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01-12-2021|Business

Elon Musk tells SpaceX employees that Starship engine crisis is creating a ‘risk of bankruptcy’.

  • In a companywide email, a copy of which was obtained by CNBC the day after Thanksgiving, Elon Musk described a grim situation with SpaceX's development of Raptor rocket engines.
  • Musk stated, "The Raptor production situation is significantly worse than it appeared a few weeks ago."
  • The company's Starship rocket is powered by Raptor engines, according to Musk, who also stated that SpaceX faced "a genuine risk of bankruptcy if we do not accomplish a Starship flight rate of at least once every two weeks next year."

Elon Musk is frustrated with SpaceX's progress in developing the Raptor engines that will power its Starship rocket.

In a companywide email sent the day after Thanksgiving, he outlined a grim situation, which CNBC obtained a copy of.

Musk stated, "The Raptor production situation is significantly worse than it appeared a few weeks ago."

Musk later stated, "We face a true risk of bankruptcy if we don't accomplish a Starship flight rate of at least once every two weeks next year."

SpaceX is working on a gigantic next-generation rocket called Starship that will be used to launch freight and people on missions to the moon and Mars. The company is putting prototypes through their paces at a facility in southern Texas, and has already completed several short test flights. However, in order to advance to orbital launches, each rocket prototype will require up to 39 Raptor engines, necessitating a rapid increase in engine production.

Musk's note to SpaceX staff clarifies the significance of former Vice President of Propulsion Will Heltsley's departure earlier this month. Heltsley has been taken off Raptor development before he left, and Musk said in his email that the company's leadership has been investigating into the program's flaws since then, discovering the situation "to be substantially more severe" than Musk had previously imagined.

SpaceX did not respond to CNBC's request for comment right away. CNBC reached out to Heltsley for comment, but he did not answer.

Space Explored, a subset of technology blog 9to5Mac, was the first to report on the email of SpaceX's founder and CEO.

Raptor engine programme is ‘a disaster’

In the email, Musk stated that he would be taking the long Thanksgiving holiday off. Musk, however, stated that after learning of the Raptor situation, he will personally work on the engine production line through Friday night and into the weekend.

"To recover from what is, very frankly, a disaster, we need all hands on deck," Musk wrote.

The billionaire creator has consistently stated that the most difficult aspect of building SpaceX's massive rocket is production. With many prototypes in the works, the business has progressively built up its Starship production and testing facility in Boca Chica, Texas.

The launch of Starship into orbit is the next crucial stage in the company's development.

Musk announced on Nov. 17 that SpaceX plans to "hopefully launch" the first orbital Starship voyage in January or February, pending regulatory approval by the FAA as well as technical readiness.

Starship will be totally reusable, with both the rocket and its booster capable of landing and being recovered for future missions, according to SpaceX. The Falcon 9 rockets from SpaceX are partially reusable. The company can land and relaunch the boosters on a regular basis, but not the rocket's upper part, or stage.

Musk admitted earlier this month that he wasn't sure if Starship will reach orbit on its first attempt, but that he is "certain" that the rocket will reach orbit in 2022. At the time, he also stated that Starship development is "at least 90% internally funded thus far," with the company not anticipating "any international collaboration" or outside funding.

Starship is critical to the financial success of Starlink

SpaceX has raised billions of dollars in funding for both Starship and its satellite internet project Starlink in recent years, with the company's valuation recently reaching $100 billion.

Despite the fact that SpaceX has put about 1,700 Starlink satellites into orbit, Musk claims that the first iteration of the satellite is "financially poor." Starlink's customer base has been constantly rising, with approximately 140,000 users paying $99 per month for service.

SpaceX announced enhancements for the second version of the satellite earlier this year, with Musk writing in an email that "V2 is strong" but that it can only be launched with its Starship rockets.

SpaceX has launched Starlink satellites with its Falcon 9 rockets so far, but Musk stated that the rockets lack the bulk and volume required to deploy the second-generation satellites effectively. As a result, the Raptor engine's success is vital to SpaceX's Starlink service's long-term financial viability, which Musk has discussed spinning out in an IPO.

Notably, Musk wrote in the email that SpaceX is presently ramping up production of its Starlink antennas "to several million units per year," but that they will be "useless otherwise" if Raptor does not succeed.

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