I think that I need to discuss launch costs (again), because I keep reading the same bullshit such as: "Over the past decade, launch costs have been lowered by an order of magnitude, thus laying the foundation for the emergence of a new, expansive space economy." 1/9
This assertion from "an integrated strategic and financial services boutique" is wrong because "launch costs" have not been lowered by "an order of magnitude" - furthermore, as all economists know, the price elasticity of launch demand remains an elusive subject. 2/9
So what is launch cost? In its simplest form it is the unit price of a launcher. Once eliminating the Space Shuttle from the series, the trend looks like this. We can see that in average the launcher unit prices have decreased by a factor 2 to 3 in 30 years. 3/9
But is the unit price of a launcher a good indicator? Not really, because other factors apply, such as the launched mass, the fill ratio etc. So a better indicator is the actual launch price per kg (i.e. the unit price divided by the actual launched mass for each launch) 4/9
Also, to make it more or less correct, you have to separate LEO launch from launches to GEO and other orbits, due to a very different load factor. And to avoid a few extreme value points in the series I have kept only the main launchers (worth 95% of total mass launched). 5/9
In average the real cost to launch to GEO has dropped by 30% in 3 decades, and the real price to launch to LEO has dropped by 50% in 3 decades. Of course a lot of this due to the roll-out of Falcon 9 and its aggressive pricing policy. 6/9
This is already impressive, but is nowhere close to a factor 10 decrease. Even when considering SpaceX most aggressive pricing strategies (i.e. not for NASA, NRO and DoD), the best price/kg to LEO I could measure with Falcon 9 was 4k$/kg - but in average F9 fares at >10k$/kg 7/9
So is this cheap? Well yes, it is getting cheaper. But has it changed the volume of demand? Not yet (except SpaceX's own demand to launch Starlink - see 2020/21). And this is the big issue of launch demand, it is not very elastic and reacts poorly to price variations. 8/9
So how low must launch prices go to actually really make a difference in launch demand? 9/9

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More from @LionnetPierre

7 Sep
We have modelized the economic equation of @SpaceX as a launch service provider (leaving aside Dragon, Starship and Starlink) with a view to uncover its cost and profit drivers. The idea was to use Falcon 9 as a benchmark for testing the economics of launcher Reusability. 1/18
The full research paper is available at linkedin, please read it to understand the assumptions and limitations. The key findings and highlights are posted in this thread. 2/18
linkedin.com/posts/eurospac…
We find that there is a very strong correlation between gross profit and launch cadence in launcher economics, in other words: without a sufficient volume of launch the launcher cannot be profitable, reusable or not. 3/18
Read 18 tweets
23 Aug
How big is 'the space economy'? Confronted with endless discussions I decided to publish a paper on linkedin to discuss the matter, from an economist perspective. Please read the full paper. The highlights are provided in the thread below. 1/7
linkedin.com/posts/eurospac… Image
The space economy in 2020 was about 300 B$ in value. This value is assessed by consolidating the revenues between the upstream and the midstream players, and only considers the measurable value of the induced markets (in the downstream). 2/7 Image
The infrastructure market originates with a demand for space systems supported by a revenue base worth 125B (50+60+15). The demand is supported by two different drives: Public demand with resources worth 110B and commercial initiative worth 15B. 3/7 Image
Read 7 tweets
2 Aug
I have had a look at the SEC filings for @SpireGlobal, and I tried to understand what was the unit cost of the Spire satellites. Not an easy task... a thread. 1/16
In the SEC registration documents you can find a table listing the company property value and the related D&A. There I see that 'Satellites in service' represent 26,2M$ (p. F-43) 2/16
sec.gov/Archives/edgar…
Let me assume that 'Satellites in service' are only those 3 years old or less in 2020, i.e. 62 satellites at end 2020. That is giving me a value per satellite in orbit of 420k$, launch included. But how much did @SpireGlobal pay for launch? 3/16
Read 20 tweets
27 Jul
What's going on at @RocketLab? Apart from a seemingly toxic work environment, two recently published financial reports give us a hint of @RocketLab economics and how it is losing money consistently on every launch, despite NZ government financial support. A thread. 1/14
First a look at the financials of @RocketLab USA and of @ Rocketlab NZ in USD, and in NZD (in 2020 1 NZD=0,63 USD) 2/14
The notes to the NZ financial statements explain that @Rocketlab NZ provides services at a margin cost to the USA parent company. And indeed we have 66 MUSD worth of expenditures at @RocketLab US that match the 90 MNZD worth of revenues of @RocketLab NZ (at 2020 rates). 3/14
Read 18 tweets
23 Mar
A thread: Newspace companies founding chronology is it a typical hype cycle? 1/13
Among the easiest information points to find about newspace companies is the founding date. I thought it would be interesting to create a chronological map of the upstream and midstream companies in my list, and align it with the current level of employment in the companies. 2/13
This last bit of information is of course less easy to find, to the point that it may seems that employment figures are a taboo in the start-up environment. 3/13
Read 15 tweets
18 Feb
@SeraphimCapital recently issued its intersting 2020/Q4 Space Index, seraphim.vc/wp-content/upl… highlighting "private investor’s unprecedented appetite for Spacetech". Now, looking at the data I would like to understand where Seraphim sets the boundary for "Space" 1/6
Indeed when looking a the list of Q4 'mega deals' provided by @SeraphimCapital I am surprised to see two companies whose business is not "space" at all. They are Joby Aviation (Air taxi, formerly Uber Elevate) and Percepto (autonomous robots and drones). 2/6
I do understand that these companies will make use of space based services such as GNSS and/or remote sensing data, but labelling them 'Space' is an exageration. With the same reasoning, shall we now consider that Deliveroo and Uber are part of the space sector? 3/6
Read 7 tweets

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