Thanks for coming.
We're super excited at SpaceX to announce some of the details around the Falcon Heavy rocket, which is our large rocket development - our really large rocket development, and this is something we've alluded to in the past but I've only just recently completed the design and I've been able to increase the thrust and payload capability of the rocket considerably over our previous estimations.
With Falcon Heavy we'll be able to put well over 100,000 pounds into orbit. In fact, it's looking like at least on the order of 117,000 pounds, maybe even above 120,000 pounds, depending upon what the final performance numbers look like. This is a rocket of truly huge scale. As we mentioned in the press release, this is - the 117,000 pounds is more than a fully loaded Boeing 737 with 136 passengers, luggage and fuel - in orbit. So that is, really really humungous. It's more payload capability than any vehicle in history apart from the Saturn V, and so opens up a range of possibilities, for government and commercial customers, that simply aren't present with the current launch capacity. If you compare our lifting capacity to, say, the space shuttle or the Delta IV Heavy, which are the two most capable vehicles in the world today, we're twice - more than twice - the capability of either of those vehicles. Although the space shuttle is obviously retiring this year - I think - this is something America can be really proud of - the fact that there's actually going to be a vehicle with twice the capability of the space shuttle, that going to be ready to launch at the end of next year.
The initial launch will take place from Vandenburg air force base in California, where we have space launch complex 4 and shortly thereafter expect to be launching from Cape Canaveral as well. So we'll certainly have that capability on both coasts. We expect to be launching Falcon Heavy a lot, actually. Whereas Falcon 9 can address about half the market, Falcon Heavy can address the other half of the market which is the largest government and commercial satellites, as well as - as I mentioned - as well as opening up new market opportunities for satellites and spacecraft that simply cannot be carried to space by the currently available rockets. So I expect to see, potentially new opportunities arising because of Falcon Heavy.
Also, from a cost standpoint - which is critically important in space, because launch costs have been steadily rising over the years, Falcon Heavy represents a huge economic advantage. "Falcon Heavy costs about a third as much per flight as Delta IV Heavy, but carries twice as much payload to orbit, so it's effectively a six-fold improvement in the cost per pound to orbit." In fact, Falcon Heavy sets a new world record for the cost per pound to orbit of around about $1000. So that's a pretty huge leap in capability.
Let's show the video.
In addition to representing a new world record in cost per pound to orbit, the Falcon Heavy is also designed to meet the NASA human rating standards. For example, it is designed with structural safety margins that are 40% above the actual flight loads that it expects to encounter, as opposed to normal satellite launchers which are designed to only 25% above the flight loads. It also has engine-out capability, so you can lose multiple engines on the vehicle and still complete the mission. It has cross-feed between the cores which is the first time any rocket has been able to cross-feed propellant between the cores. Triple-redundant avionics. All of this is such that it can launch people if need be and do so safely.
Also, it has so much capability, so much more than any other vehicle, that we can start to realistically contemplate missions like a Mars sample return - which requires quite a lot of lift capability because you've gotta send a lander to Mars that still has enough propellant to return to Earth. If you try to do a mission like that with a smaller vehicle you have to do several launches and either do orbital rendezvous or do some sort of much more complex mission whereas with Falcon Heavy you could potentially do it with a single flight.
Let me turn it over to questions.
The payload to Mars would be about a quarter of its payload to LEO. So we're talking about, something like, 30,000 pounds to trans-Mars injection. To the Moon it would be about, maybe, 35,000 pounds.
The Falcon 9 is suitable for transporting people to low Earth orbit, like to the space station and back, but Falcon 9 doesn't quite have the lifting power to go beyond the space station, whereas Falcon Heavy go, really, much further than low Earth orbit. Falcon Heavy is about half the lifting capability of a Saturn V, so, in principle you could do another mission to the Moon, just by doing two launches of a Falcon Heavy. Perhaps one that delivered the return vehicle to the surface of the Moon and one that delivered the lander to the surface of the Moon. As far as human standards are concerned, the Falcon 9 and Falcon Heavy are designed to meet all of the published NASA human rating standards. So it would only be if there's some unpublished standard or some new standard that's about to be published - that it would not be in compliance.
Falcon 9, we've always said it would be about 3 years from when we received NASA funding to conduct a demonstration, and the gating fact on that isn't actually the rocket, it's the launch escape system on the spacecraft. Falcon Heavy would be, really, capable of launching people as soon as we've proven it out with a few launches, really. There's no changes, that we are aware of, that we would make to the Falcon Heavy that would be required to launch people. There may be changes to the spacecraft that it carries, but not to the launch vehicle itself - or if there are, they're very minor. So yeah, it certainly opens up a wide range of possibilities, such as returning to the Moon and conceivably even going to Mars, although it would require probably twice as many launches as a Moon mission.
We have an upgrade in the works for our Merlin engine. Going from 95,000 pounds of sea-level thrust to 140,000 pounds of sea-level thrust. So, pretty substantial upgrade. We're also doing some design improvements to improve the manufacturability, so we can go to a high rate of engine production. We're anticipating, if launch demand ends up being like we think it is, "we'll have a production rate of about 400 booster engines per year. Which, I think, would be more engines than the rest of the world production combined. As it is, we're already more than the rest of US production combined. Although that's not saying much. Unfortunately."
We do not have - so we're expecting to do an initial demonstration flight of Falcon Heavy, that doesn't have a primary customer, although that could change. It'll probably have some smaller secondary satellites on-board. However, we are highly confident of announcing customers for Falcon Heavy for the second and subsequent flights, and we're in liaison discussions with government and commercial customers in that regard.
Even on Falcon 9 we have been launching secondary satellites, we launched some secondary satellites on the last flight of Falcon 9. With the upcoming flight of Falcon 9, the first one that's going to the space station, that will carry a couple of ORBCOMM satellites. With every, with most missions we expect to be launching secondary satellites. It's not always with the same dispenser, although that would make it a lot more convenient, but I think it's likely that most of our flights will carry secondary satellites.
I think you should definitely count on Falcon Heavy being there for the long term. When it succeeds, and certainly that is right from the initial launch as it was with Falcon 9. We're starting off at Vandenburg but we'll then be transitioning to the cape. We'll be upgrading our launch pad at Cape Canaveral so that we can process both a Falcon 9 and a Falcon Heavy simultaneously and they can both roll out to the pad. We're also investigating the possibility at the cape of using one of the old shuttle pads for the Falcon Heavy. That's a possibility but our default plan is to use our existing launch pad but upgrade it such that there's a hanger where you can process Falcon 9 and that rolls to the pad, and another hanger - kinda at 90 degrees - where you can process Falcon Heavy and either one of them can roll to the pad, so you can have dual processing take place.
In terms of the number of jobs, it really depends on the launch rate, so I'd expect that number to grow over time, but I think once it really gets going - and we do expect more launches to occur from the cape than from Vandenburg in the long haul, with Falcon Heavy, because most of our commercial customers want to go to GTO which, obviously, is cape launches. So we're expecting probably a couple of hundred jobs. It depends on customer demand, so I'd say, it's probably 2 to 3 years, but it really depends on what the customer adoption rate is. I'm confident of a couple of hundred jobs when the customer adoption is high, when we're doing several launches a year. I think we'll probably do as many Falcon Heavy launches as we do Falcon 9 launches. Our rough ballpark estimate is something on the order of 20 launches per year of which roughly half are Falcon Heavy, roughly half are Falcon 9 and of those, probably 60%, 70%, are [inaudible].
I think there's a lot of wishful thinking on the part of our competitors that our prices must be higher, but they are not. In fact, "I think that we're unique in the launch business of publishing our prices on our website. Whereas other launch providers sort of treat it like a rug bazaar - they'll charge you what they think you can afford. We believe in every day low prices, you know, and we've stuck to our guns on that." The Falcon 9 costs $50 million, and it's been that way for a while, and the Falcon Heavy is, on average, about $100 million, so we're very very confident of being able to maintain those prices, and I say let history be the judge. Here I am saying it, we'll see if that remains true, but you have it on camera.
[Question about getting to the Moon.] If you had a small enough spacecraft, you could conceivably do it with one Falcon Heavy. It kinda depends on how big of a spacecraft and how many people you want to send, but I think you could slim it down to just do it on one Falcon Heavy.
[Question about getting to an asteroid.] I'm sure you could do it with two Falcon Heavy launches. If your spacecraft had a little bit of propellant on-board, presumably it would because it has to get back from the asteroid too, then I think you could do it with two Falcon Heavy launches.
I think we've thought a lot about going public but before we do so we want to make sure that we have a very predictable revenue stream because the markets don't like surprises, but I think that there's a decent chance we'll look at going public towards the end of next year. Not saying we will, but it's a possibility. It's possible that we could see acquisition interest, but I have no interest in selling and I am the controlling shareholder in the company. We've had some inquiries, but then I'm pretty clear with them that I would not give up a controlling stake in the company because SpaceX has some philosophical goals, or philanthropic goals, which may not be coincidental with the goals of a large government contractor.
I think end of next year meaning November, December, is when we expect to have Falcon Heavy at the launch pad at Vandenburg. The launch itself is a little more difficult to predict, because we have to go through final regulatory approvals, there could be things that we have to debug about the rocket and the launch site interaction, so I think, most likely what you'll see is a rocket at the pad towards the end of next year and a launch sometime in 2013.
I don't want to speak for specific customers, but I can say that there is strong interest from both the US government and large commercial operators in Falcon Heavy and that we are at an advanced stage of discussions with both, and part of what's needed to get them to sign up to a launch is to not be the first. It's always possible that a customer may jump in at the last minute and say, okay, they'll do it, but it's a lot easier to get deals done if customers know that they don't have to be the first flight. It's a bit of a, I guess, a slight risk on our part to be doing the first launch on our own funds, and of course, it does cost us some money, but it's an important thing to do in order to get customers to sign up. We had to do something similar with Falcon 9.
Ramping up production is our number one focus. That's what I have the whole company focused on. We're bringing in people both from the rocket industry, as well as from other industries, like automotive and high volume aircraft production. We'll be making more rocket engines than any company - actually, more than any country, I think - has every made. At 400 booster engines per year, I guess, at 500 booster engines per year it is more than the rest of the world's production combined. So that's pretty serious scale in the rocket business. In terms of the number of cores, we're talking about 40 cores. So it's very high volume but that's what's needed in order to do 10 Falcon 9s and 10 Falcon Heavys in a given year. As it is, if you look at our launch manifest, just based on existing contracts that we have, if you go out 3 or 4 years, we already have on the order of 10 launches booked of Falcon 9 and we've only done two Falcon 9 launches, and we're only just putting a stake in the ground with Falcon Heavy. "Twenty launches a year, is not a crazy number at all. We expect that to occur without any miracles." So we must make sure that we are building our production capability and our launch capability to meet that demand.
Right now our engine production rate is around 50 to 60 per year. That's what we're doing with the Merlin 1C. Merlin 1D, in addition to being a thrust upgrade, and some performance upgrade, is really a design for manufacturability as well. It's helpful that I have experience from the automotive world as well because, in automotive, 400 engines per year is nothing. There are a lot of techniques which the car industry has developed to be able to do high volume production but also be very reliable and consistent in doing so. I'm very confident that with the Merlin 1D design we'll be able to build 400 engines per year or frankly even 600 or 700 engines per year if we need to, and then the same with the cores. So we are making a significant investment in tooling and production process efficiency, honing our software systems within the company that manage the procurement, assembly, and launch, trying to automate as much as possible.
None-the-less, we are expecting to hire a lot more people and last year we grew quite dramatically - over 50% employment count growth last year - we went from 800 to 1200 in 2010. This year, I think we'll probably grow 15 to 20% and I am intentionally slowing growth down a little bit just because I want to make sure we're building the company on the right foundation, and then next year I expect the growth rate to continue to increase up to the 30 to 40% level in personnel growth.
We actually have been steadily acquiring the buildings around us in California. So we're sort of growing like the Borg. Actually, almost all the buildings around us have been acquired and that's increased our capacity in California by about 50% in terms of real estate, but I think we'll actually do a lot more with the existing physical locations we have. Actually, I really like density. I like a beehive of activity and people fairly close together. I think it creates a much better esprit de corps. You may have seen the announcement in Texas that we've more than doubled the size of our rocket development facility in Texas which is where we do development and acceptance testing of the rocket engines and stages and that's in anticipation of a lot more growth. So we're now at over 600 acres in Texas. We're building up a launch site at Vandenburg and we'll be enhancing our launch site at the cape. So it's a lot of growth across the board.
[A thousand dollars per pound,] it's the mythical number. Not so mythical anymore. [Comparison to shuttle and volume.] Good question. I think we'll need to launch, maybe, on the order of four per year to maintain those cost numbers, but I'm very confident that we'll be able to do that. That is not, I think, a tall order, and I think it's going to be a lot closer to 10 than 4. Also, because of the commonality between Falcon 9 and Falcon Heavy we're able to spread the overhead across both vehicles. Because really, Falcon Heavy is essentially the upgraded Falcon 9 with two additional first stages as side boosters. So it's able to use the same tooling, be made in the same line, and I think therefore significantly improves the probability of being able to hold to our cost numbers on Falcon Heavy. You're hearing it from me directly, you know, it's being recorded that we will stick to those prices, and not go above them, except for, you know, inflation and stuff like that. So, in current year dollars, we'll stick to what we have said.
The first mission is really a demonstration flight. It's there to prove that Falcon Heavy will work. That it will deliver the payload that we say it can, and we don't have a primary customer for it, but we are likely to have several smaller secondary satellites on-board that will do a variety of things, and if we get lucky, maybe there will be a big satellite at the last minute that wants to buy the flight at a reduced price.
"Dragon is capable of reentering from even Mars velocities including lunar velocities, etc. It's a very capable vehicle and is not limited to simply low Earth orbit operations." It's certainly possible to do a lunar fly-by mission with Falcon Heavy and Dragon. Where you sort of send a Dragon spacecraft on a loop around the back side of the Moon. In order to land on the Moon, there would need to be a propulsive landing system developed which we do not currently have planned. Certainly it is something we could potentially do, but there's no question that with Falcon Heavy and Dragon you could do a really cool mission which would be a lunar flyby, so you could go past the back of the Moon, you could even go a little further than they went in Apollo. That'd be kinda cool I think.
[Question about price changes since 2002.] Well, first of all, in 2002 we didn't even have any pricing because I only started the company in, basically, July of 2002. We didn't even know what rocket we were making in 2002. So it's not possible to have doubled from a question mark. But I think if you look at the pricing for Falcon 9, ever since we rolled out the final specifications for Falcon 9, we've kept our pricing consistent at around the $50 million level. "I think we've been very solid in keeping our prices steady and we do not expect to make price increases in the future except for inflation related adjustments." In fact, over time we really want to reduce the cost per pound to orbit because that is the fundamental gating factor that prevents humanity from becoming a truly spacefaring civilization. It has just been far too expensive to do space travel in the past and in order for the country and for humanity to have an exciting future in space, it is critical that we are constantly improving the cost per pound to orbit and with Falcon Heavy we're demonstrating that we are. Falcon Heavy is a significant improvement over Falcon 9 in the cost per pound to orbit, and it's right around the, not so mythical anymore, $1000 per pound capability, and as we improve the performance of Falcon Heavy over time we want to get it below $1000.
We have an idea for a super heavy lift capability that would be sorta on the order of 150 metric tons to orbit, about three times the capability of Falcon Heavy and that's something that we're working. That's 50% bigger than a Saturn V. That's something that we're iterating with NASA on right now as part of - NASA issued an RFP for design ideas on a super heavy. We're one of the companies that NASA awarded. It's a small contract, a few hundred thousand dollars, but we're exploring with NASA how to do a 150 metric ton to orbit capability but complete that development rapidly and with an end result that is well under $1000 per pound to orbit.
We're already slated to replace the shuttle as far as cargo delivery capability to the station, which is the main functionality of the shuttle. Most of what the shuttle does is carry cargo to and from the space station. It does carry astronauts as well, and if things go as we hope, [inaudible] replace both the cargo and astronaut transport capabilities of the space shuttle. So we do expect that will occur. Now that's slated to occur with Falcon 9 and Dragon, Falcon Heavy has potential to do a lot more than that.
Texas is where we do all of our engine development and stage testing. As I mentioned a moment ago, we've more than doubled the size of our property in Texas, now 600 acres. So we are expecting a significant workforce increase at our McGreggor test site. I expect it to more than double over the next few years.
Alright, thank you.