Will DARPA's New Space Shuttle Crush the SpaceX Grasshopper?

DARPA's hypothetical "space plane." Photo: DARPA.

SpaceX wants to put American astronauts back in space aboard American-built rockets powered by American-built rocket engines.

But will the American government give the company the chance?

SpaceX recently accomplished a successful "soft" landing of a Falcon 9 rocket that had delivered its payloadto space, then returned safely to Earth. (Unfortunately, it landed on a patch of "Earth" that was actually water and promptly sank. But you can't win 'em all.)

SpaceX hopes to turn the Falcon 9 into the next stage in evolution of the company's revolutionary "Grasshopper" vertical takeoff and landing space rocket. Dubbing the next stage in the Grasshopper experiment, the Falcon 9R ("R" for "reusable"), SpaceX's ultimate goal is to build a rocket ship that can launch into space, deliver its satellite payload, then drop back down through the atmosphere and land vertically on its launch pad. If the company succeeds, it will give the U.S. government its first truly reusable spacecraft since the cancellation of the space shuttle program.

SpaceX's Grasshopper: Small, but with big potential. Photo: SpaceX.

The bigger question is whether the U.S. government will want it.

DARPA steals SpaceX's thunder

A reusable spacecraft holds the potential to save taxpayers billions of dollars in costs by not having to build disposable spacecraft for each new satellite launch. But the Pentagon's Defense Advanced Research Projects Agency is already working on its own idea for a reusable spacecraft.

Dubbed the "Experimental Spaceplane," or XS-1 program, the new spacecraft would actually work more as a suborbital space shuttle. Operated remotely like a drone, and flying at speeds in excess of Mach 10, XS-1 would lift small payloads into the stratosphere, then fire them into orbit via a small, disposable, "upper stage" rocket. The XS-1 would then fly back down to Earth to land just like a plane would.

DARPA thinks that if it can get this concept up and running, it should be possible to deliver small satellites (1.5-2.5 tons) into orbit at a cost of about $5 million apiece. That's 10 times less than the $55 million that SpaceX charged SES for one satellite launch last year aboard its (currently disposable) Falcon 9 rocket. In fact, $5 million would almost certainly be cheaper than what SpaceX could charge even with a reusable Falcon 9.

As such, DARPA's XS-1 project has the potential to undercut SpaceX's pricing and smother its reusable spacecraft project in the cradle.

Who benefits?

DARPA has hired three teams of space industry contractors to do initial design work on XS-1:

  • Boeing , in collaboration with CEO Jeff Bezos' " Blue Origin " space company
  • Northrop Grumman , teaming up with Virgin Galactic
  • Privately held Masten Space Systems, working with equally private XCOR Aerospace

DARPA has not revealed how much it will pay the contractors to begin work on XS-1 -- much less how much they might earn from contracts to actually build the craft, should the program proceed that far. But the latter amount (at least) is likely to be substantial, and SpaceX is not even in the running to win it.

Who gets hurt?

SpaceX, certainly, has a lot at stake if DARPA's XS-1 program succeeds. A viable XS-1 could quickly make the company's reusable Falcon 9 program look obsolete -- and expensive. What might surprise you, though, is that the biggest casualty of a successful XS-1 program might not be SpaceX, but Boeing -- one of the companies that might win the DARPA project.

As one half of the government-supported United Launch Alliance (which also includes Lockheed Martin ), Boeing benefits mightily from the current system of sending satellites into orbit aboard disposable spacecraft. These launches cost the government -- and taxpayers -- about $10,000 per pound of payload delivered into space. But if XS-1 can move 5,000 pounds. into orbit for just $5 million, that works out to just $1,000 per pound -- a tenfold reduction in cost and a tenfold reduction in space launch revenue for Boeing (and Lockheed Martin).

What goes up, must (drive prices) down

That's could be a big hit to Boeing's business. But at least if it builds DARPA's space plane, Boeing will still retain some revenue from the space launch business. The alternative is to not build XS-1, to allow SpaceX to put Falcon 9R into service unchallenged, and, slowly but surely, to get priced out of the space launch business. For Boeing, that's simply too big a risk to take.

More from The Motley Fool:Warren Buffett Tells You How to Turn $40 into $10 Million

XS-1 could leapfrog SpaceX in the race to space. But whoever wins, the price of "space access" is coming down. Source: DARPA.

The article Will DARPA's New Space Shuttle Crush the SpaceX Grasshopper? originally appeared on

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of, Lockheed Martin, and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More