What benefits has SpaceX brought to the U.S. and the world?
Now that SpaceX launches as often as the rest of the world combined and delivers 3 times more payloads into space, it’s hard to imagine that in the 2000s their very existence was far from guaranteed. SpaceX started with $100M after Beal Aerospace spent $200M through booster engine test and decided to cease operations to not compete with NASA-backed rockets while Kistler Aerospace was burning through $900M on a partially reusable launch vehicle to declare bankruptcy when they missed their target market.
But before reaching orbit with a fraction of the money of those who failed before them, SpaceX took on another impossible task: to convince government agencies that they were worthy of competing for contracts and winning against many established contractors. Their 2004 protest against NASA awarding a sole-source contract to Kistler, which went through bankruptcy a year earlier, was supported by GAO and was the first step in forming the COTS program that later saved them from bankruptcy.
Their 2005 attack on the formation of the military launch monopoly ULA created by Lockheed Martin and Boeing was less productive, however. DARPA was enthusiastic about small-lift Falcon 1, but that didn’t change the Air Force's skepticism about medium-lift Falcon 9v1.0, which was a few years away from a maiden flight. The only thing the Air Force agreed to was annual competitions for contracts so as not to cut SpaceX off from this market for 6 years ahead. However, it took SpaceX a lot more effort through the end of 2012 to get the first contract and another lawsuit to make the Air Force open 40% of launches to competition in 2015. And even in 2025, 20 years after the beginning of their efforts, SpaceX will still only have 40% of military launches even though they have always been the cheapest solution for DoD.
NASA: at least $5.8-7.9B of savings
NASA's use of the commercial approach began with the Launch Services Program (LSP) in1998, but it took a push by SpaceX to expand it to ISS cargo resupply. After SpaceX demonstrated success in developing the Falcon 9 and Dragon in the Commercial Orbital Transportation Services (COTS) program and supporting the ISS in the Commercial Resupply Services (CRS), NASA decided to select SpaceX as the 2nd contractor for the Commercial Crew Program (CCP) along with Boeing. Finally, the stunning success over Boeing allowed NASA to bet on SpaceX in the Human Landing System (HLS) when Congress drastically cut the budget for this program.
Since HLS has not yet demonstrated results, it will be omitted from the estimate. This brings us to a total of 38 launches completed by the end of 2023 including 7 LSP, 3 COTS, 19 CRS, and 9 CCP missions. For this work, SpaceX received $7B nominal dollars ($9.1B adjusted for 2023 inflation) while NASA's best alternatives would have cost $11.9B nominally and $14.9B in $2023. This doesn’t take into account SpaceX's constant pressure on launch prices, without which the cost of alternatives would have risen to $13.8B nominal ($17B adjusted) just following the trend of inflation.
Also since for this estimate the actual figures of 2nd contractors were used, this can be considered the lower limit of saved money. Because in the absence of SpaceX, NASA would have had to choose bidders whose offers were evaluated 3rd or lower. That means NASA would have had to pay at least 64-87% more for the same contracts they gave to SpaceX.
Department of Defense (DoD): $8B of savings
After the Challenger accident in 1986, DoD received a “mixed fleet” policy to ensure access to space with multiple vehicles. In 1994, they started the Evolved Expendable Launch Vehicle program (EELV) to improve the reliability and reduce the price of launch vehicles. The original winners were Lockheed Martin and McDonnell Douglas, which had already announced a merger with Boeing.
Boeing was soon caught negotiating the employment of an Air Force procurement officer and commercial espionage on Lockheed for which they were stripped of the $1B portion of the contract. Boeing threatened to pull out of the deal, forcing DoD to negotiate the creation of their joint ULA monopoly on launches with Lockheed. As a result, DoD got a staggering 100% reliability, but with equally staggeringly skyrocketing prices.
From 2006 through 2019 for Atlas V and through 2020 for Delta IV, ULA had two separate contracts with the Air Force: one that covered the cost of launch pads maintenance and one that paid for the construction of the launch vehicles and the launches themselves. This made it impossible to determine the actual prices of specific launches, but according to the GAO report (page 85), average procurement prices for DoD launches increased from $101.7M in 1998 to $376.5M in 2013 at 2015 prices ($130.7M and $484M respectively at 2023 prices).
So it’s no surprise that although SpaceX has only performed 13 Falcon 9 and 4 Falcon Heavy launches for DoD by the end of 2023 and received $1.7B nominally ($2.1B in $2023), they have saved even more for them than for NASA. Because without SpaceX, these launches would cost $6.8B nominally ($8.3B adjusted) even if ULA had a competitor to stop the launch price rise. But since SpaceX is still their only competitor, prices would most likely continue to rise and bring the total price to $8.2B nominally and $10.1B in $2023. That means DoD would have had to pay an insane 381% more for the same work SpaceX did for them.
Commercial launches: $3.2-4.7B of savings
When Falcon 9 first launched in 2010, the majority of commercial launches were aimed at geostationary orbit, where customers had few options: pay $85M to Russia for Proton-M, $100M to Sea Launch for Zenit-3SL, or half of $220M to Europe for a paired launch on the reliable Ariane 5. Falcon 9 came with a price tag of $50-56M which gradually risen to $67M now due to the doubling of performance. By 2015, SpaceX’s pressure on the launch market had driven prices down to $65M for Proton-M and $167-189M for Ariane 5 with further plans to reach only $120M for Ariane 6. Under constant pressure from SpaceX, ULA was forced to enter the commercial market with minimum prices dropping from $125M to $109M in 2016 and to ~$100M with the introduction of Vulcan Centaur in 2024.
By the end of 2023, SpaceX had performed 98 launches for commercial customers and foreign government organizations for which they received an estimated $6.1B nominal and $7.4B in $2023. The cheapest options for these customers would have cost $8.8B and $10.6B respectively otherwise.
However, these figures do not reflect the reliability factor, which by the end of 2023 was 92% for Proton-M, 97% for Ariane 5, and 99% for Falcon 9. It doesn’t directly affect the launch price but determines the insurance rate which in 2017 was 12% for Proton-M, 4-5% for Falcon 9, and 3-4% for Ariane 5. By 2020 it reached ~4% for Falcon 9, Ariane 5, and Atlas V while Proton-M was forced out of business. The reliability of the launch vehicle also determines the chances of losing years of satellite revenue and market share that are not covered by insurance. Using equally reliable options would cost commercial customers $10B nominally and $12B adjusted.
Investors: at least $20B gain
NASA invested less than half of the development cost of the Falcon 9 v1.0 and Cargo Dragon, about 70% of the cost of Crew Dragon, and less than half the cost of Starship. The remainder, all subsequent versions of Falcon 9, and the initial deployment of Starlink SpaceX had to cover from its funds. To do this they initiated several rounds of investment that brought the company $11.9B nominally and $13.5B in 2023 prices. At the end of 2023, this investment was valued at no less than $33.7B.
U.S. economy: around $6B per year
The US has been the undisputed leader in the space industry since the manned Moon landing, but it came at a price. The Space Foundation estimates that in 2011 government spending on space in the U.S. amounted to $47.25B compared to $25.52B for the rest of the world ($64B vs $34.6B in $2023). Last year, that gap narrowed to $74B versus $51.2B. But even before that, the brute force of government spending didn't provide leadership in all parts of the space industry, especially those that American companies didn't consider valuable enough.
At the time of the Falcon 9's maiden flight in 2010, the entire launch industry represented $7.32B with a $2.45B share of commercial launches ($10.23B vs $3.42B in $2023). The soaring prices of DoD and NASA launches from the newly created ULA monopoly led to its complete loss of interest in the commercial market, leaving U.S. satellite operators at the mercy of finding launch contractors first in China, and when that idea failed in Russia and Europe. SpaceX's efforts not only brought back $1-2B per year in commercial launch revenue to the US, but also drove down the price of launches to the point where the total launch industry remained at $7.2B in 2023 even despite a 3-fold increase in the number of orbital launches and a 2.4-fold increase in payload.
An even smaller niche was manned spaceflight, where since the retirement of the Space Shuttle NASA was forced to rely entirely on Russia. This resulted in $3.9B of NASA money flowing to Russia between 2006 and 2020 in exchange for 70 Soyuz seats, the prices for which have steadily increased from $21.3M to $86M ($31.3M to $101.2M in $2023). An approximate 11% annual growth in price means that by 2023 the 6 seats NASA needed would likely cost ~$700M per year. And since NASA still doesn't expect to have a 2nd manned spacecraft ready until at least late 2025, Crew Dragon was the only way to keep that money in the US.
NASA were strongly opposed to space tourism to the point where the first tourist, American Dennis Tito, had to buy a chair in the Soyuz and were banned from visiting the U.S. orbital segment without an escort. This led to another $150M ($260M in $2023) flowed into Russia for 8 seats for tourists in the 2000s, until Roscosmos had to abandon the business in the 2010s due to the increase in the Russian Orbital Segment crew. With the certification of Crew Dragon for operational missions in November 2020, SpaceX was able to launch 10 space tourists while Russia launched only two. In 2023, it generated about $150M for the U.S. economy.
Another undeveloped industry in 2010 in the U.S. was commercial communications satellites where a dominant 60% of the $17.67B in fixed services came from European Intelsat, SES, and Eutelsat and Canadian Telesat, while 53% of the $1.38B in mobile services came from the UK's Inmarsat alone. The only U.S. company to make it into the top 25 in terms of revenue among fixed services ranked 23rd with only $64M in sales. One of the reasons for this terrible situation was the FCC's long-standing position of neglecting satellite communications in favor of terrestrial ISPs, while the European Parliament had already embraced satellites as one of the keys to providing every European with Internet access.
Thus only $100M of the $7.2B ARRA stimulus package to provide broadband and wireless Internet access to Americans went to satellite companies in 2010. In 2020, Starlink was the only satellite company to win $855.5M of the $9.2B allocated in the RDOF program, but later the FCC asked them to give up ~6% of allocated census blocks, which they deemed to have been allocated incorrectly, and ultimately decided to cancel the entire grant in 2022. Among participants in the $14.2B Affordable Connectivity Program conducted from 2021 to 2024, only Viasat represented a satellite company with a 0.9% share for satellite and fixed wireless combined.
Despite fighting against heavily subsidized ISPs, by the end of 2023 Starlink has managed to reach 1.3 million customers in the US, another 1 million more customers abroad, and achieve break-even cash flow despite donating hardware and providing free service to disaster relief efforts in Florida and Maui. Last year Starlink is estimated to have generated $4.2B in revenue from $4.8B of global satellite broadband, breaking more than a decade of European dominance in all areas of the commercial satellite communications market.
Summation
NASA money indeed saved SpaceX from bankruptcy in 2008, although claims that they bet on a company without any experience are baseless. By the time the $278M COTS program contract was awarded, SpaceX had already had a failed Falcon 1 launch, and by the time the $1.6B CRS program contract was awarded, they had already successfully launched a payload into orbit. Still, they've received a lot of contracts over the years, which leads us to the question:
How much did SpaceX get from the government and is this investment worth it?
From 2006 through 2023, SpaceX received $13.7B nominally and $15.9B inflation-adjusted for 2023. That's pretty close to the $13.8-15.9B that NASA and DoD have saved thanks to them. If we add to this the taxes on the $6B per year contribution to the US economy that SpaceX returned and attracted from abroad or created from scratch, they've most likely already paid back every last dime they got from the government.
In recent years, the share of government contracts in SpaceX's budget has varied between 25-50%.
It's also important to look at this situation in comparison: Lockheed Martin, Boeing, and their subsidiary ULA received $28.5B, $26.6B, and $24B respectively for the same period, which in 2023 prices represent $35B, $32.1B, and $27.6B (twice as much as SpaceX got on average). What did the American taxpayers get for this besides lobbying for the use of Russian engines, embarrassing dependence on Russia to deliver astronauts to the ISS, ignoring the needs of satellite operators providing much-needed services, and the SLS launch vehicle that even the DoD doesn't want to use?
Another important point is labor productivity. Some of the brightest minds of American engineers are involved in the space industry, and to keep the American economy competitive, their talents must not be allowed to be wasted. SpaceX employees had spent a cumulative 87,105 years with the company as of the end of 2023, while another private company, Blue Origin, accumulated 31,693 years. Given roughly 42 years of working life we arrive at the equivalent of 2,074 workers in the case of SpaceX and 755 workers in the case of Blue Origin that have dedicated their lives to these companies. Using this workforce, SpaceX has completed 297 successful orbital launches with 3,000 metric tons of payload including 2,100 tons of Starlink satellites they built themselves, more than 7,000 satellites including 5,650 Starlinks, and 42 astronauts and space tourists they launched into orbit. Blue Origin, with more than a third of that workforce, has completed only 23 successful suborbital flights with 32 tourists and several NASA payloads.
At the crossroads
NASA now faces many challenges from limited budget, flagship missions, and a race with China to get astronauts to the south pole of the Moon first. Obviously, their current approach to solving problem is no longer sustainable and requires more efficient solutions. One of them could be commercial space, in which NASA has invested only 16% of their budget for 2022. Of course, commercial space is not a silver bullet and requires NASA itself to change its approach from babysitting contractors to giving them more freedom in technical decisions while sticking to safety issues. The new space economy won't thrive if the companies representing it are stuck in endless meetings and obtaining permits instead of doing the real work and trying to stay within the budget of a fixed-price contract.
The United States will continue to be the leader in space for at least a few years regardless. But whether this continues into the 2030s and beyond will depend on NASA's ability to adapt to a rapidly changing world. Commercial space has learned a lot from NASA in recent years, but now it looks like their time has come to learn how to operate efficiently.