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Kevin Parkin

"Regrettably, I am unaware of any credible proposal to achieve the desired substantial cost reductions. The propulsion breakthrough, which would be a prerequisite for a much better cost performance, is not in sight"

Not in sight for him ;)

Daniel Schmelzer

It's a fascinating dialogue. One thing to keep in mind is that Musk isn't doing quite a typical rational entry into a working market. If he were doing so, he would price his rocket at a rate only slightly lower than the available boosters and enjoy an excedingly high profit margin.

Rather, he is trying to shift the demand curve substantially and going after a more international market. Conventional wisdom and some solid analysis indicate that Musk will not find a compensating increase in demand when the demand curve shifts.

Demisch must know this, so he may view SpaceX as a flash in the pan -- a suboptimal use of capital that will eventually be squeezed from the US market. I'm of the opinion that Musk may be able to gore everybody's ox dead in good enough time to survive with the help of some friendly billionaires, but I can't help but agree that the argument against Musk's approach is solid.

Kevin Parkin

Agreed, the supply demand curve favors the high prices we have today until prices can be reduced more than an order of magnitude. No Lockheed or Boeing wants to reduce their revenue by lowering prices.

But those curves ane based on civil and commercial needs I think. If you factor in the military responsive space launch needs then I think a low-priced low-cost launcher becomes favored by the economics i.e. maximizes revenue.

This is why I think it will be the military who create the conditions that finally crack the launch problem.

Kevin Parkin

Hehe, make that low-mass low-cost launcher :>

Daniel Schmelzer

That responsive launch contract is for between 8 and 16 launches over the next 5 years, I guess. That's a lot of support, and it can be enhanced in other ways (e.g., the Air Force paying for the ability to launch rather than the launch itself or the Air Force paying for demonstrations of certain capabilities), but I doubt even this makes Musk's bet with regard to demand a good one. He'll still be making a handsome profit, mind you. Just not a maximized one.

But who knows? Maybe the Air Force will think this kind of launch contract is a great deal and double up on its orders or whatever. If I were the Air Force, I would let as many contracts as Musk can accommodate reasonably -- these magnitudes are pretty much beer money for the Air Force and supply isn't limited for Musk in quite the same way as it is limited for others.

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