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How Elon Musk Willed SpaceX Into Making the Cheapest Rockets Ever Created

Musk's obsession with cost cutting and in-house manufacturing at times seems ludicrous.

by Jason Koebler
May 12 2015, 7:57pm

Image: Flickr/SpaceX

Over the span of little over a decade, SpaceX went from being a space company made up of amateur rocketeers and a dude who helped start an internet banking company to our best chance to set up a colony on Mars. Along the way, it's managed to create the cheapest rockets we've seen yet.

Now, when SpaceX says it can launch a military rocket for $90 million compared to ULA's $380 million, you just kind of nod your head and move on.

The reasons the company can offer launches for a quarter the price of competitors are often contained in a throwaway line in an article somewhere: The company does most everything in-house and have little of the bloat common in rocketry today. That quick explanation isn't inaccurate, but it's a little bit flip.

What does it actually mean to make everything in house? And how does the company do it so much cheaper than everyone else?

SpaceX will load a rocket with both the legacy part and the one it's designed in house, and test them both without making a big deal out of it

SpaceX has been an utterly fascinating story to follow—its attempts to land a rocket on a barge in the middle of the ocean actually get my heart racing—but rarely do we get a look at what goes on inside its factory in Hawthorne, California.

In Ashlee Vance's new biography of Elon Musk, set to come out next week, we learn just how obsessed Musk and his engineers are with cutting costs everywhere, in thinking up new ways of doing things, and in pushing employees to do what seems, at first glance, impossible.

Many of SpaceX's employees say Musk has demanded the absolute best out of them. Image: SpaceX

"In addition to building its own engines, rocket bodies, and capsules, SpaceX designs its own motherboards and circuits, sensors to detect vibrations, flight computers, and solar panels," Vance wrote. "The cost savings for a homemade radio are dramatic, dropping from between $50,000 to $100,000 for the industrial-grade equipment used by aerospace companies to $5,000 for SpaceX's unit."

The story of SpaceX as laid out by Vance, which I'll be covering a bit more over the coming week, is that Musk is from the same mold as someone like Steve Jobs—maniacally obsessed with getting the best out of his workers, at the expense of their feelings and their free time. Anything for the vision.

We've discussed before what the vision is, short term: A reusable rocket that can fly over and over and over again, one that could quite literally make it impossible for anyone—including massive government contractors with deep pockets—to compete with Musk until they follow suit.

But, in the meantime, SpaceX has been going to crazy-seeming lengths to cut the costs of its Falcon 9 rocket, reusable or not.

"There are dozens if not hundreds of places where SpaceX has secured such savings," Vance wrote, referring to the $5,000 radio, which, like many SpaceX parts, was made out of consumer electronics-level equipment, not "space grade" stuff.

But how do you know if a $5,000 radio designed in-house is going to work against the tried-and-true legacy parts? How do you build the entire rocket's avionics computer system for just over $10,000, when standard rocket companies use systems that cost in the neighborhood of $10 million?

Image: SpaceX

Well, you test both of them on the same flight. While we've been watching SpaceX try to land a rocket on a boat, Vance notes that the company has been performing dozens of experiments in secret. It'll load a rocket with both the legacy part and the one it's designed in house, and test them both without making a big deal out of it.

"Engineers then compare the performance characteristics of the devices. Once a SpaceX design equals or outperforms the commercial products, it becomes the de facto hardware," Vance wrote.

Musk did this type of thing with Tesla too, of course, but with SpaceX, he not only trusted people who had no hardware designing experience to make things that would fly on a real-life rocket, he demanded that they make something best-in-class for absurdly low prices on absurdly short deadlines.

Vance relays a story from 2004, in which Musk asked Steve Davis, now SpaceX's director of advanced projects, to source an actuator that would help the second stage of the Falcon 1 rocket steer itself.

"Naturally, [Davis] went out to find some suppliers who could make an electro-mechanical actuator for him. He got a quote back for $120,000," Vance wrote. "'Elon laughed,' Davis said. 'He said, 'That part is no more complicated than a garage door opener. Your budget is $5,000. Go make it work.''"

Davis spent nine months designing and building the thing for a grand total of $3,900.

Repeat that process hundreds of times, and you've got a rocket that's cheaper and, seemingly, just as reliable as anything that's ever been made.

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