Elon Musk’s company is getting more and more contracts from The Pentagon and could soon threaten the industry’s big fishes.
A few years ago, Space Exploration Technologies Corporation (SpaceX's official name) found only closed doors on its way to the Pentagon where the aeronautics firm, newly founded by Elon Musk, didn’t fail to propose innovative services. Since then, things have utterly changed. As it is described in an article from the Wall Street Journal, SpaceX now plays a central role in its industry and gathered $5 billion in contracts from the private sector since its founding.
In addition to that, SpaceX’s book is filling up with public contracts. NASA represents $9 billion of SpaceX’s revenues. The American administration uses the launcher for multi-purpose missions (sending astronauts to the ISS, cargo missions, etc.)
With that in mind, something interesting appears, SpaceX’s market share is growing at an unprecedented speed and has become central during the last few months. Eutelsat CEO Michel de Rosen said, "Each year that passes will see SpaceX advance, gain market share and further reduce its costs through economies of scale.” According to TIME Magazine, SpaceX's market share increased rapidly. In 2016, SpaceX had a 30% global market share for newly awarded commercial launch contracts. In 2017, the market share reached 45% and 65% in 2018. Thereby, what was an official monopoly led by Boeing and Lockheed Martin (merged as the United Launch Alliance) is now an open market, with a disruptive player.
Boeing, Lockheed and … SpaceX
The Pentagon gave SpaceX the task of conceiving a satellite for missile launch detection. SpaceX also took over various classified secret-defence surveillance contracts, weather satellites, and a communication system similar to Starlink. According to the WSJ, those contracts from the military now make up around $6 billion of the company's revenue. It is still far behind the $26 billion and $21 billion revenue from Boeing and Lockheed Martin, but that’s in big part because those firms continue to benefit from their past monopoly, as they still have NASA’s confidence.
SpaceX could soon outshine its competitors. Indeed, the company has a considerable advantage over its competitors– its Low-Cost Business Model. This is a crucial component in the eyes of national administrations that have the challenging task to manage the taxpayers’ money. “SpaceX’s executives have been constant in their effort to convince The Pentagon officials, but it paid off” stated Roger Rusch, a satellite communications specialist.
Shoot for the stars, Aim for Mars
Elon Musk must have liked Pop Smoke’s (R.I.P.) last album. As the entrepreneur mentioned it multiple times already, SpaceX has two main goals; First, the implementation of the Starlink technology within the next few years (a technology that would provide fast broadband all across the world). And of course, Mars Colonisation. Thus it is clear that Musk plans on making the most of SpaceX's increasing contract revenue to take a head start in his Mars journey.
Although the new Democrat administration might contradict his plans by reducing the spendings on defence and space programs, SpaceX has proved itself as an innovative company able to evolve with its time. If there's anything we've learnt, it's that we can always count on Elon Musk's ability to find new revenue streams for his enterprise.