Prediction: Rocket Lab Gets a New Neighbor in SpaceX
Five years ago -- even before its IPO -- small rocket company and SpaceX rival Rocket Lab USA (NASDAQ: RKLB) had an announcement to make.
Despite its name, Rocket Lab was primarily a New Zealand company at the time. Its founder lived there. It launched its rockets from there. For that matter, its only launch pad was located there. But fresh off its 10th successful rocket launch, Rocket Lab was raring to compete with America's most famous rocket company, SpaceX, to try to win more launch contracts from U.S. customers.
This would be hard, of course, because SpaceX had the advantage of position in winning U.S. government and U.S. commercial launch contracts. Specifically, SpaceX was located in the U.S. -- right next to most of its customers -- lowering their cost of delivering payloads to SpaceX for payload integration and launch.
How could Rocket Lab level the playing field with SpaceX? It probably wouldn't have much luck convincing U.S. customers to relocate to New Zealand. So Rocket Lab decided to build a launch pad on Wallops Island, Virginia.
But it turns out two can play that game. As we just learned, SpaceX may be planning to move into Rocket Lab's backyard, too.
G'day spacemate!
As Reuters reported last week, SpaceX is seeking permission to land a Starship rocket off the Australian coast, and this could be a "first step toward a bigger presence for Elon Musk's company in the region."
The request follows a successful fourth test flight of SpaceX's Starship rocket and Super Heavy booster, in June, in which Starship executed a "water landing" in the Indian Ocean, somewhere to the northwest of Australia. Logically, therefore, SpaceX's request probably relates to a subsequent test flight following a trajectory similar to that used in Test Flight 4 (to minimize the variables between tests). Once again, the aim would be to land near Australia (this time on a landing barge). The rocket would be transported to Australia for inspection, and then probably be shipped back to America.
Reuters notes the plan could also be a first step toward setting up a point-to-point system for using Starship to rapidly deliver cargo and passengers around the globe. Ordinarily, we think of rockets as going from Earth to somewhere other than Earth. But in the era of reusable rockets that both launch from and land back on Earth, there's really no reason why they couldn't be used for point-to-point transport much like airplanes already are. In fact, Elon Musk has been mulling such a scheme for nearly a decade already. And in 2021, the U.S. Air Force backed the plan with an initial $47.9 million budget for a feasibility study.
But I think Musk's plans could be even bigger than that.
Will Starbase go global?
Consider that, right now, all of SpaceX's Starships launch out of just one location: SpaceX's "Starbase" in Boca Chica, Texas. But there's good reason to think SpaceX might want to build a spaceport in Australia from which to launch and at which to recover the rockets -- and perhaps even a factory to build Starships on site. Rocket Lab's success has already shown that Australia (or at least its smaller neighbor) is a good location from which to launch rockets, with a nice big ocean to the east that any misfired rockets can safely fall into.
Plus, for the same reasons that Rocket Lab might want to set up shop in the U.S. (to be closer to U.S. customers and reduce their transportation costs), SpaceX might find it very attractive to set up an Australian Starbase on the other side of the globe, the better to win business from customers in Asia.
What this would mean for Rocket Lab investors
Suffice it to say this might not be great news for Rocket Lab, whose biggest launch customer is in Asia (Japan, to be precise), and who might not relish the added competition. In the Asian market, Rocket Lab already has to contend with low-price leader ISRO in India, which charges just three or four times Rocket Lab's price to launch payloads 10 times as big.
On the plus side, though, with Rocket Lab developing a reusable Neutron rocket of its own to compete with Starship -- and Neutron boasting more payload capacity than ISRO's PSLV rocket -- at least this will be a two-horse race, if and when SpaceX does establish a launch site in Australia.
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Rich Smith has positions in Rocket Lab USA. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.
