Entangled in Raptor engine “disaster”, SpaceX risks bankruptcy

SpaceX has many plans for 2022 and beyond … but it will already have to finish its Raptor engine or risk bankruptcy.

SpaceX would it be a colossus with feet of clay? In an email recently sent by Elon Musk to SpaceX employees, the billionaire painted a rather ominous picture of the situation on the line. production of its Raptor rocket engine. The situation would even be so catastrophic that the company would simply risk bankruptcy.

The Raptor is the gigantic rocket motor that will lift the famous Starship, SpaceX’s new generation launch system. It should also be used as part of the moon landing of the Artemis mission, scheduled for 2025. It is a colossal engineering challenge at all levels, which has put SpaceX engineers under pressure since 2014. But We are now almost in 2022, and despite encouraging preliminary tests, the Starship still has not reached orbit. Despite the efforts of Boca Chica’s troops, we will have to wait at the bare minimum until next January or February.

Problem is, this Raptor is a crucial piece in SpaceX’s short, medium, and possibly long term plans. Almost all of the company’s roadmap today hangs on the progress of the engine. This is particularly the case with the 2.9 billion contract for the Artemis mission moon lander awarded by NASA, much to the chagrin of Blue Origin.

SpaceX’s short-term plans all depend on the Raptor

But it is not only this prestigious mission that makes the situation critical. In SpaceX’s plans, the Raptor should make it possible to send more than twenty Starships into orbit as of next year. In addition, the future prospects for satellites Starlink V2 also directly depend on the state of progress of these engines.

The concern is that SpaceX is running just in time; it immediately reinvests a large part of its profits in R&D, and builds its roadmaps on the basis of sometimes ambitious predictions. And this is where the shoe pinches; because by betting everything on the development of the Raptors, Musk put himself in a quite uncomfortable situation.

From now on, the economic future of the firm is intimately linked to the launches of future Starships and Starlinks V2, which themselves depend on the Raptors. This is all the more true for the latter. SpaceX has already invested a small fortune in this new version which does not earn it a cent for the moment. However, it is indeed this V2 which presents a real economic potential in the long term, unlike the first version currently deployed. Many observers even expect Starlink V2 to become one of the company’s main revenue streams in the near future.

Is Musk doing too much?

To hope to stay afloat, SpaceX will absolutely have to buckle up its engines as soon as possible. Otherwise, she would start losing a lot of money. Potentially enough to risk bankruptcy if economic weather turns stormy along the way, as Musk explains in a tweet. This situation nevertheless raises several questions. First of all: what could have slowed down the development process so much, when SpaceX was perfectly aware of the stakes? According to the emails, Musk appears to be blaming a former high-ranking executive who recently left the company. He would have left some nasty surprises behind him, which would have considerably slowed the progress of the program.

But on the other hand, there is also a second parallel reading of these red flags. Indeed, Musk is known for his willingness to move forward at very high speed. And it doesn’t matter if he has to do blackmail loyalty and put its employees on the knees to arrive at his ends. We remember, for example, the surprisingly similar crossing of the desert that Tesla experienced in 2018. A senior official then gave birth to a memorable little sentence. He claimed that the troops were all stuck ”in an abusive relationship with Elon Musk”, With a mixture ofadmiration and respect, but also for fear of his mood swings and his sometimes unreasonable demands.

In a recent tweet, Musk made it clear that bankruptcy was “still unlikely, but not impossible”. We must therefore take this catastrophism with a grain of salt. But whatever the case, there is still an urgent need to lock up the Raptors; SpaceX’s sustainability is at stake. And we can easily understand that this generates a certain panic, knowing that we are still talking about a titan more than $ 100 billion.

The text of Musk’s email is available below.

Unfortunately, the Raptors’ production crisis is much worse than it looked a few weeks ago; by digging into the problems left by previous managers, they turned out to be much more severe than expected. There is no way to put it any other way.
I was off to take my weekend, my first in a long time, but instead I’ll be on the Raptors production line all night and this weekend.
Unless you have important family deadlines or are physically unable to return to Hawthorne, we need all of your hands to get over what is, quite frankly, a disaster.
If we can’t produce enough reliable Raptors, that means we can’t fly the Starship, but also we can’t put the Starlink V2 into orbit. (Falcon has neither the volume nor the mass to put a V2 into orbit). In addition, satellite V1 is financially weak, while satellite V2 is financially strong.

In addition, we plan to increase production to several million units per year, which will consume massive capital, assuming V2 will be in orbit to handle this demand. Otherwise, these terminals will be useless.
So we come to a real risk of bankruptcy if we can’t fly the Starship at least once every two weeks next year.

Thanks, Elon.

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