Reuse is “just as fundamental in rocketry as it is in other forms of transport – such as cars or planes or bicycles,” Mr. Musk said in a briefing after last year’s April launch.
Imagine if you could only use an automobile once, driving to your destination, and then buying another to return home. Only the richest of the rich would be able to go on road trips in such a world. Now imagine that car costs from tens to hundreds of millions of dollars.
“There are ongoing challenges in translating a reused rocket to tangible capex savings – worries about it failing, insurance implications, retrofitting turnaround, building up a critical mass of reused first stages in the warehouse,” Jefferies International LLC, an investment bank covering telecommunications satellites, wrote in a report studying SpaceX’s costs.
In addition to the substantial added costs of insurance, testing, and refurbishing, landing a rocket takes more fuel too. As much as 30 percent more propellant, according to French space agency CNES. That’s more weight the engines need to hoist into space, where kilograms don’t come cheap.
All these extra costs add up, making how many times a company can fly the same rocket a critical factor. According to a 2014 CNES estimate, a completely reusable first stage booster would have to fly 50 times a year to cut costs by 10 to 20 percent. Chief Executive Stephane Israel of competing aerospace company Arianespace has floated 35-40 launches as the magic number, but SpaceX has yet to state a minimum profitable target.
Assuming a more modest goal of 15 annual launches per Falcon 9 (Musk’s comments suggest he expects “dozens”), Jeffries found that SpaceX could save over $25 million per launch from their $61 million sticker price, assuming current profit margins of 40 percent. Jeffries suggests those profits could rise as high as 77 percent per launch, if the company is generous enough to pass along half of its savings to the consumer.
But the March contract with SES, which is SpaceX’s biggest client in terms of contract number, shows only a 10 percent discount for the risk and honor of being the first to ride a second-time rocket.
The satellite company has repeatedly said it was willing to be that guinea pig, but had publicly stated it was hoping for a 50 percent price drop, Space News reported last April, leaving some to wonder if Musk is playing it safe as SpaceX ramps up its refurbishing operation, or if the economics of reusability are proving as complicated as competitors claim.