Future Elon and SpaceX Domination Will Be Like Rockefeller and Standard Oil

John D Rockefeller created Standard Oil, which built up the modern oil and refining industry. Standard Oil created massive price advantages and scale beyond its competitors. It grew by increasing sales and through acquisitions. In 1868, the Lake Shore Railroad, a part of the New York Central, gave Rockefeller’s a transportation rate of one cent a gallon or forty-two cents a barrel. This was a 71% discount for a promise to ship at least 60 carloads of oil daily. Smaller companies could not produce enough oil to qualify for discounts.

SpaceX already has a price advantage for rocket launch. They are already about ten times cheaper than ULA and have big cost advantages over Russia and China.

Standard was able to have kerosene prices drop from 58 to 26 cents from 1865 to 1870. Rockefeller used the Erie canal as a cheap alternative form of transportation to ship his refined oil from Cleveland to New York City.

Nextbigfuture has described how SpaceX has at least a six-year lead in reusable rockets. SpaceX is on track to lower launch costs by 5 times every four years. Competitors who are catching up in 6 years to where SpaceX is now will still be at a 10X price disadvantage. Competitors who are ten or more years behind SpaceX will be at a 100X price disadvantage. There will be virtually no competitive launch contracts to support competitors.

SpaceX will have Starlink and other satellites and space applications generating tens of billions of dollars each year in revenue. The Space industry is a $300 billion per year industry and only $8 billion is in launch. $3-4 billion is in commercial launches. $5 billion is in national military and government launches. SpaceX already has 60% of commercial launch.

Nextbigfuture has written several times about how I believe Starlink will reach a $50 billion per year business.

Rockefeller used and enlarged his price advantages to ramp up his scale and had 90% of the global oil industry at its peak. At the point of Standard Oil’s breakup in 1911, it had 64% of the global oil industry. This was nearly 40 years of domination for Standard Oil. The 34 companies that Standard Oil were broken into were hugely valuable. They were likely worth an inflation-adjusted $1.6 trillion. Rockefeller had 25% which was worth $400 billion.

SpaceX and Elon Musk will continue to improve the rockets after the reusability of rockets gets near the tens of thousands of reuses of passenger airplanes. The improvements for the next version of the Super Heavy Starship will be increased safety.

Increased safety by 1000X to 10,000X will get rockets to the safety of passenger planes. Those safe rockets will be able to transport passengers at 20 times the speed of sound. By 2025, the international business, first-class and private jet market will have 100+ million flights per year.

Business travelers account for 12 percent of passengers but are typically twice as profitable for airlines. Business passengers can be 75 percent of an airline’s profits. First-class and business tickets may cost as much as 10 times the price of coach tickets.

The premium air travel market could be taken by safe reusable rockets. Instead of paying for extra luxury on a ten-hour international flight, there will be a shift to paying the premium for a half-hour flight that is 20 times faster.

I estimate that a single-stage Starship might only have one crash in 1000 flights. It should be ten times safer than the crewed Falcon 9. This could be flying sub-orbital point to point cargo flights by 2022-2023.

The SpaceX point to point tickets could be $5,000 to $20,000 each. 100 million tickets per year for an average of $10,000 each would be $1 trillion per year. This could happen by 2030-2040.

The overall global airline revenue was about $824 billion in 2018. It is growing at 9.4% per year. It should double to $1.6 trillion in 2025 and could be $3.2 trillion by 2032 and $5 trillion by 2040.

When the Concord was flying in the 1990s, the air ticket prices were roughly as follows:
Full-fare Coach – $1,500
Business Class – $3,000
First Class – $6,000
Concorde – $12,000

The SpaceX Starship will be thirteen times faster than the Concorde. Each SpaceX Starship could make ten flights per day. These international rocket flights would be about 20-30 minutes long. Each might transport 100 to 300 people. I think a larger version would be made in a follow-up iteration (Starship version 3). 1000 to 3000 people per day. Each vehicle could fly 1 million people per year. 3000 to 4000 uses in one year, could mean each vehicle retires in one year or has major refurbishment.

SpaceX Starship passenger ticket prices could justify more of a premium versus first class. They would be first class plus saving the traveler a day in travel.

Elon’s World

By 2030-2040, Elon Musk could have:
a $10-20 trillion valuation (10 to 20 times the $1 trillion per year market for 2030 premium long-distance travel) SpaceX travel business and an array of satellite services.

a $500 billion to $1 trillion company with Tesla if they are selling 10+ million cars per year and also have a dominant self-driving car taxi service.

Boring company could be remaking city infrastructure with tunnels as cheap as a single lane of traffic and possibly offsetting the cost with bricks made from the tunnel dirt.

There could also be hyperloops, so that Elon would have domination of future planes (rockets), trains and cars.

Elon could make Rockefeller look like a pauper. Elon has over 50% of SpaceX and could have $10 trillion in net worth in 2030-2040. Elon could be like twenty to thirty John D. Rockefellers.

There have already been government officials talking about taking Elon’s reusable rockets as strategic assets. Elon may need the Moon and Mars to be beyond the reach of existing Earth governments in regards to anti-trust and other actions.

Written By Brian Wang, Nextbigfuture.com


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