “I believe that’s a nonsensical number,” he said of Jurvetson’s estimate of the variety of small launch vehicle corporations. “That is only a difficult thing to try this to think that there’s 190 organizations that might pull it off, I don’t buy it.”
Nevertheless, he agreed with predictions of a wave of failures. He noted that, on the SmallSat Symposium in February, he predicted a “bloodletting of aspirational launch corporations” due to technical and financial challenges corporations face in developing small launch vehicles.
He said he “took numerous heat” for those comments but feels vindicated due to what has happened within the industry since then. For instance, on the February conference he appeared on a panel that included Virgin Orbit, which filed for Chapter 11 bankruptcy in April. Rocket Lab acquired that company’s headquarters and manufacturing equipment in a bankruptcy auction.
“There’s been numerous bloodletting,” he said. “We’ve seen market cap destruction, from corporations which have gone from billions of dollars of market cap to single hundreds of thousands or tens of hundreds of thousands.”
“People think that this business goes to be an upward curve to the appropriate, everybody’s going to achieve success,” he said. “It’s not that. It’s an incredibly difficult industry to operate in.”