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Elon Musk says SpaceX could soon face bankruptcy – here’s why that’s unlikely
In a new leaked email, SpaceX CEO Elon Musk says that the company could go bankrupt if, by the end of 2022, it can’t achieve Starship and Starlink milestones that are by all practical appearances out of reach.
The news – first broken by SpaceExplored – comes about a week after CNBC reported that Musk was “shaking up” SpaceX’s leadership by effectively firing its vice president of propulsion due to “a lack of progress” in the development of Starship’s Raptor engine. Now, apparently after taking his first good look ‘under the hood’ in a while, Musk says that “the Raptor production crisis is much worse than it seemed a few weeks ago.” Worse, the CEO has implied that if it “can’t get enough reliable Raptors made [by the end of 2022]…[SpaceX will] face a genuine risk of bankruptcy.”
The email raises both skepticism and several major questions.
First and foremost, can there be any truth to Musk’s claim that SpaceX could go bankrupt because of an unspecified “Raptor production crisis [and disaster]?” Put simply, not really. Musk’s argument is simple enough. According to his estimations, the first-generation (V1) Starlink satellite internet constellation is “financially weak by itself,” which has led SpaceX to develop a much larger, more advanced second-generation (V2) Starlink satellite and constellation that the company’s existing “Falcon [rockets have] neither the [payload] volume nor mass to orbit” to launch. To efficiently launch the Starlink V2 constellation, then, Musk says SpaceX needs Starship to be operational.
Up to that point, nothing in Musk’s email implies that a “Raptor production crisis” could pose any serious harm to SpaceX beyond annoying delays. More than two years ago, Musk believed that Raptor V1.0 already cost less than $1M to produce. As of 2021, SpaceX (again per Musk) is completing an average of one Raptor engine every two days and currently has 35 functional engines installed on Starship and Super Heavy booster prototypes in Boca Chica, Texas. Already, at a rate of one engine every 48 hours, SpaceX’s Raptor production capabilities are theoretically strong enough to fully outfit a significant Starship fleet.
-->Both stages of Starship are designed to be rapidly and fully reusable and absolutely need to be to efficiently and rapidly launch SpaceX’s Starlink V2 constellation. In theory, a production capacity of ~180 Raptors per year should allow SpaceX to outfit a fleet of three Super Heavies (99 engines) and 13 Starships (72 engines). Even if Super Heavy booster reuse is initially no faster than Falcon (~1 launch per month) and Starship reuse is no faster than Dragon (~3 launches per year), that fleet would be able to launch at least 36 times per years. Even if SpaceX’s former propulsion executives somehow pulled the wool over Musk’s eyes, tricking him into seeing engines that just weren’t there and hiding hundreds of millions of dollars in secret cost overruns from the company’s own accountants, an annual run rate of 100 Raptor engines at a cost of $5 million each would still be able to power a fleet of six reusable ships and two boosters capable of ~20 launches per year.
Musk says that SpaceX will only face the risk of bankruptcy if it “cannot achieve a Starship flight rate of at least once every two weeks next year” – equivalent to 26 launches annually. Again, being deceived for years would be a terrible look but nothing described above appears to have any chance of bankrupting SpaceX. However, the CEO also says that SpaceX “is spooling up” one or several factories to produce “several million” Starlink user terminals (dishes) per year in a process that “will consume massive capital [and assumes] that [Starlink V2 satellites] will be on orbit to handle the bandwidth demand.” He even goes as far as to say that those millions of terminals “will be useless otherwise.”
Once again, while what he describes is an undeniable hurdle for SpaceX, the company is making a choice to “consume massive capital” to “spool up” Starlink dish factories before the constellation capacity needed to take advantage of those dishes has been secured. SpaceX doesn’t need to make such a massive investment so quickly when it could instead split that money with Starship, ensure that Starship and Raptor and Starlink V2.0 satellites are ready or close to ready for routine launches, and then invest heavily in dish production.
For example, just this month, SpaceX raised almost $350M from investors that have a practically bottomless appetite for SpaceX investments. Combined, by the end of the year, SpaceX will have likely raised more than $2.3B in 2021 alone. Valued at more than $100 billion, the company could – as a last resort – feasibly raise double-digit billions in one fell swoop with an IPO. Put simply, the only way SpaceX could ever go bankrupt in the near term would be by consciously letting itself drown in a sea of life preservers.
This is not to say that SpaceX doesn’t have numerous massive challenges ahead of it, nor is it to say that its fundraising potential is truly limitless. Investors could eventually become disillusioned. It’s entirely possible that it will take SpaceX years longer than Musk expects to begin routine Starlink V2.0 launches with Starship. Environmental approvals alone could easily preclude more than five orbital Starship launches in 2022 and potentially prevent regular (i.e. biweekly) launches well into 2023. But the fact of the matter is that unless Elon Musk is telegraphing signs that the rest of the company’s finances are a house of cards, the odds of SpaceX actually going bankrupt anytime soon are vanishingly small. In reality, he’s likely just attempting to (for better or worse) instill some amount of fear and panic in SpaceX employees to encourage them to work more hours and take fewer days off.
Update: Musk has tweeted a brief public comment confirming that he believes bankruptcy is actually an unlikely – but not impossible – outcome for SpaceX.
If a severe global recession were to dry up capital availability / liquidity while SpaceX was losing billions on Starlink & Starship, then bankruptcy, while still unlikely, is not impossible.
GM & Chrysler went BK last recession.
“Only the paranoid survive.” – Grove— Elon Musk (@elonmusk) November 30, 2021
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News
Tesla FSD approved for testing in Nacka, Sweden, though municipality note reveals aggravating detail
Nacka, Sweden, a municipality just a few miles from Stockholm, has given its approval for FSD tests.
Tesla has secured approval for FSD testing in an urban environment in Sweden. As per recent reports from the Tesla community, Nacka, Sweden, a municipality just a few miles from Stockholm, has given its approval for FSD tests.
A look at the municipality’s note regarding FSD’s approval, however, reveals something quite aggravating.
FSD testing approval secured
As per Tesla watcher and longtime shareholder Alexander Kristensen, Nacka is governed by the Moderate Party. The shareholder also shared the municipality’s protocol notes regarding approval for FSD’s tests.
“It is good that Nacka can be a place for test-driving self-driving cars. This is future technology that can both facilitate mobility and make transportation cheaper and more environmentally friendly,” the note read.
The update was received positively by the Tesla community on social media, as it suggests that the electric vehicle maker is making some legitimate headway in releasing FSD into the region. Sweden has been particularly challenging as well, so securing approval in Nacka is a notable milestone for the company’s efforts.
-->Aggravating details
A look at the notes from Nacka shows that FSD’s proposed tests still met some opposition from some officials. But while some critics might typically point to safety issues as their reasons for rejecting FSD, those who opposed the system in Nacka openly cited Tesla’s conflict with trade union IF Metall in their arguments. Fortunately, Nacka officials ultimately decided in Tesla’s favor as the company’s issues with the country’s unions are a completely different matter.
“The left-wing opposition (S, Nackalistan, MP and V) voted no to this, referring to the fact that the applicant company Tesla is involved in a labor market conflict and does not want to sign a collective agreement. We believe that this is not an acceptable reason for the municipality to use its authority to interfere in a labor law conflict.
“Signing a collective agreement is not an obligation, and the company has not committed any crime. The municipality should contribute to technological development and progress, not work against the future,” the note read.
News
Tesla Model 3 and Model Y named top car buys in Norway
Despite growing competition from European and Korean brands, both models stood out for their balance of price, performance, and everyday usability.
Norway’s annual roundup of the best car purchases featured Tesla’s two main sellers this year, with the Model 3 and Model Y securing top positions in their respective segments.
Despite growing competition from European and Korean brands, both models stood out for their balance of price, performance, and everyday usability. The verdict comes as electric vehicle adoption remained above 95% of new vehicle sales in the country.
Tesla Model 3 strengthens its value position
Among compact EVs, the Tesla Model 3 maintained its position as the best overall buy thanks to its strong blend of performance, efficiency, and updated features. Reviewers noted that every trim offered compelling value, especially with the all-electric sedan’s improved cabin ergonomics and the return of the turn-signal stalk, which was one of the few previous complaints among drivers.
The Model 3’s mix of long-range capability, low operating costs, and responsive handling has continued to set the benchmark for compact EVs in Norway. While competitors from Hyundai, Volkswagen, and Peugeot have narrowed the gap, Tesla’s price-to-capability ratio has remained difficult to beat in this segment, Motor.no reported.
“The Model 3 clearly offers the best value for money in the compact class, no matter which version you choose. Now it also gets the turn signal lever back. This eliminates one of the few flaws in a driving environment that many believe is the best on the market,” the publication wrote.
-->Tesla Model Y claims its crown
The Tesla Model Y emerged as Norway’s top family-car purchase this year. The latest refresh introduced improvements in ride quality, styling, and interior materials, allowing the Model Y to deliver a more premium driving experience without a substantial price increase.
Reviewers praised its spacious cabin, strong safety profile, and practical range, all of which reinforced its appeal for families needing an all-purpose electric crossover. The Model Y remains especially notable given its continued popularity in Norway even as Tesla faces declining sales in other global markets.
“The Model Y is back as the winner in the family class. The upgrade in the new year was even more extensive than expected. It is a slightly more elegant and significantly more comfortable Model Y that solidifies its position as Norway’s best car purchase in the most important class,” the Norwegian motoring publication noted.
News
Tesla Giga Berlin is still ramping production to meet Model Y demand: plant manager
Tesla Gigafactory Berlin has expanded to two full shifts, as per the facility’s plant manager, and a lot of it is due to Model Y demand.
Tesla Gigafactory Berlin has expanded to two full shifts, as per the facility’s plant manager, and a lot of it is due to Model Y demand. While registrations in some countries such as Sweden have fallen sharply this year, the company’s sales in other key territories have been rising.
Giga Berlin shifts to two shifts
Giga Berlin factory manager André Thierig told the DPA that the facility has been running two shifts since September to manage a surge in global orders. And due to the tariff dispute with the United States, vehicles that are produced at Giga Berlin are now being exported to Canada.
“We deliver to well over 30 markets and definitely see a positive trend there,” Thierig said.
Despite Giga Berlin now having two shifts, the facility’s production still needs to ramp up more. This is partly due to the addition of the Tesla Model Y Performance and Standard, which are also being produced in the Grunheide-based factory. Interestingly enough, Giga Berlin still only produces the Model Y, unlike other factories like Gigafactory Texas, the Fremont Factory, and Gigafactory Shanghai, which produce more than one type of vehicle.
Norway’s momentum
Norway, facing an imminent tax increase on cars, has seen a historic spike in Tesla purchases as buyers rush to secure deliveries before the change takes effect, as noted in a CarUp report. As per recent reports, Tesla has broken Norway’s all-time annual sales record this month, beating Volkswagen’s record that has stood since 2016.
-->What is rather remarkable is the fact that Tesla was able to achieve so much in Norway with one hand practically tied behind its back. This is because the company’s biggest sales draw, FSD, remains unavailable in the country. Fortunately, Tesla is currently hard at work attempting to get FSD approved for Europe, a notable milestone that should spur even more vehicle sales in the region.
Tesla FSD approved for testing in Nacka, Sweden, though municipality note reveals aggravating detail
Tesla Model 3 and Model Y named top car buys in Norway
