Washington divorcing SpaceX just isn't possible right now

Japan Times

10 hours ago

The public spat between U.S. President Donald Trump and Elon Musk, the world's richest person, was unsettling given the power these two men wield and how their verbal tussle quickly escalated to issues that directly affect national security.
Trump floated the cancellation of all NASA and Department of Defense contracts with SpaceX, the space-launch and satellite-internet company Musk founded in 2002. Musk countered that he would withdraw the services of the Dragon space capsule, which is the only option now, except for resorting to the Russians, for ferrying astronauts to the International Space Station.
While the details of the social-media fracas will fade over time, the power dynamics on which the threats were based won't. The U.S. government depends on SpaceX for low-cost space launches while competitors lag behind. SpaceX needs the government, ranging from the mundane (approving launch permits) to the grandiose (funding to put a human on Mars). Perhaps this realization that this dustup would only lead to mutual damage was a catalyst for Trump uncharacteristically letting go of the issue and Musk atypically admitting that he went too far in his X attacks.
As the dust settles, it's clear that both NASA and the Defense Department would benefit from more launch competition from the legacy space companies, such as Boeing and Lockheed Martin, and startups, including Jeff Bezos' Blue Origin and Rocket Lab. It's unsettling to think that a mercurial-tempered billionaire has the sole hand on the SpaceX tiller and could potentially make rash decisions that impact the nation — like leaving astronauts stranded.
Steve Bannon, a Trump ally and voice of the extreme end of the MAGA movement, in his bombastic style said the government should confiscate SpaceX and deport Musk, even though he's a naturalized U.S. citizen. Such drastic measures would be counterproductive, destroying the entrepreneurial spirit that made SpaceX a success while giving pause to foreign companies seeking to build assets in the U.S.
An uneasy truce between Trump and Musk seems to be taking hold, but the fallout already has real consequences for SpaceX. Trump scrapped the nomination of Jared Isaacman, the billionaire space enthusiast and Musk ally, to head NASA. Trump's next pick may not be as favorable to Musk's ambition of reaching Mars and perhaps will seek to bolster alternatives to reduce that dependence on SpaceX.
SpaceX's Starship spacecraft lifts off from Starbase, Texas, on May 27. The U.S. had 145 successful space launches last year and SpaceX accounted for 134 of them. China was the second-most-active launcher, with 66, and Russia followed with 17. |
REUTERS
Musk will regret even more his outbursts on social media, including linking Trump to the accused sex trafficker Jeffrey Epstein, if the president picks someone with ties to the legacy space industry to lead NASA instead of an outsider entrepreneur like Isaacman.
Still, it would be hard for the government to step back from SpaceX. Apart from the large lead on launches, SpaceX has built a satellite network that's 10 times as large as its nearest competitor. This has empowered SpaceX's Starlink unit to gobble up market share with its low-cost fast internet service, which has won over customers such as United Airlines and Carnival at the expense of tradition satellite providers such as Viasat and Europe's Eutelsat Communications.
The reason is simple: SpaceX was the first to design a reusable rocket that drastically cuts launch costs. The U.S. had 145 successful launches last year and SpaceX accounted for 134 of them, according to statistics compiled by Jonathan McDowell, an astrophysicist at the Harvard-Smithsonian Center for Astrophysics. China was the second-most-active launcher, with 66, and Russia followed with 17.
In a nutshell, SpaceX is the dominant player for space launches and satellite internet, and its lead will most likely grow. The company inevitably will play a crucial role in the Defense Department's effort to create a Golden Dome, a space-based system for early detection and destruction of intercontinental ballistic missiles. This dominance is not the case for Musk's other enterprises, including Tesla, xAI and Neuralink, which all face robust competitors and have little national-security implications.
While the valuation of Tesla teeters on successful rollouts of robotaxis and robots, SpaceX's road map to riches is much more certain. The argument that the federal government should cut back on contracts with SpaceX and its reliance on a single man runs into two problems. The first is that there's no viable substitute. United Launch Alliance — a joint venture between Boeing and Lockheed Martin — has the proven Atlas V rocket, but the cost to launch is more than $100 million, according to reports, compared with less than $70 million for SpaceX's Falcon 9.
ULA has a new, larger rocket called Vulcan, but it has just recently been certified for flight and won't have a reusable booster, although it's designed to recover the engines in the future.
Boeing's Starliner spacecraft — the alternative to SpaceX's Dragon capsule — ran into problems with its maiden voyage last year to take astronauts to the space station and returned empty. Starliner won't be available for flight until next year, leaving Dragon, which has made 46 visits to the ISS, as the only option.
The second problem with trying to strangle SpaceX by withholding federal contracts is that the company would continue to launch for commercial customers and for itself, accelerating the expansion of its satellite network. Starlink has about 7,000 operational satellites compared with about 650 for OneWeb, which Eutelsat bought for $3.4 billion in 2023. Tellingly, the last launch of 20 OneWeb satellites in October was aboard a SpaceX rocket. Amazon.com, which is seeking to build a satellite network, faces the same problem of paying higher launch costs or using SpaceX rockets.
While legacy space companies in the U.S. and Europe haven't kept pace with reusable rocket technology, startups haven't fared much better. Blue Origin, the space company financed by Amazon Chairman Jeff Bezos, fired its New Glenn reusable rocket into space for the first time in January, but failed to capture the booster. It's second launch has been delayed until August. Rocket Lab is also pursuing a reusable rocket, but for now can only handle small payloads.
Meanwhile, SpaceX is testing its giant Starship rocket designed for NASA's missions to take astronauts to the moon and Mars, but so far has had more failures than success. SpaceX is attempting to reuse the lower and upper stages of this rocket, which would lower even more the launch cost per kilogram of payload and increase the gap with competitors.
For better or worse, Trump and Musk are stuck with each other. While its not ideal for the government to be so reliant on one person, Musk also can't turn his back on its influence and billions of dollars in contracts. They don't have to like each other, but they have little choice but to work together, harmoniously or not.
Thomas Black is a Bloomberg Opinion columnist writing about the industrial and transportation sectors.