Elon Musk says SpaceX can outcompete anyone, even China

SpaceX CEO Elon Musk argued today that his private space exploration company has "the best launch prices in the world," costs that he said make it nearly impossible for any foreign country to compete.

Musk's post on the SpaceX site was apparently aimed at answering critics who he said have misrepresented what SpaceX charges for its launches and missions.

"When I started SpaceX," Musk wrote, "it was not surprising when people said we wouldn't succeed. But now that we've successfully proven Falcon 1, Falcon 9, and Dragon, there's been a steady stream of misinformation and doubt expressed about SpaceX's actual launch costs and prices."

The company's most important milestone to date was its launch on June 4, 2010, of its Falcon 9 rocket. That spacecraft and its Dragon cargo modules were built to send supplies to the International Space Station (ISS), as well as to ferry experiment and equipment samples to Earth. The initial launch of the Falcon 9 was funded by SpaceX, but the firm has a contract with NASA for at least three more test flights.

In his post, Musk touted what he said was a recent admission by the Chinese government that SpaceX offers prices with which that country cannot compete. "This is a clear case of American innovation trumping lower overseas labor rates," wrote Musk, who in addition to running SpaceX also runs electric-car maker Tesla Motors and was a founder of PayPal. "I recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary, premised on capturing a dominant share of the market, or 'teaser' rates meant to lure in an eager market only to be increased later. These prices are based on known costs and a demonstrated track record, and they exemplify the potential of America's commercial space industry."

Musk went on to spell out some specifics related to SpaceX's prices, costs, and future contracts, something he said no one else in the space industry does publicly. For example:

• For SpaceX, the cost of a standard Falcon 9 flight comes in at $54 million. "Because SpaceX is so vertically integrated, we know and can control the overwhelming majority of our costs," Musk wrote. "This is why I am so confident that our performance will increase and our prices will decline over time, as is the case with every other technology."

• SpaceX charges $133 million for a "full-up NASA Dragon cargo mission" to the ISS. The company, Musk said, has a "firm, fixed price contract with NASA for 12 missions," which includes the cost of a Falcon 9 launch, as well as the Dragon spacecraft, and all overhead. SpaceX covers any cost overruns, he said.

• Since its founding in 2002, SpaceX's total expenditures have totaled less than $800 million, a number that includes all costs for the development of the Falcon 9, Dragon, and the company's Falcon 1. Also included in that total is the price of all its launches, and the construction of its several launch sites, like that at Cape Canaveral.

• It cost about $300 million each to develop both the Falcon 9 and the Dragon spacecraft.

• Since 2007, SpaceX has been profitable every year "despite dramatic employee growth and major infrastructure and operations investments. We have over 40 flights on manifest representing over $3 billion in revenues."

Musk concluded by saying that his figures had been confirmed by "external auditors" and that the company expects to lower prices over time as "full launch vehicle reusability is achieved."

For NASA, and many entities, both commercial and governmental, it's clearly important that a company like SpaceX can be both profitable and cost-effective. That's largely because President Barack Obama canceled NASA's next major program, the Constellation, as a way of cutting costs. Many in the space industry felt that the Constellation's planned journeys to the moon, and perhaps Mars, were unnecessary boondoggles, especially in an era of huge deficits. But with the imminent closure of the space shuttle program, and without Constellation, NASA no longer had its own method to take people or equipment to the ISS. For that, it has no choice but to rely on private industry and help from the Russians.

From Musk's posts, it's clear that he's addressing a concern by many that China may step in to fill some of the space exploration void, but he argued that even with the world's fastest growing economy, China can't compete with "the American free enterprise system, which allows anyone with a better mousetrap to compete [and] is what will ensure that the United States remains the world's greatest superpower of innovation."