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SpaceX nears big US govt. missions as ULA handwaves about risks of competition

Falcon 9 B1045 rolls out to Pad 40 ahead of its first launch in April 2018. (NASA/SpaceX)

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Speaking at the 2018 Von Braun Symposium in Huntsville, Alabama, ULA COO John Elbon expressed worries that the US National Security Space (NSS) apparatus could be put at significant risk if it comes to rely too heavily on the commercial launch industry to assure access to space.

Given that the US military’s launch capabilities rest solely on SpaceX and ULA and will remain that way for at least three more years, Elbon’s comment was effectively an odd barb tossed in the direction of SpaceX and – to a lesser extent – Blue Origin, two disruptive and commercially-oriented launch providers.

Reading between the lines

For the most part, Elbon’s brief presentation centered around a reasonable discussion of ULA’s track record and future vehicle development, emphasizing the respectable reliability of its current Atlas V and Delta IV rockets and the ‘heritage’ they share with ULA’s next-generation Vulcan vehicle. However, the COO twice brought up an intriguing concern that the US military launch apparatus could suffer if it ends up relying too heavily on ‘commercially-sustained’ launch vehicles like Falcon 9/Heavy or New Glenn.

To provide historical context and evidence favorable to his position, Elbon brought up a now-obscure event in the history of the launch industry, where – 20 years ago – companies Lockheed Martin and Boeing reportedly “set out to develop … Atlas V and Delta IV” primarily to support the launch of several large satellite constellations. The reality and causes of the US launch industry’s instability in the late ’90s and early ’00s is almost indistinguishable from this narrative, however.

Despite the many veils of aerospace and military secrecy surrounding the events that occurred afterward, the facts show that – in 1999 – Boeing (per acquisition of McDonnell Douglas) and Lockheed Martin (LM) both received awards of $500M to develop the Delta IV and Atlas V rockets, and the military further committed to buying a full 28 launches for $2B between 2002 and 2006. Combined, the US military effectively placed $3B ($4.5B in 2018 dollars) on the table for its Evolved Expendable Launch Vehicle (EELV) program with the goal of ensuring uninterrupted access to space for national security purposes.

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Rocketing into corporate espionage

“The robust commercial market forecast led the Air Force to reconsider its acquisition strategy.  The EELV acquisition strategy changed from a planned down-select to a single contractor and a standard Air Force development program [where the USAF funds vehicle development in its entirety] to a dual commercialized approach that leveraged commercial market share and contractor investment.” – USAF EELV Fact Sheet, March 2017

The above quote demonstrates that there is at least an inkling of truth in Elbon’s spin. However, perhaps the single biggest reason that the EELV program and its two awardees stumbled was gross, inexcusable conduct on the part of Boeing. In essence, the company’s space executives conspired to use corporate espionage to gain an upper-hand over Lockheed Martin, knowledge which ultimately allowed Boeing to severely low-ball the prices of its Delta IV rocket, securing 19 of 28 available USAF launch contracts.

Ultimately, Lockheed Martin caught wind of Boeing’s suspect behavior and filed a lawsuit that began several years of USAF investigations and highly unpleasant revelations, while Boeing also had at least 10 future launch contracts withdrawn to the tune of ~$1B (1999). USAF investigations discovered that Boeing had lied extensively to the Air Force for more than four years – the actual volume of information stolen would balloon wildly from Boeing’s initial reports of “seven pages of harmless data” to 10+ boxes containing more than 42,000 pages of extremely detailed technical and proprietary information about Lockheed Martin’s Atlas V rocket proposal.

“If you rewind the clock 20 years, there were folks on a panel like this having dialogue about commercial launch, and there were envisioned several constellations that were going to require significant commercial launch. Lockheed Martin and Boeing set out to develop launch vehicles that were focused on that very robust commercial market – in the case of McDonald Douglas at the time, which later became Boeing, the factory in Decatur was…sized to crank out 40 [rocket boosters] a year, a couple of ships were bought to transport those…significant infrastructure put in place to address that envisioned launch market.” – John Elbon, COO, United Launch Alliance (ULA)

 

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In reality, Boeing was so desperate to secure USAF launches – despite the fact that it knew full well that Delta IV was too expensive to be sustainably competitive – that dozens of employees were eventually roped into a systematic, years-long, highly-illegal program of corporate espionage specifically designed to beat out government launch competitor Lockheed Martin. Humorously, Delta IV was not even Boeing’s design – rather, Boeing acquired designer McDonnell Douglas in late 1996, five days before the USAF announced the decision to reject Boeing and another company’s EELV proposals, narrowing down to two finalists (McDonnell Douglas and Lockheed Martin).

Seven years after the original lawsuit snowballed, Boeing settled with Lockheed Martin for a payment of more than $600M in 2006, accepting responsibility for its employees’ actions but admitting no corporate wrongdoing. Five years after that settlement, John Elbon became Vice President of Boeing’s Space Exploration division. This is by no means to suggest that Elbon is in any way complicit, having spent much of his 30+ years at Boeing managing the company’s involvement in the International Space Station, but more serves as an example of how recent these events are and why their consequences almost certainly continue to reverberate loudly within the US space industry.

SpaceX forces change

Worsened significantly by the consequences of Boeing’s lies about the actual operational costs of its Delta IV rocket (it had planned to secretly write off a loss on each rocket in order to steal USAF market share from LockMart), the commercial market for the extremely expensive rocket was and still is functionally nonexistent. 35 out of the family’s 36 launches have been contracted by the US military (30), NOAA (3), or NASA (2); the rocket’s first launch, likely sold at a major discount to Eutelsat, remains its one and only commercial mission.

ULA’s Delta Heavy seen during the August 2018 launch of NASA’s Parker Solar Probe. (Tom Cross)

Atlas V, typically priced around 30% less than comparable Delta IV variants, has had a far more productive career, albeit with very few commercial launches since the Dec. 2006 formation of the United Launch Alliance. Since 2007, just 5 of Atlas V’s 70 launches have been for commercial customers. Frankly, although Atlas V was appreciably more affordable than Delta IV, neither rocket was ever able to sustainably compete with Europe’s Ariane 5 workhorse – Ariane 5 cost more per launch, but superior payload performance often let Arianespace manifest two large satellites on a single launch, approximately halving the cost for each customer. Russia’s affordable (but only moderately reliable) Proton rockets also played an important role in the commercial launch industry prior to SpaceX’s arrival.

After fighting tooth and nail for years to break ULA’s US governmental launch monopoly, SpaceX’s first dedicated National Security Space launch finally occurred less than a year and a half ago, in May 2017. SpaceX has since placed a USAF spaceplane and a classified NSS-related satellite into orbit and been awarded launch contracts for critical USAF payloads, most notably winning five of five competed GPS III satellite launches, to begin as early as mid-December. Falcon 9 will cost the USAF roughly 30% less than a comparable Atlas 5 contract, $97M to ULA’s ~$135M.

 

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A bit more than two decades after Boeing bought McDonnell Douglas and began a calculated effort to steal trade secrets from Lockheed Martin, Elbon – now COO of the Boeing/Lockheed Martin-cooperative ULA – seems to fervently believe that the most critical mistake made in the late 1990s and early 2000s was the USAF’s decision to partially support the development of two separate rockets. Elbon concluded his remarks on the topic with one impressively unambiguous summary of ULA’s position:

“We have to make sure that we don’t get too much supply and not enough demand so that the [launch] providers can’t survive in a robust business environment, and then we lose the capability as a country to do the launches we need to do … [That’s] the perspective we have at ULA and it’s based on the experience that we’ve been through in the past.”

In his sole Delta IV vs. Atlas V case-study, what ULA now seems to think might have been “too much supply” under the USAF’s EELV program appears to literally be the fundamental minimum conditions needed for competition to exist at all – two companies offering two competing products. Short of directly stating as much, it’s difficult to imagine a more concise method of revealing the apparent belief that competition – at all – is intrinsically undesirable or risky.

A recording of the Von Braun Symposium’s Commercial Space panel can be viewed here at timestamp 01:11:40.

Eric Ralph is Teslarati's senior spaceflight reporter and has been covering the industry in some capacity for almost half a decade, largely spurred in 2016 by a trip to Mexico to watch Elon Musk reveal SpaceX's plans for Mars in person. Aside from spreading interest and excitement about spaceflight far and wide, his primary goal is to cover humanity's ongoing efforts to expand beyond Earth to the Moon, Mars, and elsewhere.

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Tesla CEO Elon Musk teases Optimus job that’s straight out of Robocop

“If somebody’s committed a crime, we might be able to provide a more humane form of containment of future crime. You now get a free Optimus, and it’s just going to follow you around and stop you from doing crime.”

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Credit: @heydave7/X

Tesla CEO Elon Musk teased a potential job for the company’s Optimus robot last week that is straight out of the movie “Robocop.”

“Robocop” aimed to show a futuristic look at law enforcement in a Sci-fi thriller that was among the first iterations of how robots could be used for police work.

The 1987 film showcased an injured cop turning into an armed cyborg, and although Tesla’s Optimus won’t be a human-robot hybrid, Musk’s idea for the humanoid project is similar.

Musk said last week at the Annual Shareholder Meeting, where shareholders voted to approve his $1 trillion compensation plan, that Optimus could be the future of law enforcement, nearly revolutionizing the way criminals are prosecuted.

He hinted that Optimus could actually be used as a chaperone of sorts, arguing that it was a “more humane form of containment of future crime.” Musk said:

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“If somebody’s committed a crime, we might be able to provide a more humane form of containment of future crime. You now get a free Optimus, and it’s just going to follow you around and stop you from doing crime. Other than that, you get to do anything; it’s just going to stop you from committing crime. That’s really it. You don’t have to put people in prisons and stuff. It’s pretty wild to think of all the possibilities, but I think it’s clearly the future.”

Musk’s overall idea for Optimus is to change the way people are able to exist, from those law-abiding citizens to others who have their run-ins with the law. Instead, the Tesla CEO believes there could be a different way to handle everything, including punishment.

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It was not the only thing that Musk indicated could be changed significantly by the presence of humanoid robots, as he also said a universal basic income could be established with the help of products like Optimus.

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Elon Musk teases huge merger: ‘Trending towards convergence’

“My companies are, surprisingly in some ways, trending towards convergence.”

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Elon Musk recently amplified the thoughts of Morgan Stanley analyst Adam Jonas, who had insight into the “Muskonomy” of his potentially interconnected ventures, something that was proposed at the recent Tesla Shareholder Meeting with xAI.

Musk’s words indicate a potential strategic fusion that could serve as a blueprint for future innovation–but it is dependent on a conglomeration between the many entities the CEO serves.

As Tesla grapples with scaling Optimus and preparing for its imminent production and the development of the Full Self-Driving suite, xAI’s computational edge could provide leverage for the millions of miles of data the company accumulates, providing a more stable and accurate development strategy for the autonomous and AI efforts it has put its chips all in on.

After Tesla Shareholders voted to deny Tesla and xAI’s potential financial partnership through an investment, Jonas said it was an issue that would have to be revisited due to its importance.

xAI has the opportunity to provide an incredible strategic and financial bolstering to Tesla, especially with how important a role data plays in the development of the company’s biggest products.

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Jonas wrote in a note to investors:

“They’re gonna have to revisit this. We don’t think investors understand just how important xAI is to Tesla and the broader Muskonomy. Tesla’s relationship with xAI (financially and strategically) is deterministic to the long-term success of Tesla due in part to the natural synergies of data, software, hardware, and manufacturing in recursive loops. The values (and value systems) of both Tesla and xAI are endowed by the values of their shared creator. We believe this co-determination becomes more obvious in the next phases of physical AI/ autonomy for Tesla in the year ahead.”

Musk said, in response to Jonas’ note, that his companies are “surprisingly in some ways, trending toward convergence.”

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Mergers and shared ecosystems between companies are not new moves out of Musk’s playbook, as it has been done in the past, especially with Tesla acquiring other entities.

It did it with SolarCity in 2016 and with Maxwell Technologies in 2019. Investments between Musk companies have occurred before, too, as SpaceX dumped $2 billion into xAI last July.

He’s also said on several occasions that he could eventually bring everything together into some sort of single entity. In July 2024, he said:

“I’m not opposed to the idea in principle, but I’m not sure there is a pragmatic or legal way to merge them. There is also value in equity incentives of people at the companies being tied to that company’s accomplishments.”

This point is especially relevant now with Musk’s recently approved compensation package.

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He also said in June, during an interview with CNBC , that “It’s not out of the question” for xAI to merge with Tesla, but it would have to be approved by shareholders. Just a few days later, he said he would not support xAI merging with Tesla; however, he put it in investors’ hands.

It’s more than just a deal; it’s symbiotic. Musk being at the helm of various companies, all intertwined with one another, helps foster recursive innovation. Despite these advantages, there are still a handful of things to consider, especially from a regulatory perspective.

However, it is not competition; it’s convergence. In Musk’s universe, especially from a business sense, mergers are not endpoints, but instead launchpads for ambitions that aim to take each company from Earth to lands beyond our atmosphere.

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Tesla makes Elon Musk’s new compensation package official

This is an important thing to note, as much of the media coverage regarding Musk’s pay package seems to indicate that the company and the shareholders are simply giving the CEO the money. He has to come through on each of these tranches to unlock the $1 trillion.

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Credit: @JoeTegtmeyer/X

Tesla has made CEO Elon Musk’s new compensation package official, as it filed a Form 4 with the Securities and Exchange Commission (SEC) on Monday.

The package officially gives Musk the opportunity to acquire over 423 million shares of Tesla stock (NASDAQ: TSLA), dependent on his ability to achieve twelve performance-based tranches that will bring growth to the company and its shareholders.

Tesla (TSLA) shareholders officially approve Elon Musk’s 2025 performance award

Musk’s new compensation package was approved by investors last Thursday at the company’s Annual Shareholder Meeting, as over 75 percent of voters supported the CEO’s new plan, which could be valued at over $1 trillion if he is able to come through on all twelve tranches.

The twelve tranches include growth goals related to vehicle deliveries, the Optimus humanoid robot project, and Tesla’s valuation. If Musk is able to achieve each tranche, he would help Tesla achieve an over $8 trillion market cap.

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The 12 tranches include:

  1. $2 trillion market cap + Deliver 20 million Tesla vehicles cumulatively
  2. $2.5 trillion market cap + Reach 10 million active Full Self-Driving (FSD) subscriptions
  3. $3 trillion market cap + Deliver 1 million Optimus humanoid robots
  4. $3.5 trillion market cap + Operate 1 million Robotaxis commercially
  5. $4 trillion market cap + Hit $50 billion in adjusted EBITDA (earnings before interest, taxes, etc.)
  6. $4.5 trillion market cap + Hit $80 billion in adjusted EBITDA
  7. $5 trillion market cap + Hit $130 billion in adjusted EBITDA
  8. $5.5 trillion market cap + Hit $210 billion in adjusted EBITDA
  9. $6 trillion market cap + Hit $300 billion in adjusted EBITDA
  10. $6.5 trillion market cap + Hit $400 billion in adjusted EBITDA
  11. $7.5 trillion market cap + Hit $400 billion in adjusted EBITDA for four straight quarters in a row
  12. $8.5 trillion market cap + Hit $400 billion in adjusted EBITDA for four straight quarters in a row

Achieving the twelve levels of the new compensation package would also give Musk what he’s really after: a larger ownership share in Tesla, which would help him achieve more control, something he feels is necessary for the rollout of the Optimus robot “army.”

Musk does not earn a dime if he does not achieve any of the tranches above.

This is an important thing to note, as much of the media coverage regarding Musk’s pay package seems to indicate that the company and the shareholders are simply giving the CEO the money. He has to come through on each of these tranches to unlock the $1 trillion.

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