Parabolic Arc

SpaceX Founder Elon Musk

In the wake of Elon Musk’s blog post defending SpaceX’s pricing, Lexington Institute COO Loren B. Thompson (who?) has written a reply accusing the South African-born entrepreneur of being a “glib salesman” who has taken “NASA for a ride.”

Musk looks to be a big beneficiary of the Obama Administration’s move to commercialize space travel, mainly because he is willing to make promises nobody else will. His working assumption appears to be that if he reduces prices far below what current launch providers are charging, that will unleash pent-up demand that will permit huge economies of scale in building and launching rockets. No doubt about it, we could definitely build launch vehicles more cheaply if customers were demanding a launch every other week. But the laws of physics aren’t going to change no matter how much demand spikes, and Musk’s track record to date is not encouraging….

When even the Chinese say they can’t match a company’s prices, there’s only two likely explanations. Either Elon Musk is an alien visitor from some superior off-world civilization, or his prices are going to rise later. Guess which possibility is already coming true for NASA.

The problems that Thompson mentions (launch delays, vehicle failures) are real enough. They’re also quite common in spaceflight. However, the author also claims that NASA has shelled out “$2 billion to get [SpaceX's] launch vehicles to a point where they can begin lifting payloads into orbit to support the Space Station and other missions.”

The actual figure is not even close to that number. SpaceX has received just shy of $400 million in NASA funding through NASA’s COTS and CCDev programs. The company does have a $1.6 billion agreement to deliver cargo to ISS once its Falcon 9 rocket and Dragon freighter become operational. However, those payments will be made upon successful delivery of the cargo. The actual development costs for these vehicles is much lower.

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