Elon Musk: “Why the US Can Beat China”

by Nancy Atkinson on May 4, 2011

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Elon Musk. Credit: SpaceX

“Whenever someone proposes to do something that has never been done before, there will always be skeptics,” says SpaceX founder and CEO Elon Musk. He distributed an email today, setting the record straight on SpaceX’s actual launch costs and prices, and he also outlines why he believes American innovation will trump countries like China in space –even though that country has the fastest growing economy in the world and lower labor rates than the US. Read Musk’s article below:

Whenever someone proposes to do something that has never been done before, there will always be skeptics. So when I started SpaceX, it was not surprising when people said we wouldn’t succeed. But now that we’ve successfully proven Falcon 1, Falcon 9 and Dragon, there’s been a steady stream of misinformation and doubt expressed about SpaceX’s actual launch costs and prices.
As noted last month by a Chinese government official, SpaceX currently has the best launch prices in the world and they don’t believe they can beat them. This is a clear case of American innovation trumping lower overseas labor rates.

I recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary, premised on capturing a dominant share of the market, or “teaser” rates meant to lure in an eager market only to be increased later. These prices are based on known costs and a demonstrated track record, and they exemplify the potential of America’s commercial space industry.

Here are the facts:

The price of a standard flight on a Falcon 9 rocket is $54 million. We are the only launch company that publicly posts this information on our website (www.spacex.com). We have signed many legally binding contracts with both government and commercial customers for this price (or less). Because SpaceX is so vertically integrated, we know and can control the overwhelming majority of our costs. This is why I am so confident that our performance will increase and our prices will decline over time, as is the case with every other technology.

The average price of a full-up NASA Dragon cargo mission to the International Space Station is $133 million including inflation, or roughly $115m in today’s dollars, and we have a firm, fixed price contract with NASA for 12 missions. This price includes the costs of the Falcon 9 launch, the Dragon spacecraft, all operations, maintenance and overhead, and all of the work required to integrate with the Space Station. If there are cost overruns, SpaceX will cover the difference. (This concept may be foreign to some traditional government space contractors that seem to believe that cost overruns should be the responsibility of the taxpayer.)

The total company expenditures since being founded in 2002 through the 2010 fiscal year were less than $800 million, which includes all the development costs for the Falcon 1, Falcon 9 and Dragon. Included in this $800 million are the costs of building launch sites at Vandenberg, Cape Canaveral and Kwajalein, as well as the corporate manufacturing facility that can support up to 12 Falcon 9 and Dragon missions per year. This total also includes the cost of five flights of Falcon 1, two flights of Falcon 9, and one up and back flight of Dragon.

The Falcon 9 launch vehicle was developed from a blank sheet to first launch in four and half years for just over $300 million. The Falcon 9 is an EELV class vehicle that generates roughly one million pounds of thrust (four times the maximum thrust of a Boeing 747) and carries more payload to orbit than a Delta IV Medium.

The Dragon spacecraft was developed from a blank sheet to the first demonstration flight in just over four years for about $300 million. Last year, SpaceX became the first private company, in partnership with NASA, to successfully orbit and recover a spacecraft. The spacecraft and the Falcon 9 rocket that carried it were designed, manufactured and launched by American workers for an American company. The Falcon 9/Dragon system, with the addition of a launch escape system, seats and upgraded life support, can carry seven astronauts to orbit, more than double the capacity of the Russian Soyuz, but at less than a third of the price per seat.

SpaceX has been profitable every year since 2007, despite dramatic employee growth and major infrastructure and operations investments. We have over 40 flights on manifest representing over $3 billion in revenues.

These are the objective facts, confirmed by external auditors. Moreover, SpaceX intends to make far more dramatic reductions in price in the long term when full launch vehicle reusability is achieved. We will not be satisfied with our progress until we have achieved this long sought goal of the space industry.

For the first time in more than three decades, America last year began taking back international market-share in commercial satellite launch. This remarkable turn-around was sparked by a small investment NASA made in SpaceX in 2006 as part of the Commercial Orbital Transportation Services (COTS) program. A unique public-private partnership, COTS has proven that under the right conditions, a properly incentivized contractor—even an all-American one—can develop extremely complex systems on rapid timelines and a fixed-price basis, significantly beating historical industry-standard costs.

China has the fastest growing economy in the world. But the American free enterprise system, which allows anyone with a better mouse-trap to compete, is what will ensure that the United States remains the world’s greatest superpower of innovation.
–Elon–

For more information see the SpaceX website.

About 

Nancy Atkinson is Universe Today's Senior Editor. She also works with Astronomy Cast, and is a NASA/JPL Solar System Ambassador.

Question May 4, 2011 at 9:24 PM

i don’t mean any disrespect to mr. musk personally but i was kind of hoping that in regards to space, the “us vs. them” mentality had died with the USSR. in modern times, international cooperation has become a key factor in getting many projects off the ground.

i suppose i shouldn’t be so naive and if the need to be competing with someone is what motivates these people to get the job done, i should be greatful.

delphinus100 May 4, 2011 at 10:55 PM

This is about the commercial launch business. It’s *always* ‘us vs. them,’ not in so much a political sense (though some of that is unavoidable, as some competitors are foreign), but your company vs. the competition, just like anything else. Space just happens to be the arena of that commercial competition, just as it has been the arena of political competition.

If there’s ‘international cooperation,’ it’s going to be in *what* gets launched, but any rational entity wants the most for its money in *how* it’s launched, no matter who it is.

It’s not just about China or Russia as competitors, I’m sure Elon and SpaceX hopes to take some of Arianespace and the United Launch Alliance’s lunch, as well. We all want lower cost space access for the things we want to see happen, this is part of how it’s done…

Archer May 5, 2011 at 1:59 AM

Russia and China is completely about us vs. them. I will cheer them on as much as I cheer on SpaceX. If competition didn’t work we’d be a species of sloths, and not long for this world. Get up and COMPETE. It’s good for the soul.

Aqua May 8, 2011 at 12:36 AM

He’s just stating facts.. the Chinese are going to the moon. Should they find something valuable, I’m sure they will share it with the rest of us?

DocM May 4, 2011 at 10:18 PM

And I would reply that the Chinese started it when they claimed to be confounded by SpaceX’s prices. This was first reported in Aviation Week April 15th, and Musk is simply responding.

http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=space&id=news/asd/2011/04/15/11.xml&headline=China%20Great%20Wall%20Confounded%20By%20SpaceX%20Prices

Torbjorn Larsson OM May 5, 2011 at 8:31 AM

Interesting. SpaceX got railroaded because China did:

“Relations between the U.S. and China have cooled in recent months. Language in the compromise fiscal 2011 funding measure working its way through Capitol Hill prohibits NASA and the White House Office of Science and Technology Policy from cooperating with China in any way, including using public funds “to effectuate the hosting of official Chinese visitors at facilities belonging to or utilized by the National Aeronautics and Space Administration.””

So yea, maybe Musk could have worded that better for the international market, to the expensive of his first market, but it is the mostly US that keeps up with “us vs them” bilateral ideas. China wanted in on the ISS, they have docking ports for that still.

Emilio May 5, 2011 at 12:34 AM

> I recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary…

This idea of free marketer can beat any government-led development is kind of marketing talk. It is because government did the development, these free loader can do it for less! Falcon is based on proven technology government developed. Yes the American taxpayer paid for the initial development. Why did free marketer took this long to get to come up with Falcon?

wjwbudro May 5, 2011 at 1:04 AM

As is the case for most of the private entrepreneurial upstarts. Anything the government (taxpayer) develops is rightfully placed in the public domain to be exploited by whoever has the smarts and the financial backers to run with it.
CPM/MPM was government sponsored and in the public domain. Seattle Computing jumped on that, packaged it up with its Basic compiler jumped in bed with the folks in Boca Ratan and whalla, PCDOS was borne. And contrary to street talk, Al Gore did not invent the Internet, it was borne from ARPANET. How many upstarts made their fortunes from that USA taxpayer dollar? And before the folks from down under throw in their 2 pence, the list can be expanded upon exponential!

wjwbudro May 5, 2011 at 8:55 PM

The last sentence above was meant to get a rise out of HSBC cause we ain’t heard from him lately. Maybe he’s working on his own site.

IVAN3MAN_AT_LARGE May 5, 2011 at 1:20 AM

Probably because that same government has tightened its purse strings and denied NASA the funding it needs for further development of its rockets; consequently, that opened up the rocket business for private enterprise to fill.

wjwbudro May 5, 2011 at 1:30 AM

Sorry but, those upstart commercial companies started long before NASA’s budget was axed.

Torbjorn Larsson OM May 5, 2011 at 8:37 AM

Speaking from a nation that have a long tradition of successful government cooperation with the industry (say, the “million program”, cheap housing during the -60s that put a refrigerator in ‘every’ home and a domestic refrigerator industry on the market), it is not ‘free loading’ as much as bound investment.

Generally speaking I think an investor doesn’t have to have ulterior market interests to participate, there simply can’t be such a “rule. So it’s fair cop, though richer nations obviously fudges the free market concept by pitching in.

delphinus100 May 5, 2011 at 11:52 PM

“It is because government did the development, these free loader can do it for less! Falcon is based on proven technology government developed.”

Yes. Similarly, Bigelow Aerospace’s work is based on the Transhab work none (but never utilized) under NASA. The aerodynamic data produced by NASA in rocket-powered X-Plane (especially the X-15) and lifting body work underlie what Scaled Composites and Sierra Nevada are working on. This seems to surprise you, but it’s actually how the system is *supposed* to work. A government R&D agency does the initial high-risk, but potentially high-value work, and whatever is potentially useful is *meant* for private industry to use, producing advance goods and services that otherwise might not have happened. Good for the US economy and tax base. It’s even more true in the ‘aeronautics’ side of NASA.

From the NASA Charter:

(c) Commercial Use of Space.–Congress declares that the general welfare of the United States requires that the Administration seek and encourage, to the maximum extent possible, the fullest commercial use of space.

For a change, things are playing out just as they should…

tripleclean May 5, 2011 at 3:51 AM

Us vs Them. I love the S.A. movie ‘District 9′, Musk had to flee his homeland,earned his own money and by using that money has been to put together a creditable space company in the US because of the large pool of American aerospace professionals and industries we have left over from the now defunded cold war and space programs. If these rockets and capsules are going to be any good at all remains to be seen, never saw a Tesla Motorcar but drove a Chevy Volt. BTW We bet China everytime.

Torbjorn Larsson OM May 5, 2011 at 8:42 AM

If US beat China every time, why is China destined to become the world’s superpower 2016? Nothing US can do will change that now.

Musk has a point, but it’s really sour grapes, as only a few producers can be the top dog on a specific market. (We have the same problem here.)

Torbjorn Larsson OM May 5, 2011 at 8:44 AM

I’m of course referring to economics btw, China do have some glaring gaps to catch up with. General medicine doesn’t seem one of them though, they went the opposite route to many nations (including US) and provide decent health care.

tripleclean May 5, 2011 at 5:15 PM

Ask the ChiComs if they will let you ride on their space shuttle or build space station freedom and call it the ISS, share with the you the greatest telescope ever?. Health care? they cut organs out of prisoners and sell them while thinking ginger soaked zebra penis is a cure. Love hearing on the radio(when flying) their pilots say ” landing runway x” cracks me up!

Redbaron719 May 5, 2011 at 7:50 AM

I’m a old Boomer liberal with a background in history and neurobiopsych, but I don’t think it takes a literal genius in rocket science to see the big picture here: JFK, Von Braun and the Nazi expats and a few smart, gutsy Americans started a helluva space program that ran its course by reaching the Moon, thereby “winning” that Cold War chapter with the USSR. Subsequently, the pols and bureaucrats did what they do best–f&$# things up via greed, budget games, padding the payroll, micromanaging, neglecting and rank cowardice to take the heat and tough things out when disaster struck. Left to their own devices, the Feds and NASA probably won’t ever get back to the Moon, let alone anywhere else, except that hunk of junk ISS that cost 100 times what it’s worth scientifically. What a worthless money pit! For all that moolah spent wisely, America could have a modest Moon base already.

Like it or not, Musk, Branson, Rutan, Bigelow, etc. represent the only hope for the Western Democracies plus Japan and S. Korea to get off this wet, muddy rock in the foreseeable future. More than that, the aforementioned offer the only viable opportunity to save our crumbling economies by getting ‘out there’ first. What’s waiting out there are infinite jobs, raw materials and unimaginable riches. The gold, platinum and other minerals on Near Earth Asteroid 433 Eros(visited 2001) are worth around $20 trillion. What’s on the Moon including the surface He-3 may be worth over $100 trillion. The Main Asteroid Belt–$600 quintillion!!! And so, since gold and precious metals are involved big time, in some respects we’re back to Frontier Days…Whoever gets there first (personally, corporately or nationally)–gets whatever they can claim and defend. Coming in 2nd in that race is no better than finishing 32nd. Forget treaties, we’re talking scads of gold and platinum here!

So, I think We the Real People should back our space exploration mega-corporate entrepreneurs–like Mr Musk– to the hilt. They can and will deliver. EXCEPT, for providing initial infrastructure, a good deal of funding, licenses to come and go freely, security under US Space Command and a legal umbrella for claiming unexplored territory, I believe Congress should pass legislation early on that holds the space exploration mega-corps much as the Euro monarchies once held their East India companies. In return for backing, security and services rendered, the US Treasury would receive 1/2 to 1/3 (sliding scale) of the annual profits to be shared as deemed appropriate with other partner/allied nations in some equitable arrangement.

Torbjorn Larsson OM May 5, 2011 at 11:39 AM

My pet peeves :-D again:

that hunk of junk ISS that cost 100 times what it’s worth scientifically.

Without data, I don’t think it can be so.

- NASA claims 20:1 ROI on space investments.

- ISS costs ~ 100 GUSD/30 years (ESA) and do science perhaps 1 h/d; say science is 1/10 or ~ 10 GUSD/30 years. For comparison, LHC costs 10 GUSD/10 years. ISS is a bargain, despite being unique.

the surface He-3

He-3 may or may not give less radioactivity, but it has very little economy compared to other fuels (see fig on reaction rates) so likely not, while being expensive.

Redbaron719 May 6, 2011 at 12:21 AM

I think you and I may have a language barrier problem. My crack about “100:1″ wasn’t meant literally. I doubt if anyone could compute an accurate figure anyway. My usage was merely a figure of speech.

==========================

Let’s approach your rejection of He-3 two different, but equally valid ways:

1)Right now, for more than its fusion reaction potential, the movers and shakers of the world economy place an obscenely high per Kg value on He-3. Anyone acquiring a stockpile of multiple tonnes of He-3 would quickly make the Sultan of Brunei look like a pauper by comparison. Arguing the point of the value of He-3 is tantamount to questioning the price of gold or platinum as having worth–they simply do. So, as it happens does He-3.

2) Note above in my initial remarks, I’m NOT educated formally in the physical sciences. What I know, I learned in basic physics and basic grad p-chem plus substantial reading on my own. Given what I have learned, Wikipedia (which you cite) is a very poor way to view cutting edge technology, because Wikipedia is written by hacks with biases, then minimally edited by an ad hoc committee of questionable credentials. .

Nevertheless, what you cited does contain a few relevant tidbits. Yes, fusing deuterium with He-3 is far from ideal. D-D and D-T suck as well. So, no one with smarts wants to do any of that ilk beyond exigency driven basic research-proof of design. Another glitch, no one’s mastered fusion of anything, except in a thermonuke. There are still many questions to be answered and problems to be overcome. I wish I had all the answers. I’d be simultaneously the richest human ever and a household name of God-like proportion. Too bad for me.

Don’t look for tokamaks to get far. Likely, they can’t contain plasma at a temp for anything practical. So, currently unfolding end runs outside the slowly evolving ITER tokamak under construction in France look to be the best approaches. The best of these IMHO seems to be Dr Ed Moses’ National Ignition Facility (NIF) at Lawrence Livermore National Lab outside San Francisco by Cal Berkeley. NIF is an odds on favorite of the non-traditionalists to achieve first fusion within 2 years. It will likely ignite fusion with a D-T combo-for what should be obvious reasons, but is only proof of concept–not readily adapted to producing power commercially. The competing “PETAL” project in France trails Moses’ operation badly. Ironically, the follow-on commercialization of the French project seems to have benefitted from a technical leap in laser amplification (http://www.physics.org/explorelink.asp?id=4922&q=hiper%20power&currentpage=1&age=0&knowledge=2&item=0)[source in French]

Moses’ lesser favored follow-on is LIFE. To bone up simply google “NIF” and surf the website.
Frankly though, I’m figuring that PETAL and LIFE get merged to create a helluva hot laser array that will handle He-3 fusion to He-3. Why? No radioactivity beyond immediate containment and no neutrons produced whatsoever. The downside, higher heat of fusion than competing methods and less heat of fusion output at max. BUT, I’m thinking a trade-off will be made to finesse the problems with radioactive waste and radioactive release during any possible analogues to fission reactor meltdowns. Try reading (http://www.technologyreview.com/energy/19296/) to get a perspective radically different from your own.

Uncle Fred May 5, 2011 at 10:18 PM

Not discounting the possibly, but I have yet to see any real hard values for extra-planetary resource extraction. If it’s profitable then I’m all for it. Sadly, everyone I’ve read who’s actually ran the preliminary numbers shows it not to be profitable.

Also, treaties forbid any nation or company from claiming rights to any celestial body or region of space. Of course, who could stop them :-D?

Perhaps with visionary leaders and prudent longterm investment..

Redbaron719 May 6, 2011 at 1:43 AM

We’re operating at such a low level right now that no one can possibly provide you any “real hard values for extra-planetary extraction”. Most I’ve read also get mired down in 2-D thinking where what’s mined MUST be brought back to Earth! Why, for pity’s sake???! Those same folks endlessly pi$$ and moan about the cost per pound to orbit material or to break gravitation and go elsewhere beyond Earth. Who says 95-99% of whatever gets extracted ‘out there’ doesn’t stay out there? It’s the very substance underlying what Mr Musk is advertising far and wide–getting that price per pound put into orbit down further and further. Mining, making and growing what you need ‘out there’ gets the cost down virtually to zero. The trick, of course, will be getting positioned to do that–ad astra per aspera!

What mankind’s really missing–and it fuels my criticism of the ISS–is a base with ‘elbow room’, natural protection from noxious elements flying around and gravity. Given that, explorers and researchers can live ‘out there’. Consequently, man can begin to build industrial manufacturing infrastructure.
———————————————-
As for treaties that get in the way of man acquiring gold and platinum…ask any Native American or Yukon Eskimo about how far those treaties extend when a gold rush breaks out.
————————————
As for “visionary leaders” and long-term investment–look above at Mr Musk to see both appearing in current time.

wjwbudro May 5, 2011 at 1:58 PM

“Whoever gets there first (personally, corporately or nationally)–gets whatever they can claim and defend.”
Until the guy with the bigger club comes along and takes it from you.

Btw, has anyone really worked out the “astronomical” (pun intended) cost and complexity of a mining mission on the moon or an asteroid? Talk about -ROI, Transport of machinery, spare parts, manpower, power generation? not to mention getting the product back to earth!

aerandir May 5, 2011 at 2:19 PM

That’s what he meant by “defend”.

Anyway, here’s an article I found..

http://www.spacefuture.com/archive/the_technical_and_economic_feasibility_of_mining_the_near_earth_asteriods.shtml

I guess you can check out his cited papers if you want more in-depth material.

Olaf May 5, 2011 at 5:28 PM

A standard commercial message.
Just like Dash washes whiter than white.
It means nothing.

DavyCrocket2003 May 8, 2011 at 12:23 AM

Typically true. If you do your research on Elon Musk, you will discover that he is quite a remarkable man. He is above and beyond “standard.” He is NOT just trying to make SpaceX look good. He is telling the truth. Genius, uncommon sense, vision, determination, and a whole bunch of hard work mean that Elon Musk can do what other men say is impossible. He is the real deal.

Aqua May 8, 2011 at 12:41 AM

Go Space-X! As an unemployed aerospace designer.. I am impressed that someone saw a valuable human resource and did something constructive with it! Remember the swords into plow shares thang? Lets go dig around on the Moon!

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