A looming production problem could mean trouble on the horizon for Elon Musk’s aerospace company.
SpaceX could face bankruptcy if it can’t ramp up its engine production, Musk said in a recent companywide email. Musk also called some employees back to work over the Thanksgiving weekend to work on SpaceX’s Raptor engine line, a situation he described as a “crisis.” SpaceX’s Raptor engines are a family of full-flow stage combustion cycle rocket engines designed for use in Starship launch vehicles.
“The Raptor production crisis is much worse than it seemed a few weeks ago,” Musk, who is CEO of both SpaceX and automaker Tesla, wrote in the email, which was obtained by the Verge, a technology website.
Musk, who is now a Texas resident, said SpaceX could face bankruptcy if it doesn’t keep with the tight flight schedule for the company’s next-generation Starship rocket, which is designed to carry both cargo and people. The rockets are also expected to play a key role in launching the company’s Starlink satellites.
“We face genuine risk of bankruptcy if we cannot achieve a Starship flight rate of at least once every two weeks next year,” Musk said. “We need all hands on deck to recover from what is, quite frankly, a disaster.”
It’s unclear how likely bankruptcy would actually be for the California-based company. SpaceX has been valued at $100 billion in recent months, and Musk said last month that the company is hoping to launch its first orbital flight early next year.
In a tweet this week responding to media reports, Musk said bankruptcy is unlikely for SpaceX, but not impossible.
“If a severe global recession were to dry up capital availability / liquidity while SpaceX was losing billions on Starlink & Starship, then bankruptcy, while still unlikely, is not impossible,” Musk wrote. He also pointed to automakers General Motors and Chrysler, which filed for bankruptcy in 2009 during the recession, and quoted businessman Andrew Grove, saying “Only the paranoid survive.”
Still, SpaceX does need to significantly increase production as it aims for orbital launches as early as January or February. The company has been testing prototypes of the rocket in South Texas and has flown successful short flights, but to reach orbit each rocket prototype could need to use at least 39 Raptor engines.
Last week, Musk said the situation was “all hands on deck,” and urged employees to come in unless they had urgent family matters or were unable to physically return to Hawthorne, California, where SpaceX is headquartered. The billionaire said he also had planned to take the weekend off, which he said would be his first off in a “long time” but instead would be working.
Musk said the facility will be in McGregor because of “challenges” in South Texas, without giving details. The company also has a testing facility in McGregor, used for research and development of new rocket engines and thrusters and for testing of final engines and components.
In far South Texas, SpaceX has an operations center called Starbase near Boca Chica, about 20 miles east of Brownsville. The property includes a production facility and a launch site where the company tests its Starship rocket prototypes. Musk, who moved to Texas in 2020, also has said his current main residence is a small home near Boca Chica on the SpaceX campus.
SpaceX also appears to have plans for growth in Austin. In March, the company posted ads for job openings for engineers in Austin that said the aerospace company is “breaking ground on a new, state of the art manufacturing facility.”
If SpaceX facility in Austin became a reality, it would add to a number of Musk-led companies with a presence in Central Texas. Musk has moved several of his companies into the region since at least 2020, most notably with Tesla’s $1.1 billion manufacturing facility currently being built in southeastern Travis County. In October, Musk also announced Tesla would move its corporate headquarters to Austin.
Musk’s other ventures have been quietly expanding into the region, including Musk’s tunneling and infrastructure company, the Boring Co., which has facilities in Pflugerville and Bastrop; a potential Neuralink office; and the headquarters of his private foundation, the Musk Foundation.
This isn’t the first time Musk has cited financial concerns to his employees. In 2018, Musk said Tesla came within weeks of collapse over Model 3 production problems. The company has since rebounded, and Tesla is now valued at $1 trillion.