Space Exploration Technologies, better known as SpaceX, has been attracting global attention since Elon Musk first launched the venture in 2002. Much of that attention has focused on the future possibility that private companies may create a viable network of space launch, exploration, and travel. What has gone largely unnoticed, however, is how the company has already fundamentally changed the American space sector.
Space launches have long been the domain of government-backed agencies or contractors, the most recent iteration being the heavily subsidized United Launch Alliance (ULA). In late April, however, SpaceX broke ULA’s monopoly on military launches after a brief legal bout and won an $83 million contract to place an Air Force GPS satellite into orbit. Given that per-launch costs for the ULA average $225 million (and the lowest possible cost for the ULA around $100 million), the contract represents a significant cost savings. SpaceX is aggressively poised to open up a small, inefficient, and uncompetitive industry to flourishing innovation and market competition. Given the military’s risk-averse nature towards space, SpaceX’s success in winning the contract is no small feat.
SpaceX is the spearhead of a larger push by private companies to commercialize space exploration. NASA has shown confidence in this push by investing $14 billion in private space launches through 2024, with awards going to Musk’s company as well as Orbital ATK and Sierra Nevada. SpaceX is also leading the charge when it comes to demonstrating what modern technology is capable of. Its most recent and historical accomplishment was becoming the first company in history to return a reusable rocket to Earth after a successful orbital launch. The ability to consistently reuse and recycle first-stage launch rockets could reduce the costs of a SpaceX launch to between $37 and $48 million. And the benefits of SpaceX’s success are not just limited to Musk’s company.
Competitors have been driven to develop reusable rockets, with Blue Origin’s New Shepard demonstrating several successful landings as well. The incentives are cyclical, with Blue Origin’s success further raising the stakes for SpaceX’s goal of landing a rocket at sea—a feat it accomplished after several mishaps (and has since repeated). SpaceX is not just encouraging competition in the United States; European companies are also looking at the benefits of reusable rockets.
Interest in space-based innovation is at an all-time high. Space startups received more venture capital funding in 2015 than in the previous 15 years combined, showing that these types of investors are starting to see potential in an industry long seen as unviable. While other companies have benefited from this surge, SpaceX was the main beneficiary—demonstrating its particular cache in the market. But it’s not just launch companies that are growing. Other companies like Spire, Planet Labs, Mapbox, DigitalGlobe, and Bigelow Aerospace are lining themselves up to provide other space services, further contributing to a circuitous feedback loop of innovation and firm entry into a formerly insular marketplace.
The private space industry has risks it will have to mitigate and manage, including potential liability questions and engagement with global military concerns. Already, however, we are seeing a level of competitive innovation hitherto unknown in a market previously dominated by entrenched government-sanctioned monopolies. The door to private space exploration has been blown open by SpaceX, and the space industry will never be the same.