It costs around $50 million to launch a Orbital Sciences Minotaur 4, which can put 1,730 kg into LEO while the Lockheed’s Athena 2 will cost around $65 million to put 1,712 kg into LEO. SpaceX currently posts charges $54M – $59.5M for launching to LEO 10,450 kg (equatorial) and 8,560 kg (polar). If SpaceX is able to sustain these prices in routine operation, it will obviously result in some disturbance to the launch industry.
Let’s deconstruct these numbers again, this time listing them by the cost per kilogram:
- Orbital Sciences: $28,901 per kilogram on the Minotaur 4 rocket.
- Lockheed Martin: $37,967 per kilogram on the Athena 2 rocket.
- SpaceX: $5,694 per kilogram on the Falcon 9 rocket to go to an equatorial orbit.
- SpaceX: $6,951 per kilogram on the Falcon 9 rocket to go to a polar orbit.
For SpaceX, I have used their higher price, $59.5 million, to get my figures above.
As Clark notes, “If SpaceX is able to sustain these prices in routine operation, it will obviously result in some disturbance to the launch industry.”
To put it mildly, this is an understatement.
The way I see it, SpaceX’s vastly lower prices suggest two things: Either the rest of the launch industry is incredibly inefficient, or SpaceX is pricing its product too low. Though I suspect the answer is a little of both, I also suspect it is mostly the former. For decades American rocket companies have shown little interest in reducing cost, mostly because their main (and possibly only) customer was the U.S. government. which cared little how much it cost to get payload into space. It is for this reason that, since the 1980s, these rocket companies have lost most of the commercial market to either Russia or Arianespace, both of which are heavily subsidized by their governments and thus appear to be very inefficient themselves in building rockets. Their prices are therefore cheaper, but not by a significant amount.
Elon Musk entered this market precisely because he recognized this reality, and realized that he could easily undercut the prices of everyone else by simply building his rockets efficiently. If the launch of Falcon 9 is successful on April 30, and SpaceX begins normal operations, launching cargo to ISS as well as fulfilling the multi-million dollar launch contracts it has already signed with a number of commercial customers, then the launch industry is going to go through a significant but welcome upheaval. Everyone else is either going to have to cut their prices, or go under. And to cut those prices will require overhauling how these companies do things. Inefficiency will no longer pay off.
Ah, competition. I love it.