Statement of Elon Musk, SpaceX CEO before the Joint Hearing on Commercial Human Spaceflight

U.S. Senate Science, Commerce and Technology Subcommittee on Space

U.S. House of Representatives Subcommittee on Space and Aeronautics

July 24, 2003

Senator Brownback and members of the Senate Science, Commerce and Technology Space Subcommittee; Congressman Rohrabacher and members of the House Space and Aeronautics Subcommittee; on behalf of Space Exploration Technologies Corporation, I would like to express my appreciation for the opportunity to come before you to address issues related to access to space.

It is despairing to consider that the cost and reliability of access to space have barely changed since the Apollo era over three decades ago. Yet in virtually every other field of technology, we have made great strides in reducing cost and increasing capability, often in ways we did not dream existed. We have improved computing costs by a factor 10,000 or more, decoded the human genome, built the Internet and made inter-continental flight available to the average citizen for no more than a few hundred dollars. The exception to this wave of development has been space launch, but why?

My best guess at the origin of the problem relates to the breakdown of a process that the economist Schumpeter called “creative destruction”. He postulated that the way an industry improves is that new companies enter a market with a lower price or superior product. This creates a forcing function for the whole market to improve. Looking at space launch vehicles, we see a situation where there has been not one single, successful new entrant in four decades, apart from one firm established in the 1980s. Even in that case, the solid rocket motors that constitute a majority of the manufacturing costs of its launchers are in fact built by existing aerospace companies. So we have really seen no truly new entrants to the American launch vehicle market and therefore should not be surprised that costs remain unchanged.

To address this problem, we must create a fertile environment for new space access companies that brings to bear the same free market forces that have made our country the greatest economic power in the world. If we can create such an environment, my expectation is that progress in space launch costs and capability will be no less dramatic than in other technology sectors.

We are at a crucial turning point today. The recent entrepreneurial activity in space (my company perhaps included) shows promise, but is still embryonic and fragile. It is very important that our government, in all its forms, proactively adopt a nurturing and supportive approach to new space launch vehicle developments.

The SpaceX Approach

It was to help change the equation of space exploration that I established SpaceX and set as our goal revolutionizing the cost and reliability of access to space, for nothing less is needed. Our first offering is a semi-reusable orbital launch vehicle, called Falcon. Initially, we will deliver cargo to orbit in the form of satellites and spacecraft, however we do believe in the long term market for commercial human transportation. The reason for an early focus on satellites is that this allows Falcon to prove itself safe, before we extend its use to human transport.

There is no simple sound bite that describes why our rocket is a fraction the cost of efforts by existing launch service providers. Our approach has been to focus on reducing all the cost elements of a launch vehicle company, those being propulsion, structures, avionics, launch operations and general overhead. We have also listened very carefully to the collective wisdom of key engineers involved with all major American rocket developments of the past three decades to glean whatever lessons may be learned.

At this point, we are very comfortable that selling the Falcon for six million dollars per flight is economically viable. This is a reduction of over 75% compared with the nearest incumbent competitor. Moreover, as SpaceX refines the recovery process of our rocket’s first stage, we believe that price can be further reduced.

Part of what I will provide today is the SpaceX view on actions that can be taken by the federal government to foster the nascent entrepreneurial activity. SpaceX is just over a year old, so these reflect only what we have learned to date. No doubt, there will be more to report a year from now, when we will have hopefully placed our first satellite in orbit.

It is worth noting that the perspective I bring to the launch vehicle industry is drawn from a particularly Darwinian experience in the business world, having founded and helped build two successful Internet companies in Silicon Valley. Seldom have we seen a faster moving, more voraciously competitive business environment or one with more tombstones. However, for all the problems associated with that era, the rise and fall and perhaps rise again of the NASDAQ, it is easy to forget that the vast majority of the monumental work required to build what we know as the world wide web was done in less than a decade.

If you doubt that we can possibly see such progress in space access, please reflect for a moment that the Internet, originally a DARPA funded project, showed negligible growth for over two decades until private enterprise took hold. At that point, growth accelerated by more than a factor of ten. We saw Internet traffic grow by more in a few years than the sum of all growth in the prior two decades.

How Can the Federal Government Support this New Era of Space?

Regulatory Authority
As you will no doubt hear from others on this panel, there needs to be clear regulatory authority for commercial launch vehicles of all kinds. It is also critical that such regulatory authorities recognize the early and experimental nature of the commercial launch vehicle industry, providing only the minimum regulatory burden necessary to ensure reasonable safety for the general public.

We recommend reaffirming the authority of the AST office of the FAA as the primary regulatory agent for space vehicles. Moreover, progress in fostering new launch vehicle developments should be a key metric of success in the performance evaluation of AST and other federal agencies when they report to Congress.

Environmental Approval
For existing launch facilities, where launches are routinely conducted, we believe that either a blanket Environmental Impact Statement that covers all non-toxic launch vehicles or a categorical exclusion, such as exists for airplanes, would be immensely helpful. This would save a substantial amount of expense, paperwork and processing time.

For example, certain issues of environmental concern seem to defy common sense. The population of seals in the waters around Vandenberg increased by 12.7 percent last year, yet much concern is raised about how rocket launches might disturb them and we are forced to spend $10,000 every launch to see if our relatively small rocket affects their quality of life. This makes little sense. With that population growth rate, it seems clear that if anything the Vandenberg launch activity serves as an aphrodisiac.

Range Safety Approval
SpaceX has been asked by senior leadership in the Air Force to prepare a report on range safety approval once the process is complete for Falcon. That will be our definitive view, but our preliminary conclusion is that there needs to be a zero-based revision of range safety documentation with a focus on simplicity, along with a clearly defined process for range approval. Rather than trying to amend the existing document, we feel, based on conversations with range safety personnel who have said as much, that the right approach is to do a ground up revision.

Liability
One of the surest ways of preventing companies like SpaceX from offering human transportation in the future is to make it an unlimited liability business, where a single, unintentional mistake can result in a multi-hundred million dollar jury award. It would instantly kill not only the company that made that mistake, but the entire industry.

General aviation almost perished in the 1980’s as a result of one massive jury award of questionable justice after another. It only revived once legislation placed reasonable limits on liability. Moreover, in contrast to the fledgling status of entrepreneurial space, aviation was a strong and mature industry with a well developed immune system.

We believe it is appropriate that a limit be placed on liability such that, notwithstanding clearly egregious conduct, a mistake or force major event resulting in third party injury, loss of life or damage to property be limited to a reasonable maximum dollar figure. For those that choose to fly on early passenger carrying spacecraft, an individual should have the right to waive liability, provided the risks are fully explained, just as would be done for extreme sports, such skydiving or mountain climbing.

Addendum: How Does SpaceX See the Commercial Human Spaceflight Market?

The market for satellite delivery, while significant, has limitations in size and application. I suspect the far larger market in the long term is serving people that wish to travel to space for enjoyment. For many people, as shown by a number of marketing studies, this is the fulfillment of a lifelong dream and they are willing to spend a substantial portion of their savings to see that dream realized.

There is some skepticism about the market size and dependability, but such skeptics should study the early days of aviation as a guide. For many years before Air Mail service became the anchor that allowed the growth of commercial aviation, a thriving airplane business was underway around the nation, supporting the desire for an unprecedented adventure and the incredible notion that humans could fly.

Barnstormers satisfied that interest and became the crop of entrepreneurs and pilots from which commercial aviation would be developed. Why do we think that commercial space passenger services will be any different? If we believe humanity should one day expand to the stars, then people must have some way to see for themselves what space is all about. They must share in its wonders and experience firsthand its meaning and, in so doing, open the doorway to space for all.

Again, my thanks for the opportunity to come before you today, and I look forward to answering any questions that you may have.