Elon Musk says Raptor engine production is a ‘disaster’ that puts SpaceX at risk of bankruptcy

On Black Friday, SpaceX CEO Elon Musk sent an anxious email to his company’s employees, urging them to work over the weekend on SpaceX’s Raptor engine line and describing the production situation as a “crisis.” In the email, a copy of which was obtained by The Verge, Musk argued that the company faces a “genuine risk of bankruptcy” if production doesn’t increase to support a high flight rate of the company’s new Starship rocket next year.

The Raptor is SpaceX’s massive methane engine that will be used to propel the company’s next-generation launch system, called Starship. SpaceX plans to use Starship to take people to deep space, and in April, NASA awarded SpaceX a $2.9 billion contract to develop Starship as a lunar lander to transport astronauts to the Moon’s surface as early as 2025. SpaceX has been hard at work developing and testing Starship prototypes at the company’s test site in Boca Chica, Texas, though the company has yet to launch the vehicle to orbit.

SpaceX is currently hoping to conduct Starship’s first orbital launch in either January or February of 2022, according to a presentation given by Musk to the National Academies of Sciences on November 17th. However, according to Musk’s email, SpaceX needs to launch Starship at least once every two weeks next year to keep the company afloat. And apparently, Raptor engine development isn’t on track at the moment.

In the email, first reported by SpaceExplored and CNBC, Musk claimed that after key senior management departed the company, SpaceX personnel looked deeper into issues surrounding Raptor production and found them to “be far more severe than was reported.” Two vice presidents, one of whom worked on Raptor engine development, recently left the company, CNBC reported this month.

“I was going to take this weekend off, as my first weekend off in a long time, but instead I will be on the Raptor line all night and through the weekend,” Musk wrote in the email. He also urged employees to come in for an “all hands on deck” situation unless they had critical family matters or could not “physically return to Hawthorne,” the location of SpaceX’s headquarters in California.

While Starship will ultimately be used to transport people to deep space, Musk also stressed the vehicle’s role in launching the company’s next-generation Starlink satellites. Starlink is SpaceX’s ambitious initiative to launch a mega-constellation of nearly 12,000 satellites to provide broadband Internet coverage to users all over the Earth. So far, SpaceX has launched more than 1,800 Starlink satellites and is currently serving roughly 140,000 users in more than 20 countries, according to a presentation SpaceX gave to the Federal Communication Commission on November 10th.

However, SpaceX has only launched the first version of its Starlink satellites, known as Version 1 or V1. Most of those satellites don’t have lasers allowing them to communicate with one another, though recent launches have included this capability. Eventually, SpaceX plans to launch its Version 2 or V2 satellites, which are much more massive and will include laser communication. And per his email, Musk claims that Starship is the only rocket that can launch these larger satellites.

“Falcon has neither the volume *nor* the mass to orbit needed for satellite V2,” Musk wrote, adding that “Satellite V1 by itself is financially weak, whereas V2 is strong.” SpaceX filed an amendment with the FCC in August, proposing changes to its satellites with plans to launch them on Starship. In the email, Musk also noted that SpaceX will be ramping up production of its user dishes, which customers must buy in order to tap into the Starlink V2 satellites. Musk says the terminals will be useless unless the new satellites are ready to “handle the bandwidth demand.”

It’s hard to know for sure if SpaceX is truly in dire straights. SpaceX did not respond to a request for a comment from The Verge. Later today, Musk responded to coverage of the email, saying that bankruptcy is unlikely, but not impossible, if a severe global recession hits.

This isn’t the first time Musk has called on his employees to rally and work long hours or risk bankruptcy. In 2018, Musk claimed that his other company, Tesla, came “within single-digit weeks” of collapse over problems with the production of the Model 3. Since then, Tesla has rebounded and recently surpassed a $1 trillion valuation.

Read the entire email from Musk below:

[blockquote align=”left”]

Unfortunately, the Raptor production crisis is much worse than it seemed a few weeks ago. As we have dug into the issues following exiting prior senior management, they have unfortunately turned out to be far more severe than was reported. There is no way to sugarcoat this. I was going to take this weekend off, as my first weekend off in a long time, but instead I will be on the Raptor line all night and through the weekend. Unless you have critical family matters or cannot physically return to Hawthorne, we need all hands on deck to recover from what is, quite frankly, a disaster. The consequences for SpaceX if we can’t get enough reliable Raptors made is that we then can’t fly Starship, which means we then can’t fly Starlink Satellite V2 (Falcon has neither the volume *nor* the mass to orbit needed for satellite V2). Satellite V1 by itself is financially weak, whereas V2 is strong. In addition, we are spooling up terminal production to several million units per year, which will consume massive capital, assuming that satellite V2 will be on orbit to handle the bandwidth demand. These terminals will be useless otherwise. What it comes down to is that we face genuine risk of bankruptcy if we cannot achieve a Starship flight rate of at least once every two weeks next year. Thanks, Elon




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