4 ms·

Can anyone break down the economics of this? How can they afford this over and over again?

by runawaybottle 6y ago

carabiner 6y ago
Stainless steel is really cheap, and they adapted fabrication methods from the grain silo industry.
- qayxc 6y ago
  The stainless steel is irrelevant. They lose 3 raptor engines per crash and that hurts. A lot.
  - mrep 6y ago
    Not sure if they are at v1.0 yet, but "Raptor cost is tracking to well under $1M for V1.0" [0]. Assuming they are, 3 million dollars worth of engines per test isn't that much. [0]: https://twitter.com/elonmusk/status/1179107539352313856 https://twitter.com/elonmusk/status/1179107539352313856
antoniuschan99 6y ago
I would like to know too. When sn8 crashed I googled and saw a quora article saying it costs $180 mil for each prototype. But this article says ~10 mil. Im assuming to ~180 mil number is the production version? https://qr.ae/pGRZv0 https://qr.ae/pGRZv0 It makes sense at $10 mil since they are pumping these out like mad. Also NASA awarded $135 mil for the starship design so it can’t cost $100 for each of these sn’s right!?
- adwn 6y ago
  > Im assuming to ~180 mil number is the production version? The best assumption would be that the author of the $180M figure has no idea what they're talking about and derived at this number from a lack of information and through bad analogies and misapplication of scaling laws.
- runawaybottle 6y ago
  They must be willing to foot the bill for testing beyond a certain amount of the NASA award (40 million of the 135?).
- qayxc 6y ago
  I don't believe the $10 mil figure for one second. That'd mean a Raptor engine would cost less than $1 mil and that just can't be true - that'd be about half the price of a much smaller and less complex Merlin engine...
  - iso1631 6y ago
    They're heading towards that $1m per engine, but that price includes development effort. The cost to make 1000 engines is not going to be 10 times the price of making 100 engines, the more that are made, the better they get at making them
    - qayxc 6y ago
      Heading there doesn't mean the engines they're currently using are already at that point.
      - iso1631 6y ago
        We have no idea what the marginal cost of the engine is, but it's far lower than the total cost of developing an engine, and the more they build the closer they get to $1m, $500k and towards the $250k target But even if it were $2m, there's 3 engines, that's $6m, leaving $4m for a bit of steel out of that $10m budget.
- elihu 6y ago
  A quick google search says that SpaceX charges 62 million for a typical Falcon 9 launch. Let's say they have a 50% profit margin (no idea if that's true, but let's go with it). They had 26 launches in 2020, so that's 806 million in profit they can redirect to R&D on Starship (in addition to loans or VC funding rounds or loose change found in Elon Musk's couch). The Starship prototype cost is a big variable, but assuming it's somewhere in the (log scale) middle of the 10 to 180 million range it's not unreasonable to think that SpaceX can afford to keep producing these things at a rapid rate for quite a while without going broke.
nickik 6y ago
Let me do some guesses. Well, they are shooting at a per Raptor cost of 100k long term 250k short term. Even assuming it is 4x as much now, that is about 3m for the engines. The stainless steel only cost a couple 100k$ at most. Add in some bits and pieces, like flight termination system, thruster system and tanks, sensors and so on, add another couple 100k$, lets say 1 million. All of these are already produced by SpaceX in pretty large numbers. Then manufacturing cost, is a bit hard to calculated, they are producing one prototype every couple of weeks and most of the labor is in welders and most of the machines are welding robots. Labor cost being the dominate cost. A large part of the cost would likely be the launch site construction itself, and how you want to amortize to an individual prototype is hard to say. Then there is another bunch of cost for operations and fuel add another couple 100k. So I would assume a cost of 3 million to 20 million. I'm giving this a pretty large range because its a guessing game. Over the course of a year they tested about 10 increasingly complex prototypes. That would at the high end be a cost of 200 million for one year of this process, if we ignore the design cost. Consider that NASA SLS has a budget of about 2.5 billion a year including ground system (and that has been going on for 10+ years and will go on for many more), SpaceX is basically nickel and dimming a launch vehicle of that size. Elon Musk has a couple of saying along the lines of 'if its long its wrong' regarding development. Spending 50% less time while blowing up prototypes regularly is cheaper then spending longer on the project overall. A lot of the things SpaceX does is novel, so no matter how much design work, nobody has ever flipped a deep cryo methane tank and started a full flow staged engine with torch igniter. Working the perfect design for this on paper would take incredibly long and even then you might have to start over again and once you finally test it. This is certainty an expensive program, but compared to Starlink is seems less insane in terms of cash burn. Doing both together is a bit extra insane, but on the other hand if you have Starship, the cost of Starlink drops to pretty absurdly low level.
- qayxc 6y ago
  > Well, they are shooting at a per Raptor cost of 100k long term 250k short term. Even assuming it is 4x as much now, that is about 3m for the engines. That's some super optimistic numbers you chose there. There's no reason to believe that at this point in time a Raptor engine is only half as much as a less complex Merlin engine. The loss of three engines per test is by far the most costly part of the operation. How much an engine costs right now, I don't know of course, but I'm very confident it's more than $2 million a piece.
samcheng 6y ago
They recently raised $1.9B - that will buy a whole lot of grain silos... and quite a few fancy rocket engines, too.
fiftyfifty 6y ago
It will be interesting to see if they push Superheavy/Starship into production before they've completely mastered the landing/re-use of the second stage (or even the first stage)? They might as well get paid for some of these launches while they continue to refine their design, like they did with Falcon 9. Starship is supposed to be able to carry 240 Starlink satellites at a time, that alone might be worth pushing ahead.

Can anyone break down the economics of this? How can they afford this over and over again?

carabiner 6y ago

Stainless steel is really cheap, and they adapted fabrication methods from the grain silo industry.

qayxc 6y ago
The stainless steel is irrelevant. They lose 3 raptor engines per crash and that hurts. A lot.
- mrep 6y ago
  Not sure if they are at v1.0 yet, but "Raptor cost is tracking to well under $1M for V1.0" [0]. Assuming they are, 3 million dollars worth of engines per test isn't that much. [0]: https://twitter.com/elonmusk/status/1179107539352313856 https://twitter.com/elonmusk/status/1179107539352313856

antoniuschan99 6y ago

I would like to know too. When sn8 crashed I googled and saw a quora article saying it costs $180 mil for each prototype. But this article says ~10 mil. Im assuming to ~180 mil number is the production version? https://qr.ae/pGRZv0 https://qr.ae/pGRZv0 It makes sense at $10 mil since they are pumping these out like mad. Also NASA awarded $135 mil for the starship design so it can’t cost $100 for each of these sn’s right!?

adwn 6y ago
> Im assuming to ~180 mil number is the production version? The best assumption would be that the author of the $180M figure has no idea what they're talking about and derived at this number from a lack of information and through bad analogies and misapplication of scaling laws.
runawaybottle 6y ago
They must be willing to foot the bill for testing beyond a certain amount of the NASA award (40 million of the 135?).
qayxc 6y ago
I don't believe the $10 mil figure for one second. That'd mean a Raptor engine would cost less than $1 mil and that just can't be true - that'd be about half the price of a much smaller and less complex Merlin engine...
- iso1631 6y ago
  They're heading towards that $1m per engine, but that price includes development effort. The cost to make 1000 engines is not going to be 10 times the price of making 100 engines, the more that are made, the better they get at making them
  - qayxc 6y ago
    Heading there doesn't mean the engines they're currently using are already at that point.
    - iso1631 6y ago
      We have no idea what the marginal cost of the engine is, but it's far lower than the total cost of developing an engine, and the more they build the closer they get to $1m, $500k and towards the $250k target But even if it were $2m, there's 3 engines, that's $6m, leaving $4m for a bit of steel out of that $10m budget.
elihu 6y ago
A quick google search says that SpaceX charges 62 million for a typical Falcon 9 launch. Let's say they have a 50% profit margin (no idea if that's true, but let's go with it). They had 26 launches in 2020, so that's 806 million in profit they can redirect to R&D on Starship (in addition to loans or VC funding rounds or loose change found in Elon Musk's couch). The Starship prototype cost is a big variable, but assuming it's somewhere in the (log scale) middle of the 10 to 180 million range it's not unreasonable to think that SpaceX can afford to keep producing these things at a rapid rate for quite a while without going broke.

nickik 6y ago

Let me do some guesses. Well, they are shooting at a per Raptor cost of 100k long term 250k short term. Even assuming it is 4x as much now, that is about 3m for the engines. The stainless steel only cost a couple 100k$ at most. Add in some bits and pieces, like flight termination system, thruster system and tanks, sensors and so on, add another couple 100k$, lets say 1 million. All of these are already produced by SpaceX in pretty large numbers. Then manufacturing cost, is a bit hard to calculated, they are producing one prototype every couple of weeks and most of the labor is in welders and most of the machines are welding robots. Labor cost being the dominate cost. A large part of the cost would likely be the launch site construction itself, and how you want to amortize to an individual prototype is hard to say. Then there is another bunch of cost for operations and fuel add another couple 100k. So I would assume a cost of 3 million to 20 million. I'm giving this a pretty large range because its a guessing game. Over the course of a year they tested about 10 increasingly complex prototypes. That would at the high end be a cost of 200 million for one year of this process, if we ignore the design cost. Consider that NASA SLS has a budget of about 2.5 billion a year including ground system (and that has been going on for 10+ years and will go on for many more), SpaceX is basically nickel and dimming a launch vehicle of that size. Elon Musk has a couple of saying along the lines of 'if its long its wrong' regarding development. Spending 50% less time while blowing up prototypes regularly is cheaper then spending longer on the project overall. A lot of the things SpaceX does is novel, so no matter how much design work, nobody has ever flipped a deep cryo methane tank and started a full flow staged engine with torch igniter. Working the perfect design for this on paper would take incredibly long and even then you might have to start over again and once you finally test it. This is certainty an expensive program, but compared to Starlink is seems less insane in terms of cash burn. Doing both together is a bit extra insane, but on the other hand if you have Starship, the cost of Starlink drops to pretty absurdly low level.

qayxc 6y ago
> Well, they are shooting at a per Raptor cost of 100k long term 250k short term. Even assuming it is 4x as much now, that is about 3m for the engines. That's some super optimistic numbers you chose there. There's no reason to believe that at this point in time a Raptor engine is only half as much as a less complex Merlin engine. The loss of three engines per test is by far the most costly part of the operation. How much an engine costs right now, I don't know of course, but I'm very confident it's more than $2 million a piece.

samcheng 6y ago

They recently raised $1.9B - that will buy a whole lot of grain silos... and quite a few fancy rocket engines, too.

fiftyfifty 6y ago

It will be interesting to see if they push Superheavy/Starship into production before they've completely mastered the landing/re-use of the second stage (or even the first stage)? They might as well get paid for some of these launches while they continue to refine their design, like they did with Falcon 9. Starship is supposed to be able to carry 240 Starlink satellites at a time, that alone might be worth pushing ahead.