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Tuesday, June 7, 2016

The Economics Of A Private Mars Mission

Destination Moon
Destination Moon has some parallels to Elon Musk’s interest in reusable rockets enabling human Mars missions.

Echoes from the past: the Mars dilemma

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In 1950, an independent producer, George Pal, created a science fiction movie, Destination Moon. He went to considerable trouble to create a definitive vision of what would be involved in travelling to and from the Moon (it got an Oscar for visual effects). The rocket rather resembled the German V-2 missile, and the culmination was when it landed back on Earth, upright, at the site it had taken off from. This, it appeared, was a reusable vehicle like SpaceX’s Falcon 9.
Reusability is the key to SpaceX’s strategy to put humankind permanently on Mars, hence the critical importance of SpaceX’s recent successes in safely landing Falcon 9 first stages. There will be no stopping SpaceX now—except money.
There was another parallel. The film’s premise was that US private industry would have to finance and manufacture the first human mission to the Moon because of the inability of US government agencies to meet the challenge. Substitute “Mars” for “Moon” and we get Elon Musk’s strategy and his driving vision. The film argued that once the private sector had shown the way, the (embarrassed?) government would put in the necessary resources to enable the United States to take up a dominating position in space.
Reusability is the key to SpaceX’s strategy to put humankind permanently on Mars. In 2012 Musk said, “The revolutionary breakthrough will come with rockets that are fully and rapidly reusable. We will never conquer Mars unless we do that. It’ll be too expensive. The American colonies would never have been pioneered if the ships that crossed the ocean hadn’t been reusable.”
Hence the critical importance of SpaceX’s recent successes in safely landing Falcon 9 first stages. There will be no stopping SpaceX now—except money.
So far, SpaceX has been very lucky: its rise has coincided with the growth of venture capital firms and their growing interest in space. Those investors know from the software industry that revolutionary ideas take time to become profitable (Facebook took five years for its cash flow to turn positive.)
The future market is for launches of numerous small satellites. A reusable vehicle capable of serving this market is what the clever money is watching out for.
SpaceX has never revealed the development cost of the Falcon series. All that we know is that at a published price of $62 million per launch, Falcon 9 launches are already the cheapest for that class of vehicle in the industry, and are now likely to be much cheaper because the first stages will presumably be sent up again and again. In March, SpaceX president Gwynne Shotwell, said that the price of a launch using a refurbished first stage could potentially fall to around $40 million.
If we assume that its low Earth orbit payload is 15 metric tons (about a third less than full capacity because of the extra fuel needed to land), then the price will only be about $2,700 per kilogram. So if you have something heavy to put into orbit, it is a no-brainer.
And after Falcon 9 comes Falcon Heavy. This will probably lift off later this year and has an enormous payload: up to 53 metric tons to low earth orbit. Nothing has been seen like this since Saturn V.
However, heavy payloads are no longer where the market is. Yes, the International Space Station requires regular cargo missions to keep going, there are still some large geostationary satellites to put up there, and the military has big mysterious payloads. But otherwise the future market is for launches of numerous small satellites. A reusable vehicle capable of serving this market is what the clever money is watching out for.
This lack of a big heavy lift market is why it makes sense for SpaceX to aim for Mars. There will be a great deal of heavy lifting to be done when constructing the proposed Mars Colonial Transporter in orbit. The only snag is, where is the money for this expensive enterprise coming from? The Destination Moon storyline was about provoking the US government into supporting space exploration. Does SpaceX, with its reusable technology and massive lift capacity, aim to provoke government support for the settlement of Mars?
In 1989, President George H.W. Bush suggested human missions to Mars might be a good idea, but then a cost of $450 billion emerged, and nothing more was heard of it. Nevertheless, NASA has consistently stated that it is planning on sending crews to Mars in the 2030s, and to that end is developing its own (perhaps foundering) Space Launch System, and others have proposed less expensive Mars mission architectures. SpaceX could bring this forward by a decade, but the political will has to be there.
A Mars mission will have prestige and glamour, but it is not a bread and butter vote-getter. The presidential candidates know this. None of them have made an issue of space; indeed, they have tended to avoid discussing it.
In the 1950s and ’60s, there were good strategic reasons for the US to demonstrate that it could put a man on the Moon if it put its mind to it. There was also the possibility that there would be desirable minerals and metals—rare earths and platinum group metals—to be brought back from there. But in the 21st century there are neither strategic nor commercial reasons for going to Mars. A tiny settlement there could hardly affect Earth’s geopolitics and, unless we run out of iron ore, there seems nothing worth mining.
A Mars mission will have prestige and glamour, but it is not a bread and butter vote-getter. The presidential candidates know this. None of them have made an issue of space; indeed, they have tended to avoid discussing it.
Indeed, the challenges to maintaining life on Mars are almost as great as maintaining it on the Moon—and nobody has been back there since 1972 because there is no good reason to do so. Of course, a Mars mission will have prestige and glamour, but it is not a bread and butter vote-getter. The presidential candidates know this. None of them have made an issue of space; indeed, they have tended to avoid discussing it.
So if there are no overwhelming political, strategic, or commercial reasons for going to Mars, when it comes to the point the state won’t pony up the billions needed. This leaves SpaceX stuck with a market that may be too small even to justify its reusable launch prices.
That’s particularly true if a rival system pops up (see “Space launch lite: the Swala concept”, The Space Review, February 29, 2016). The numbers are now available for this very simple system that uses ’50s and ’60s technology. For a development cost of around $176 million, a half-ton payload could be put into LEO for about half a million dollars per launch. For a 20% internal rate of return, the customer pricing would be $3,000 a kilogram. The turn-around could be every two days or so, should the market warrant it.
If I were Elon Musk, I would worry. If I were a US taxpayer, I would breathe a sigh of relief.

Comments (12)

+7
Thomas Matula's avatar
Thomas Matula· 11 hours ago
"So if there are no overwhelming political, strategic, or commercial reasons for going to Mars, when it comes to the point the state won’t pony up the billions needed. This leaves SpaceX stuck with a market that may be too small even to justify its reusable launch prices." 

True, but that is irrelevant. Elon Musk is going to Mars because he wants to and has enough money to do so using his own systems. Period. So I will say it again, ROI or political support are simply not relevant. 

NASA may tag along and buy a seat if they wish. Or ESA. Or some other nation. But if they don't it doesn't matter, Elon Musk is going anyway. Elon Musk has Mars Fever and enough money to satisfy it. 

That is the difference between the old paradigm where space advocates had to justify going to Mars to the government. The new paradigm is that a billionaire like Elon Musk just decides they want to go and is willing to spend the money to do so. Its why he will succeed while government will fail. The role of space advocates in the new paradigm is just to cheer him on. 

As for the ROI, it will likely emerge once he gets to Mars. The Virginia Company came to the New World to mine gold. They found and became rich on tobacco instead. The Transcontinental railroads wanted to reach California and the gold/silver fields. But they made their money shipping cattle and wheat to Eastern markets instead. 

And if it doesn't emerge for Mars than the space billionaires like Jeff Bezos, Paul Allen, Larry Page, Sir Richard Branson, etc., will find it in asteroid mining or lunar development, or ??? Its how a free market frontier works.
4 replies · active 3 hours ago
+3
Coastal Ron's avatar
Coastal Ron· 9 hours ago
"NASA may tag along and buy a seat if they wish. Or ESA. Or some other nation. But if they don't it doesn't matter, Elon Musk is going anyway. Elon Musk has Mars Fever and enough money to satisfy it.

I agree. NASA is likely not mandatory for Musk's Mars plans. 

And I think Elon Musk understands how much funding he could expect from NASA without having to be dependent on them, which means he wants them as a science customer, not a "partner" in the full sense. Although how much they are a "partner" may depend on the regulator frameworks that need to be negotiated for sending humans to Mars. 

Plus I think Elon Musk has already started laying the groundwork for "Mars Colonization". That would include "science services" like what NASA may buy, and I think it will also include direct contributions from members of the 1% financial club. Another option would be to form legal entity that can take investment and/or donations - and even with no expectation of getting my money back, I'd be glad to kick in some of my play money.
0
William's avatar
William· 8 hours ago
Does Musk really have "enough money to satisfy it"? He's worth a lot less than Bezos ($12B vs. $59B according to Google) and I've seen news analysis that Tesla has negative cash flow and needs a major success (the Model 3?) to turn profitable. I've also seen reports that Musk's various enterprises are interconnected financially to the point where a problem at one may affect the others (although some analysts don't see a big issue). But, folks have bet against Musk in the past and have been wrong. What SpaceX has done in a decade is incredible and if there is going to be an IPO I would probably want in, but I think they are going to have to be profitable to fund their founder's Mars dream. Those profits will probably come from their current LEO services and things like LEO tourism that will emerge in the next decade or so. Profits from Mars, asteroids, or even the Moon, are likely decades if not a century away.
-1
Grigory's avatar
Grigory· 6 hours ago
I’m afraid it's not true that Elon Musk has enough money for going to Mars “to do so using his own systems”. I believe that, unfortunately, NASA’s estimation of hundred billons cost of journey to Mars are more or less correct. Again, unfortunately …
0
Robert G. Oler's avatar
Robert G. Oler· 3 hours ago
True, but that is irrelevant. Elon Musk is going to Mars because he wants to and has enough money to do so using his own systems. 

Tom I will be curious to see if that is accurate... 

a first test of that might be REd Dragon...see how the funding of that works...does Musk put up most of the money and sell the space as a commercial product to NASA or anyone else who can pony up the money to get on the capsule? 

or does it fall back to NASA being the single customer...or does it simply fade away for 2018...and slip to 20 and then keep slipping as do most of SpaceX programs 

What we are all guessing at is "where does the money come from" 

ie what process that Musk is involved in with SpaceX or his entire "empire" makes the money necessary at any level for him to "go to Mars" i whatever fashion that is defined as... 

My guess it is capturing the launch vehicle market...and if so then he needs to make that happen before he is going anywhere.
The market for heavy space lift is in Low Earth Orbit (Tourism and Space Business Parks), and on the moon (mining and manufacturing). Mars is the stretch goal to keep public interest up.
Trying to send humans to Mars and return them to safely to the Earth without-- artificial gravity- is pretty much of a death trip. And Elon really hasn't shown much interest in developing artificial gravity. 

So Space X is definitely not going to be sending humans to Mars in the 2020s. 

Walking on Mars 
https://www.youtube.com/watch?v=zruVHZCAf24 

Gravity is a massive problem 
https://www.youtube.com/watch?v=xO1Pvtv_A4k 

If We're Serious About Going to Mars, We Need Artificial Gravity - 
http://www.space.com/24904-gravity-for-mars-missi... 

SLS Derived Artificial Gravity Habitats for Space Stations and Interplanetary Vehicles 
http://newpapyrusmagazine.blogspot.com/2016/04/sl... 

What if you were born in space 
https://www.youtube.com/watch?v=jTL_sJycQAA
+3
Coastal Ron's avatar
Coastal Ron· 9 hours ago
"Trying to send humans to Mars and return them to safely to the Earth without-- artificial gravity- is pretty much of a death trip. And Elon really hasn't shown much interest in developing artificial gravity.

Everyone involved knows the facts at hand, probably better than you do. And they may not share your interpretations of the facts either. Plus, it's obvious that despite the negative factors people are still willing to risk not only their own money, but their own lives. 

And that is all that is required - the desire to risk. And people do that everyday already here on Earth, so it's not that unusual.
2 replies · active 2 hours ago
0
Robert G. Oler's avatar
Robert G. Oler· 3 hours ago
the odds of going to mars without some sort of gravity are remote
Your opinion means nothing without facts, logical reasoning, and/or a strong claim to being a more credible expert than NASA's rocket scientists or Elon Musk and his SpaceX team. 

Some facts and logic: 

People have already lived a year on the ISS which has no artificial gravity. A trip to Mars is uniquely notable for greater risk of radiation and claustrophobia, but breaks less ground with regard to lack of gravity. 

Unlike the ISS crew, Mars astronauts are unlikely to have a full schedule of experiments to run all day, so they will have more time to keep their bodies in shape. Adding additional exercise during journey time will help. There may be additional ways to add physical stressors that have therapeutic benefits. 

Progress is also being made on medications to slow or pause some side effects of low gravity.
0
Fred Willett's avatar
Fred Willett· 4 hours ago
Each year the space economy grows. The most recent figures I could find were for 2014 which put the space economy at $330B which puts NASA's entire budget of $19B(proposed) in context.(17%) 
The global space economy is growing around 7-8% annually. NASA's budget has been flat for decades. 
So are we going to Mars? The power of compounding growth will ensure we get there. I recommend just sitting back and watching for a few more years. Someone will go. If not Musk, someone else. The only certainty is it will not be NASA. Not unless the tooth fairy puts a few hundreds of billions under NASA's collective pillow.

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