“SpaceX designs, manufacturers and launches advanced rockets and spacecraft.”
As the first privately funded company to successfully design and launch an orbital spacecraft  and the first company to achieve in-space docking with a crewed space station, SpaceX has achieved goals that were previously the exclusive domain of national governments. Equally impressively, SpaceX has achieved the lowest costs of any launch vehicle manufacturer, including those in India and China. Prior to SpaceX, a typical U.S. government satellite launch cost ~$200 million. SpaceX is able to achieve per launch prices of ~$60 million. Low cost access to space was and is the primary value proposition SpaceX promised its customers, and the company has been highly effective at organizing its operations around this mission. To date, the company has achieved 18 successful orbital launches of its Falcon 9 rocket.
Company business model:
SpaceX has three types of customers: U.S. government space agencies, international governments, and commercial space companies. For international governments and commercial space companies, SpaceX offers only one product, space launch services (i.e. delivery of a spacecraft to orbit). For U.S. government customers, SpaceX also offers space launch vehicle and spacecraft design services, whereby the U.S. government subsidizes SpaceX’s research and development for the creation of new launch vehicles and spacecraft that it can then purchase. Currently, SpaceX has a contract backlog of 50 orbital launches representing over $3 billion in revenue and is under contract to develop a crewed spacecraft for NASA.
SpaceX is unique among US space contractors in its high degree of vertical integration. The company develops and manufactures in-house more than 70% (of both $ volume and mass) of its two main products. SpaceX is the primary actor in all phases of product lifecycle, including vehicle design/engineering, component manufacturing, software development, subsystem assembly, vehicle integration, vehicle testing, launch operations, and on orbit operations. SpaceX’s vertical integration is a key factor in its low costs. The company is able to share facilities, equipment, infrastructure and personnel across activities and product lines.For most of the company’s history, all manufacturing, design, and business offices were history housed in a single 95,000 square meter facility in Hawthorne, California. Its primary competitor for US government launches, by contrast, serves only as the systems integrator and launch operator and has over 1,200 subcontractors, which operate a huge number of facilities spread all over the country.
Other key factors enabling SpaceX’s low costs include its young, highly motivated and non-unionized workforce willing to work significant unpaid overtime. SpaceX targets the top graduates from prestigious engineering programs and recruits them with the promise of playing a major role in exciting missions such as putting a human on Mars.
SpaceX, as a late entrant to the space manufacturing industry, purchased state of the art automated manufacturing equipment, including a 3-D printer that can print flight hardware rocket engines out of titanium. Overall the company has optimized its production process for a highly automated bulk manufacturing process which was previously unheard of in the space industry, where hand assembly of components is still the norm.
SpaceX also designs its products to fit within this bulk manufacturing vision. For instance, whereas most space launch vehicles have either two or one engines and has a custom engine for each rocket. By contrast SpaceX’s main rocket, the Falcon 9, employs 9 identical engines. Its larger vehicle, the Falcon Heavy, uses 27 of the same engine. Similarly the maneuvering Draco thrusters on the Falcon 9 are the same as those on the Dragon spacecraft. By manufacturing a smaller number of systems in larger volumes, SpaceX is able to achieve better economies of scale and lower prices.
Finally, the operating model helps drive the business model because as by far the lowest cost provider of space launch services, SpaceX has also been able to secure the greatest number of launch contracts, further driving high volumes and economies of scale. Unfortunately, the pressure to perform likely contributed to SpaceX’s launch failure on June 28. However, with a roughly 5% failure rate, SpaceX’s performance is still in line with that of more experienced launch vehicle manufacturers, and the company is expected to return to flight by January 2016.