SpaceX's Launch Price Isn't A Market Price
Why no one can compete with SpaceX, and why that's everyone's problem
Alright, you freaks told me you wanted more space economics stuff, so here you go…
Have you heard the latest, that space launch is cheap now?!
SpaceX fixed the space launch business, because Elon is a genius. Reusability works. The cost curve is falling. Competition will follow. Access to space is being democratized.
Except… not quite.
SpaceX’s price to launch a payload isn’t a market price, it’s a transfer price set by a vertically integrated company whose largest customer is checks notes — itself.
To rewind: In 2024, 89 of 134 Falcon launches carried Starlink; by 2025, SpaceX flew 165 missions, which is more than twice China’s entire program and roughly half of all global launches.
That cadence is insane in every possible way. But most of all because of how it impacts the economics of the launch industry, which is driven by volume! Fixed costs (by which I mean factories, pads, workforce, mission control, etc) essentially disappear at ~165 launches per year.
Which is great for SpaceX, of course.
However, fixed costs do not disappear at 7 launches a year (Ariane 6’s 2025 output).
So, who cares? Well, for the last three years, but especially in the last year, I’ve been working with governments and the private sector to figure out how, exactly, non-SpaceX’ers can become space launch companies, too. And therein lies a really important question: how can we increase domestic European or national competition in response to SpaceX? Why, for example, does Europe not have a SpaceX, too?
Cue the usual responses about Europeans being lazy, or … insert a million reasons … that essentially boil down to, because nobody has an IQ that can match Elon’s.
But here’s the BIG issue that outweighs every single other issue… In the global launch industry, competitors to SpaceX aren’t benchmarking against a market price; they’re actually benchmarking against a demand curve that they will frankly never achieve. Because SpaceX relies on induced customer demand from itself! Because the “space launch market” … doesn’t actually exist.
This is when people (including myself!) usually start muttering in low tongues about the P-word (procurement). But for a moment, consider what today’s procurement mechanisms actually do:
• Governments award on lowest cost (to SpaceX).
• Every contract to SpaceX reduces cadence for everyone else.
• Reduced cadence worsens unit economics for everyone that’s not SpaceX.
• They lose the next contract too.
The cycle is self-reinforcing, so what looks like market competition is actually the very opposite! It’s deep architectural asymmetry, meaning that long-term dependencies on SpaceX are created , which eventually, get priced accordingly.
The frameworks applied here, of architecture lag, premature markets, coordination architectures, are developed formally in two companion papers by Sinéad O’Sullivan. Available on request: s@sinead.co