SpaceX, Economies of Scale, and a Revolution in Space Access
From the time he transformed the world of online banking, Elon Musk established himself as a bold innovator. After selling X.com to PayPal in 2002, he founded a series of revolutionary start-ups, starting with Space Exploration Technologies (SpaceX). Hoping to "make human life multiplanetary", Musk aimed to establish the first Mars civilization, but was unable to procure rockets that would be cheap or reliable enough to make the journey. Over the course of the next decade, SpaceX developed a line of revolutionary rockets that transformed the commercial space launch industry. Using reusable rockets to exploit the benefits of economies of scale, SpaceX cut costs to orbit by a factor of 18 and captured a large percentage of the global launch market, once thought to be inaccessible to newcomers in the industry. But after a remarkable decade, Musk's original goal to reach Mars seemed both within reach and impossibly optimistic. SpaceX developed technologies that would be critical in supporting a crewed mission to Mars, but the cost to get there was estimated to be well above $200 billion dollars in 2014, nowhere near revenues from the launch services market. Would there be enough demand for launch services to make Elon Musk's vision a possibility, or would SpaceX have to find other ways to get there?
Keywords: space tech; space access; vision; Economies of Scale; Technological Innovation; Emerging Markets; Commercialization; Finance; Aerospace Industry;
Citation:
Weinzierl, Matthew C., Kylie Lucas, and Mehak Sarang. "SpaceX, Economies of Scale, and a Revolution in Space Access." Harvard Business School Case 720-027, April 2020. (Revised June 2020.) View Details