Investing in Space

A year after the colossal SpaceX rocket's debut, Falcon Heavy has 'high value' uses – despite skepticism

Key Points
  • Even after SpaceX's Falcon Heavy succeeded, critics focused on the market for the massive rocket's services.
  • The manifest for Falcon Heavy has grown to five contracted missions, worth somewhere between $500 million and $750 million.
  • The lack of competitive rockets is also a boon for Falcon Heavy.
Elon Musk talks space race after Falcon Heavy launch

A year ago SpaceX launched its Falcon Heavy rocket for the first time. Millions tuned in as Elon Musk's space company moved to number one on the list of the world's most powerful rockets.

Falcon Heavy's maiden launch was nearly flawless. The only blemish was when one of its three boosters crashed into the ocean, rather than gently coming to a landing on a company barge.

Yet, even after Falcon Heavy succeeded, critics focused on the market for the massive rocket's services. Department of Defense applications of Falcon Heavy were apparent. But even the prospect of lucrative military contracts was not enough to convince some within the space industry that Falcon Heavy would generate solid revenue for SpaceX.

Skeptics pointed to the slowing market for large communication satellites and the need for U.S. Air Force certification to fly national security missions. They said these were two reasons SpaceX would not be able to fill Falcon Heavy's manifest.

With the test flight under its belt, the rocket needed "to get some commercial customers," Dr. Greg Autry told CNBC. Autry is a professor at USC's Marshall School of Business, as well as the director of the Southern California Commercial Spaceflight Initiative.

"The lone test flight was incredible but not enough to prove for someone to put an expensive payload on board," Autry said of Falcon Heavy. "SpaceX needs to prove it's a reliable vehicle."

Orders did arrive in the past year and, even before a second flight, Air Force certification came with them. The manifest for Falcon Heavy has grown to five contracted missions, including three commercial missions. While only one has a known price tag – a $130 million contract to launch the Air Force Space Command-52 satellite – the rocket's manifest is worth somewhere between $500 million and $750 million, given the price range per launch.

That means Falcon Heavy has enough contracts to cover the cost of its development, which was more than $500 million, Musk noted last year, with the all funding coming from inside SpaceX.

Chad Anderson, CEO of Space Angels, which invests in space projects, told CNBC some people in the industry doubted the concept of reusability, or launching, landing and launching again, which has become a trademark for SpaceX. Last year, SpaceX became the first company to launch and land the same orbital rocket three times. That's in part due to the increased power and reliability of the company's evolved Falcon 9 rocket, which Musk said is "capable of at least 100 flights."

And the criticisms of Falcon Heavy are starting to sound familiar. "There's a recurring pattern here," Anderson said, "It's the same tired, old arguments we're seeing applied to Falcon Heavy."

The lack of competitive rockets is also a boon for Falcon Heavy. The only operational rocket that compares is United Launch Alliance's Delta IV Heavy and it's retiring soon. NASA's Space Launch System (or SLS) and Blue Origin's New Glenn are possible new entrants in the market of heavy lift vehicles but neither rocket is expected to launch before 2021. The Ariane 6 rocket is supposed to launch next year but a French auditor published a blistering assessment of the European rocket that found Ariane 6 will not be a competitive or sustainable option.

SpaceX just launched its most powerful rocket ever

"Falcon Heavy is a very impressive rocket," Dr. George Nield, the former director of the Federal Aviation Administration's office of commercial space transportation, told CNBC. "It may not be a system that is going to be flown a lot and it may not be a cash cow for the company ... but there certainly are folks out there that would like to launch very large payloads."

Both Anderson and Autry believe that Falcon Heavy is a direct competitor to NASA's SLS rocket, which costs over $1 billion to launch. Anderson and Autry pointed to NASA's ambitious Lunar Gateway program, which is the agency's plan to return humans to the moon. Just over a year ago, President Donald Trump directed NASA to return American astronauts to the moon, a job Autry said "Falcon Heavy is admirably suited to do." Falcon Heavy is the only rocket "that's available to do that now at the best price," Autry said.

"Having vehicles that can cost effectively take cargo into orbit and eventually on to the moon and Mars is something we as a nation want to do," Nield said.

Even at a much lower cost than SLS, exploration missions for NASA or other government agencies would still be of "high value" to SpaceX, said Autry.

"Those are contracts worth hundreds of millions of dollars instead of tens of millions of dollars," Autry said.

Musk's vision remains focused on Starship, the rocket SpaceX plans to use to transport up to 100 people to Mars. Starship's development part of the reason why SpaceX decided not to pursue a "human rating" for Falcon Heavy.

"Starship is going to replace Falcon Heavy and Falcon 9," Anderson said.

But even as SpaceX's development accelerates on the Starship project, Nield thinks there are multiple applications for Falcon Heavy in the years ahead.

"If you've already got the vehicle developed, the question is how much additional would it take to keep that as a part of their product offering, if you will," Nield added. "That could contribute to their bottom line, even if it's not a part of their long term strategy."